Reference no: EM132277578

Question 1

The regulatory environment and financial reporting

You are employed in a large accounting firm which specialises in preparing general purpose financial reports for large companies that are listed on the Australian Securities Exchange (ASX). As the training manager, one of your key tasks is to prepare a regular newsletter for staff involved in the preparation of the above financial reports. The purpose of the newsletter is to keep staff updated on the latest financial reporting news, alerting staff of changes and developments that may impact their work, and provide enough information to staff to satisfy the following:

- For staff to understand the nature of the news / change / development and its potential impact (so staff can decide whether they need to investigate further given the nature of their own work);
- Provide directions to staff of where they can access further information on the news / change / development if they wish to (including website links where appropriate).

Required:
Prepare a 2 page newsletter that identifies and summarises changes / developments and news in the financial reporting environment for the period from 1 December 2018 to 31 March 2019.

Detailed guidelines for completing this task:

1. Identification of changes and developments
This will involve extensive research on a number of sources over the required period. You will need to identify and consider a range of developments/changes such as:
- Technical issues: for example the issue of new accounting standards, amendments to accounting standards, updates on AASB or IASB projects in progress, outcomes of AASB or IASB meetings, amendments to ASX listing rules.
- Regulation and monitoring of financial reporting: for example ASIC reviews on financial reporting.
- Political influences or other potential developments. 'Political' does not only mean action from politicians - it would also include lobbying/actions by other groups to promote their own interests - for example there may be articles about companies, or particular interest groups such as Group of 100, saying that if certain accounting standards are introduced this will disadvantage or have a negative impact.
You will need to consider both local (Australian) and international sources and developments.

The restriction of a 2 page newsletter means that you need to use your own judgment as to whether to include information about specific news items and changes / developments, and how much information to include. It is not intended that you provide complete details of changes / developments (although you may consider in particular cases that more detail is needed).

Given the target audience, it would be assumed that they have a working knowledge of common terms and abbreviations (such as AASB, IASB), so abbreviations may be used.

What not to consider?
You need to take care that the news / changes / developments included in the newsletter are relevant to the objective, in particular that they relate directly to the preparation of general purpose financial reports for large companies listed on the ASX. The newsletter should not consider areas only indirectly related to the preparation of financial reports such as (this is not an exhaustive list):
- Fraud
- Auditing
- Taxation
- Other disclosures by listed companies such as: industry disclosures required by peak organisations, and voluntary disclosures in the area of corporate social responsibility.

2. Potential sources
Given the scope of the potential influences on financial reporting, you will need to research a range of sources. Below is a list of sources that may be of interest. Note that this list is not exhaustive, students should search for sources outside of these. Students should not rely on any one type of source, but a range of sources from each category, i.e. do not just look at websites, also check journals, newspapers etc. Examples of possible information sources include:
(a) Websites such as those of:
- Australian Accounting Standards Board
- Financial Reporting Council
- Australian Securities and Investment Commission
- Australian Securities Exchange
- International Federation of Accountants
- Chartered Accountants Australia and New Zealand
- CPA Australia
- International Accounting Standards Board
- Websites of large accounting firms
(b) Professional publications:
- In the Black (CPA)
- Acuity (CAANZ)
(c) Newspapers/journals

3. Format and presentation
The following are to be observed for your newsletter preparation.
- The top of the newsletter must include the title (you need to decide what to call your newsletter) and details of the period the newsletter is considering.
- The newsletter should not read as one continuous 'essay'. It must include headings and sub-headings that assist in identifying the nature of news / changes / developments and help to guide the reader, and also enable the reader to distinguish between items of interest and the relative importance of changes.
- You must refer the reader to specific sources (including website links where appropriate) so that they are able to obtain more detailed information of the news / change / development. If you include direct quotations in your newsletter, you need to include in-text citations using the APA referencing format.
- The newsletter must be printed in minimum font set at 11 points (you may wish to use different formatting (such as larger fonts) for headings etc. Apart from minimum font size, there are no specific requirements in relation to line spacing, margins etc. However, you should note that simply reducing line spacings or margins to 'fit more in' may impact on the presentation and effectiveness of the newsletter.
- There is no specific 'word limit'. The newsletter must be no longer than 2 pages. In cases where the newsletter exceeds the 2 page limit, only the first 2 pages will be marked.
- Do not attach actual articles/printouts of web sources etc to your assessment. You are only required to include details of these in the bibliography (see section 4 below).
Don't be afraid to be creative. The effectiveness of a newsletter is impacted by how interesting the readers find it.

4. Bibliography and referencing
This assessment must include a bibliography using the APA referencing style.

Question 2 - Financial statement presentation

You are the senior financial accountant at Whirl Ltd. One of the new trainee accountants has prepared the following statement of profit or loss and other comprehensive income, statement financial position and statement of changes in equity from the trial balance, after its first year of operations:

Additional information:
- Whirl Ltd uses the single statement format for the statement of profit or loss and other comprehensive income and the directors would like to present an analysis of expenses by function on the statement.

- In relation to the statement of financial position, where AASB 101 requires entities to disclose further sub-classifications of the minimum line items on the face of the statement or in the notes, the directors of Whirl Ltd want to report only the minimum line items on the face of the statement, and leave the sub-classifications to be disclosed in the notes.

Required:

Review the financial statements prepared by the trainee accountant. Discuss what corrections / changes need to be made to the financial statements, to ensure that they comply with the requirements of AASB 101. Provide references to relevant paragraphs in the accounting standards where appropriate to support your answers.

Note: You are not required to discuss any note disclosures that are needed, or prepare revised financial statements.