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Solutions Manual for Financial Reporting 2nd Edition By Janice Loftus, Ken Leo, Sorin Daniliuc, Noel Boys, Belinda Luke, Hong Nee Ang, Karyn Byrnes (All Chapters, 100% Original Verified, A+ Grade) $28.49
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Solutions Manual for Financial Reporting 2nd Edition By Janice Loftus, Ken Leo, Sorin Daniliuc, Noel Boys, Belinda Luke, Hong Nee Ang, Karyn Byrnes (All Chapters, 100% Original Verified, A+ Grade)
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This Is Original 2nd Edition of Solutions Manual From Original Author. All Other Files in the market are fake/old Edition. Other Sellers Have changed old Edition Number to new But solutions Manual is old Edition. Solutions Manual for Financial Reporting 2nd Edition By Janice Loftus, Ken Leo, Sor...

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  • August 6, 2024
  • 2155
  • 2024/2025
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Solutions manual
to accompany

Financial reporting
2nd edition
by

Loftus, Leo, Daniliuc, Boys, Luke, Ang
and Byrnes




.

, Chapter1: Accounting regulation and the conceptual framework


Chapter 1: Accounting regulation and the conceptual framework
Comprehension questions

1. What are the key sources of regulation in Australia for a listed company?

The key sources of regulation for a listed company in Australia are:
• The Corporations Act, which is administered by the Australian Securities and
Investments Commission
• Australian Accounting Standards and the Conceptual Framework, issued by the
Australian Accounting Standards Board
• Australian Securities Exchange Listing Rules.


2. Describe the standard-setting process of the AASB.

Accounting standards are developed through a consultation process to ensure information is
high quality and of value to all users of financial statements. If an item is added to the
Board’s agenda, it may research the issue, consider solutions, and consult with stakeholders.
Then the AASB may proceed with the issue of exposure drafts, invitations to comment, draft
interpretations and discussion papers. For standards intended for profit-seeking entities, the
exposure drafts issued by the AASB typically incorporate exposure drafts issued by the
IASB, along with Australian-specific matters for comment as applicable. The consultation
process may involve focus groups and roundtable discussions with stakeholders and
responses to exposure drafts. The AASB may also draw on project advisory panels and
interpretation advisory panels.


3. Distinguish between the roles of the FRC and the AASB.

Both the FRC and the AASB are involved in standard setting. The AASB is responsible for
developing a conceptual framework and issuing accounting standards. Another function of
the AASB is to participate in and contribute to the development of a global set of accounting
standards. The FRC’s role in standard setting is essentially a broad oversight function; it
oversees the processes for setting accounting standards. The FRC’s oversight function also
extends to the auditing standard setting process, including monitoring the effectiveness of
auditor independence requirements in Australia.

The FRC appoints members of the AASB and approves its priorities, business plans, budgets
and staffing arrangements. The FRC determines the AASB’s broad strategic direction (e.g.,
the FRC directed the AASB to adopt International Financial Reporting Standards, such that
compliance with Australian Accounting Standards by profit seeking entities results in
compliance with IFRS. The FRC advises the AASB and provides feedback on policy matters.




© John Wiley and Sons Australia Ltd, 2018 1.2

,Solutions manual to accompany Financial reporting 2e by Loftus et al.


4. How does the IASB influence financial reporting in Australia?

Australia has adopted International Financial Reporting Standards since 2005. Hence
technical issues on the IASB work program are also included on the AASB work program.
The AASB Board members and staff can identify issues requiring consideration. Some of
these issues can be referred to the IASB for consideration and some can be addressed
domestically. In fact the issue of an accounting standard by the IASB would result in a
corresponding and consistent standard being issued by the AASB. The text of the
international accounting standard may be modified to the extent necessary to take account of
the Australian legal or institutional environment and, in particular, to ensure that any
disclosure and transparency provisions in the standard are appropriate to the Australian legal
or institutional environment. This is often reflected in modifications to standards for
application by not-for-profit entities in Australia.


5. Explain the potential benefits and problems that can result from the adoption of
IFRSs in Australia.

The adoption of Australian Accounting Standards that are equivalent of IFRSs may be
viewed as implementing development of a global set of accounting standards. It also reflects
the view that doing so is, on the whole, in the best interests of the Australian economy. These
benefits may manifest in reduce cost of capital and reduced reporting costs for Australian
companies that seek finance in global capital markets. It also may make listing in Australia
more attractive to multinational corporations because Australian investors’ will have greater
understanding of financial statements prepared in accordance with IFRSs.

The problem that can result from the adoption of IFRSs in Australia is the ‘one size fits all’
approach. IFRSs were initially drafted to be used solely by large, for-profit entities. In
Australia, however, they have been applied across the board to all entities, including small
and medium-sized entities, not-for-profits and governments. The AASB has now recognised
this issue and has implemented a differential system — reduced disclosure regime —
whereby certain entities may not have to abide by the full requirements of Australian
equivalents to IFRSs.


6. What is the difference between Australian Accounting Standards and IFRSs?

While IFRSs are developed for application by profit-seeking entities, Australian Accounting
Standards are also applied by not-for-profit entities in the public and private sectors.
Accordingly Australian Accounting Standards may include additional or different
requirements or exemptions for not-for-profit entities. Australian Accounting Standards also
cover additional matters, such as disclosure requirements (typically in a separate standard) on
matters not covered by IFRSs. The difference introduced by the AASB can be easily
identified in the texts. For example, paragraphs added by the AASB are prefixed with “Aus”
while paragraphs deleted by the AASB are indicated as “deleted by the AASB”.




© John Wiley and Sons Australia Ltd, 2018 1.3

, Chapter1: Accounting regulation and the conceptual framework


7. Specify the objectives of general purpose financial reporting, the nature of users,
and the information to be provided to users to achieve the objectives as provided in
the conceptual framework.

The conceptual framework specifies the objectives of general purpose financial reporting as
providing financial information about the reporting entity that is useful to existing and
potential investors, lenders and other creditors in making decisions about providing resources
to the entity. It adopts the ‘entity perspective’; that is, it is the entity, not its owners and
others having an interest in it, which is the object of general purpose financial reporting. In
other words, the focus is placed on reporting the entity’s resources (assets), the claims to the
entity’s resources (liabilities and equity) and the changes in them. Shareholders are seen not
so much as owners of the entity but merely as providers of resources to the entity, in much
the same way as liabilities. Both present and potential equity investors, lenders and other
creditors are seen as constituting a single primary user group. This group makes decisions
about the allocation of resources as well as decisions relating to protecting or enhancing their
claim on the entity’s resources. Other potential user groups; for example, government and
other regulatory bodies, customers, employees and their representatives, are not the focus of
the objective.

It appears odd that in times when environmental and social issues are of great importance to
society, and the desire for triple-bottom line reporting is growing, that these issues are
ignored in the revised conceptual framework.


8. One of the functions of the FRC is to ensure that the Australian Accounting
Standards are ‘in the best interests of both the private and public sectors in the
Australian economy’. How might the FRC assess this?

The FRC is required under the ASIC Act to promote the adoption international best practice,
provided doing so would be in the best interests of both the private and public sectors in the
Australian economy. The success of this mandate may be assessed by considering the
reduction in the cost of capital and reporting costs for Australian companies that seek finance
in global capital markets, the attractiveness to multinational corporations of listing in
Australia. Feedback obtained via various stakeholder mechanisms may also be assessed. For
example, stakeholder groups represented on the FRC will be consulted regularly by the FRC
member they have nominated, and stakeholder views will be brought to FRC meetings, as
appropriate.




© John Wiley and Sons Australia Ltd, 2018 1.4

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