Reference no: EM131478452

This assignment is based on the International Financial Reporting Standards (IFRS) for Small and medium-size entities (SMEs). The IFRS for SMEs is a self-contained Standard (less than 250 pages), designed to meet the needs and capabilities of small and medium-sized entities (SMEs), which are estimated to account for over 95 per cent of all companies around the world. Compared with full IFRS (and many national GAAPs), the IFRS for SMEs is less complex in a number of ways according to International Accounting Standards Setting Board (IASB).

The Standard is available for any jurisdiction to adopt, whether or not it has adopted full IFRS. Each jurisdiction must determine which entities should use the Standard. The IASB's only restriction is that entities that have public accountability should not use it.

When the IFRS for SMEs was issued, the IASB stated that it planned to undertake an initial comprehensive review of the IFRS for SMEs after two years of use by SMEs to consider whether there was a need for any amendments. Specifically, the IASB said it would consider whether to amend the IFRS for SMEs to address any implementation issues identified and also whether to consider any changes made to IFRS (sometimes referred to as ‘full IFRS' when compared to the IFRS for SMEs) since the IFRS for SMEs was published.

The IASB decided to commence its initial comprehensive review in 2012, with support from the SME Implementation Group (SMEIG), based on its view that sufficient jurisdictions had adopted the IFRS for SMEs by 2010 to provide broad insight into the implementation experience.

After consulting widely with constituents, the IASB concluded that the IFRS for SMEs is working well in practice. However, some areas were identified where targeted improvements could be made. Consequently, after considering the feedback it received, and taking into account the fact that the IFRS for SMEs is still a relatively new Standard, the IASB has made limited amendments to the IFRS for SMEs. The most significant amendments that relate to transactions commonly encountered by SMEs are:

- permitting SMEs to use a revaluation model for property, plant and equipment; and
- aligning the main recognition and measurement requirements for deferred income tax with IFRS.

Most of the other amendments clarify existing requirements or add supporting guidance, rather than change the underlying requirements in the IFRS for SMEs. Consequently, for most SMEs and users of their financial statements, the amendments are expected to improve understanding of the existing requirements, without having a significant effect on an SME's financial reporting practices and financial statements.

The amendments are effective for annual periods beginning on or after 1 January 2017. Earlier application is permitted.

Requirements:

On 9 July 2009 the IASB published an International Financial Reporting Standard (IFRS) designed for use by small and medium-sized entities (SMEs). SMEs are estimated to represent well over 95 per cent of all companies in both developed and developing countries. The standard is the result of a five-year development process with extensive consultation of SMEs worldwide.

You are required to take one of the stakeholder perspectives listed below for the purpose of providing a detailed discussion on the following specific questions relating to the International Financial Reporting Standards (IFRS) for Small and medium-size entities (SMEs).
Stakeholders
- Accounting firm/Auditor
- Lender/Creditor
- Professional Accounting body
- SME in the Mining Industry
- SME in the Manufacturing Industry
- SME in the Retail Industry
- SME in the Travel Industry
- SME in the Utilities Service Industry
- Large corporation with multiple subsidiaries

From your chosen perspective, respond to the following questions;

1. What are small and medium-sized entities (SMEs)? Was there a need to have International Financial Reporting Standard (IFRS) designed for use by small and medium-sized entities (SMEs)? (Hint: use Information Theories, Regulatory Theories, System Oriented theories and/or Political Economics Theories where applicable)

2. What are the main differences between the full International Financial Reporting Standards (IFRS) and the International Financial Reporting Standards (IFRS) for Small and medium-size entities (SMEs)?

3. What effect does IFRS designed for use by SMEs have on your chosen stakeholder's financial statements? What does it mean for users of your chosen stakeholder's financial statements? And how would it benefit and/or disadvantage the stakeholder? (Hint: use Information Theories, Positive Accounting Theory, Regulatory Theories, System Oriented theories and/or Political Economics Theories where applicable)

4. Evaluate whether overall, IFRS designed for use by SMEs would result in reporting that would be more useful to users? (Hint: use Information Theories where applicable)

5. Briefly discuss the approach that Australia Accounting Setting Board (AASB) has taken in relation to IFRS designed for use by SMEs.

6. What is the differential reporting framework under AASB, has it any similarities to IFRS designed for use by SMEs?

7. Summarise your discussion for your Chief Executive Officer (CEO) who is from a non-accounting background.

In your discussion make sure you consider the relevant specific technical and theoretical issues relating to IFRS designed for use by SMEs from your nominated stakeholder perspective. You are also required to consider the theoretical implication of accounting information produced from the perspective of your nominated stakeholder.

Objectives of the Assignment:

One of the key objectives of this assignment is to assist you to develop effective written communication skills which are crucial to gaining employment and ongoing career success.

In the 2014 Graduate Outlook report employers were surveyed about the most important selection criteria when recruiting graduates. It is evident in the table below that employers rate communication skills as their number one priority when recruiting graduates across the board.
Source: Graduate Careers Australia, 2014, Graduate Outlook 2014, Melbourne

Since 2012, the Australian Parliament legislated that all higher education providers are required to provide evidence that their graduates achieve a common national set of learning outcomes by the time they graduate. Minimum or threshold learning outcomes (TLOs) for accounting graduates were developed collaboratively across Australia in 2010 with input from the professional accounting bodies, various business practitioners and accounting academics. Five TLOs were developed for the accounting discipline of which the communication standard is particularly relevant for this assignment.

Bachelor graduates in Accounting will be able to justify and communicate accounting advice and ideas in straightforward collaborative contexts involving both accountants and non-accountants.

Please keep this TLO in mind when preparing your assignment. The Criteria and Standards for marking the assignment are on page 5. Use this to help you prepare your answer to the assignment. It shows what we will be looking for in marking and what mark you will get if you reach certain levels.

It is important to use appropriate referencing. If the reader of your report wants to further follow up any of the points you have made, correct referencing of the material is essential. You do not want the situation where the reader has to contact you to find out where the material came from!

Key factors to keep in mind when writing your submission are:

- Submission should begin with an introduction, which outlines key arguments and defines key terms. Make it clear in the first paragraph how you are planning to address the questions and which stakeholder's perspective you have adopted.

- Use the questions that you are commenting on as your headings within your discussion.
- Each paragraph should contain a topic sentence (what summarises the main idea in this paragraph) and be followed by supporting sentences (and citations), which expand and provide more detail on the idea raised. A common student mistake is to write topic sentence after topic sentence. This seems like they are jumping from one idea to the next and will often attract feedback stating "no depth" or "confusing". The supporting sentences are crucial to examine the initial idea in more detail and demonstrate an argument along with understanding. Ensure you examine each idea in enough detail - examine the idea fully before moving on.

- The most common criticism faced by students in this unit is not answering the question. Discussion around a topic is not answering the question. It is often a helpful technique to use the question as part of your submission structure. You are the bouncer at the door of your own submission: choose which ideas get in. Choose the ideas that directly address the question.

- Remember that the marker can only mark what you actually said on the paper, not what is in your head or what you "meant to say". For this reason, it is essential to review your own work in order to reveal flaws in structure or writing.

- Ensure you use accurate spelling and grammar. It is often best to state things simply and clearly rather than using complicated language in the wrong context. Prior to submission make sure you use tools like spelling and grammar checkers in WORD. You may also want to make use of online tools.

- Ensure that all in-text references are accurate and comply with the Harvard referencing style. Wikipedia, for example, is not a credible source. A Reference list of all works cited in your submission must be provided.

- Conclusions should never introduce new ideas, but instead should summarise the arguments and leave the reader with a resounding "take home message", hopefully convincing them you have answered the question.