MA601 Theory and Current Issues In Accounting & International Accounting Standard Board (IASB) - Accounting Assignment Help

Assignment Task

Assignment Description

According to Accounting Conceptual Framework (2019 revision) the objective of general purpose financial reporting is to:

Provide financial information about the reporting entity that is useful to existing and potential financial information users in making decisions relating to the entity. 

Those decisions involve decisions about:

“(a) Buying, selling or holding equity and debt instruments;

(b) Providing or settling loans and other forms of credit; or

(c) Exercising rights to vote on, or otherwise influence, management’s actions that affect the use of the entity’s economic resources” (Conceptual framework, 2019 pp10).

The purpose of Accounting Conceptual Framework as stated in the Conceptual Framework is to:

“(a) Assist the Australian Accounting Standards Board (Board) to develop Australian Accounting Standards that are based on consistent concepts;

(b) Assist preparers to develop consistent accounting policies when no Standard applies to a particular transaction or other event, or when a Standard allows a choice of accounting policy; and

(c) Assist all parties to understand and interpret the Standards” (Conceptual framework, 2019 pp8). 

The conceptual framework is viewed as a normative document because it prescribes how accounting policies should be determined (Henderson, 2017). Australian Accounting Standard Board (AASB) adopted same due process applied by International Accounting Standard Board (IASB) in the preparation of accounting standards, and AASB adopted IASB’s Accounting Conceptual Framework in 2005 in line with the harmonization and convergence with IFRS.

Choosing accounting policies in the preparation of financial statements by company accountants require a consideration of four issues. They are defining, measuring, recognizing, and disclosure of elements of financial statements. The role of the Framework 2014 for the preparation and presentation of financial statements is to guide accounting standard setters and financial statement preparers in how to resolve these four issues. In other words, it implies that Conceptual Frame Work provides guidance to the practicing professional accountants in resolving accounting controversies. However, Conceptual framework 2014 has not yet developed guidance on what principles should underlie disclosure practices.

It is, however, argued that financial information disclosed by the company should be relevant, reliable, and timely to enable financial information users to make informed decisions about the company.

With reference to the above requirements/arguments, you are required to write a report critically evaluating implications of the development of AASB standards and conceptual framework for financial reporting in Australia.

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