Reference no: EM132486348 , Length: word count:1100

Instructions

You will be provided with three relevant case studies each with an associated article (30 minutes read each).

Review each Case Study and answer the Case Study questions.

Discuss and analyse the application of theories to the relevant accounting issue.

Your responses should include reference to relevant literature, observations and analysis, and recommendations.

Assessment Criteria

Your assessment will be marked on the following criteria:
• Examines the impact of accounting standards
• Applies the relevant accounting standards to the case
• Proposes a recommendation as to the appropriate application of accounting standards to the issues in the case

Overview
This is an individual assessment task where you will be provided with three 'real world' accounting scenarios from a journal or professional magazine. This task gives you practice in critical thinking and will assist you to develop the skills that accountants require in a professional context.

Learning Outcome 1: Articulate an enhanced understanding of the role of theory in the development of accounting and the financial reporting environment

Learning Outcome 2: Critically analyse and justify accounting standards that apply to financial reporting in order to improve skills in exercising professional judgement in accounting practice

Learning Outcome 3: Evaluate and debate contemporary issues relevant to the application of accounting standards and their impact on financial reporting in local and global communities

You will need to refer to the following articles when completing the case studies:

CASE STUDY 1
"APRA urged to make CEO bonuses more transparent" Sally Patten published in the Australian Financial Review on 7/11/2019 (this can be peppered)
The issue of bonuses being paid to senior executives has come under media scrutiny as a result of the recent banking royal commission. The article "APRA urged to make CEO bonuses more transparent" by Sally Patten was published in the Australian Financial Review on 7/11/2019. A central theme in this article is that the Australian Prudential Regulatory Authority (APRA) should ensure that non¬financial targets are able to measured appropriately if they are to be used to measure bonuses as part of a plan to impose restrictions on how short-term incentives are paid.

Refer to the Patten (2019) article, as well as other references, and answer the following questions:

Question 1. Explain why APRA wants to impose restrictions on how short-term incentives are paid, referring to arguments which support the regulation of accounting as well as the bonus plan hypothesis of positive accounting theory (PAT).

Question 2. According to the article, "APRA is proposing to force companies to structure short-term incentives so that at least 50 per cent of senior executives' performance targets such as customer satisfaction, safety and compliance". Explain the purpose of this APRA proposal from the perspective of:
a. Agency problems; and
b. The Efficiency perspective of PAT

Question 3. Explain the comment "If APRA wishes to push forward with its pay recommendations, it should at least ensure that non-financial measures are quantifiable, hence less easy to manipulate" from the opportunistic perspective of PAT.

CASE STUDY 2

"Origin, AGL and Energy Australia's profits under government scrutiny" by Cara Waters which was published in the Sydney Morning Herald on 25/8/2017

In 2017, the profits of energy companies Origin, AGL and Energy Australia came under scrutiny due to increasing power prices, as explained in the article Origin, AGL and Energy Australia's profits under government scrutiny" by Cara Waters which was published in the Sydney Morning Herald on 25/8/2017. The article made the following specific observations: "Energy Minister Josh Frydenberg has pointed the finger at the growing profits of electricity retailers including Origin and AGL as pressure continues over soaring power prices", "About 12 per cent of your energy bill relates to retailers, that's the Origins, the AGLs the Energy," and "They in Victoria particularly have seen profit margins in the vicinity of 22 per cent. That is three times what you would see in a comparable retailer in the United Kingdom and more than double what you would see in other retail sectors like fuel or food or vehicles:'

Refer to the Waters (2017) article and Deegan (2014), pages 308 to 314 and answer the following questions:

Question 1. Define the term "political costs" and explain how "political costs" may be imposed upon the energy companies referred to in the article as a result of their reported profits.

Question 2. Explain the comments of the then Energy Minister Josh Frydenberg in the context of PAT.

Question 3. How would PAT anticipate that the energy companies would respond to the comments of the then Energy Minister?

Question 4. Why did the media article not refer to the accounting policies of the energy retailers when their profit margins were discussed

CASE STUDY 3
"Super funds ramp up pressure on companies to take action on climate" by Richard Gluyas which as published in the Australian on 11/3/2020
Refer to the article "Super funds ramp up pressure on companies to take action on climate" by Richard Gluyas which was published in the Australian on 11/3/2020 and answer the following questions:

Question 1. Explain the role of the Australian Council of Superannuation Investors (ACSI) in requiring companies to undertake climate modelling as a process of coercive isomorphism.

Question 2. Refer to the climate change section of the ACSI website.
a. Why is climate change a concern to the investment community?
b. Explain the comment "ACSI has been engaging companies on climate change risks and opportunities for over a decade" from the perspective of the managerial branch of stakeholder theory
c. How has ACSI sought to influence how organisations manage climate change risk and how this can lead to the institutionalisation of climate change risk assessment practices by companies

Question 3. Explain the Business Council of Australia's (BCA) development of a policy of a net zero emissions by 2050 as a process of normative isomorphism.

Question 4. Refer to the energy and climate change section of the BCA website
1. a) Identify what the BCA believes should be the four key goals of an energy and climate change framework
2. b) Explain the relationship between climate change policy and business investment