ACC514 - Developments and Changes in the Financial Reporting Environment - Finance Accounting Assessment Answers

Assessment Information

Introduction to assessment To protect the academic integrity of the subject, you may be asked to complete an additional test (which may be verbal) if I or another member of the teaching staff have doubts that the work that you have submitted for an assessment item is your own. This test would be held within 4 weeks of the submission of the assessment.

Detailed information regarding:

Sample exam (for subjects with a formal exam) Pass requirements Grades Presentation Submissions Extensions Penalties for late submission Assignment return Resubmission Plagiarism

are included in Appendix 1.

Assessment Items

Item number Title Type Value Due date* Return date**

1. 5 Online tests Assignment 10% Variable Variable
2. Assignment 1 Assignment 15% 08-Apr-2016 02-May-2016
3. Assignment 2 Assignment 15% 09-May-2016 31-May-2016
4. Final Exam Exam 60% To be Advised. -

Assessment 1: 5 Online Task

Task

This assessment task consists of 5 online tests, each contributing to 2% of your overall assessment mark, as detailed below. Each test will consist of 6 multiple choice questions, and advice will be given as how to access the tests at the beginning of the session. The online tests will be timed, with 20 minutes to complete each test.

• Online Test 1 (covering topics 1 and 2): This test will be open from 29 February – 18 March 2016 (11:59pm AEST).
• Online Test 2 (covering topics 3 and 4): This test will be open from 29 February – 8 April 2016 (11:59pm AEST).
• Online Test 3 (covering topics 5 and 6): This test will be open from 29 February – 29 April 2016 (11:59pm AEST).
• Online Test 4 (covering topics 7 and 8): This test will be open from 29 February – 13 May 2016 (11:59pm AEST).
• Online Test 5 (covering topics 9 and 10): This test will be open from 29 February – 27 May 2016 (11:59pm AEST).

Please note that each online test can be completed at any time during the periods stated above. Rationale

This assessment task is designed to assess your understanding of each topic, and to ensure that you are engaging with the subject content on a regular basis. More specifically, it seeks to assess your ability to:

prepare basic financial statements for reporting entities; discuss critically and comprehensively the statutory and professional requirements upon which published financial statements are based; explain the form and content of financial statements; interpret and apply generally accepted accounting principles and specific financial reporting standards relating to concepts of recognition, measurement, disclosure, revaluation and impairment of key financial statement elements.

Developments and changes in the financial reporting environment for the period January - March 2016

Introduction

The financial accounting is the method used by investors and shareholders to make use of the financial information of any company for making decision on their allocated resources (Ahmed, 2012). This reporting model has seen to be opted by various companies which are more oriented toward their profit. The financial statistics can be used to compare organization’s financial condition, including profit and loss statements (Anne, et al., 2010). For performing such operations, the financial accountants uses a standard template for accounting financial stats; this standard body is called as “Generally Accepted Accounting Principle”.

During the Period January 2016 to March 2016

On March 30, during the current year 2016, Accounting standard has been issued by the FASE for improving payment of employees, which is based on payment accounting. Considering the condition of today, cost compensation which has been recognized for the purpose of financial statement has been recorded in the equity.

During the year 2016, in the month of January, Income tax amendments has been issued by the IASE. The amendment clarified the pre-requisite for recognition of deferred taxes. The measurement of assets is done at the fair value; this fair value is under the tax base of assets.

The finance minister of India, during the year 2016 (1st quarter) presented the budget – 2016. The proposals have been made in which new incentive have been made for domestic start-ups, in which there’s a 100% deduction would be included for the start-ups who have been registered on or before 1 April 2019. An introduction of administration for patenting ideas with a ten percent rate of tax.

In United Kingdom, during the year 2016 (1st quarter), the conclusive regulations has been issued which introduced reporting environment based on country by country approach. Multinational entities which have been United Kingdom parented has a 750 Euro million annually consolidated.

Public accountable PBEs will now be able to report under tier 1 standards. XRP has introduced such standards from April, 2015. These changes are governed by IPSASB (International Public Sector Accounting Standards Board), under IPSAS (International Public Sector Accounting Standards). On the contrary, non-public and non-large PBEs will be able to report as per tier 2 standards under the same framework introduced by IPSASB (Barth & Landsman, 2012). Lastly for non-public small PBEs, a simpler reporting format has been developed by XRP under the consent of IPSASB.

Multi Sector Multi Standards Framework:

XRB, External reporting board of Australia, is responsible to making and monitoring any changes or development in the financial reporting environment. The same is held responsible for setting any new laws and policies in the GPFRs “general purpose financial reports” (Ahmed, 2012). From 2012, a multi-standard framework has been rolled out; the framework is specific for profit and benefit to public (PBEs). According to the policies and laws laid out in the newly established framework, the accounting standards for different entities will be different. This difference has been introduced keeping in view the sectors usages and statistics (Anne, et al., 2010). In this proposed framework, the variation has been made in standards of accounting applied in PBE’s and GPFRs. The framework out in 2012 is about to completely operational by 2016.

Tier 3 and Tier 4 Profit

According to the amendment made in the financial reporting act of 2013, obligation has been ceased for most of the small sized entities for preparing general purpose financial reports (GPFRs). This in turn would result in the removal of tier 3 and tier 4 from the accounting standards set previously. In such a case the concerned entities would be required to make either GPRFs or have to or will be forced to prepare special purpose financial reports (SPRFs).