ACCT6001 Intermediate Financial Reporting

Topic 1: Introduction & The Australian Reporting Environment

Tutorial Questions

Equivalent
AASB No. Title
International
1 First-time Adoption of Australian Accounting Standards IFRS 1

2 Share-based Payment IFRS 2

3 Business Combinations IFRS 3

4 Insurance Contracts IFRS 4

5 Non-current Assets Held for Sale and Discontinued Operations IFRS 5

6 Exploration for and Evaluation of Mineral Resources IFRS 6

7 Financial Instruments: Disclosures IFRS 7

8 Operating Segments IFRS 8

9 Financial Instruments IFRS 9

10 Consolidated Financial Statements IFRS 10

11 Joint Arrangements IFRS 11

12 Disclosure of Interests in Other Entities IFRS 12

13 Fair Value Measurement IFRS 13

14 Regulatory Deferral Accounts IFRS 14

15 Revenue from Contracts with Customers IFRS 15

16 Leases IFRS 16

17 Insurance Contracts IFRS 17

101 Presentation of Financial Statements IAS 1

102 Inventories IAS 2

107 Statement of Cash Flows IAS 7

108 Accounting Policies, Changes in Accounting Estimates and Errors IAS 8

110 Events after the Reporting Period IAS 10

112 Income Taxes IAS 12

116 Property, Plant and Equipment IAS 16

119 Employee Benefits IAS 19

Accounting for Government Grants and Disclosure of Government
120 IAS 20
Assistance
121 The Effects of Changes in Foreign Exchange Rates IAS 21

123 Borrowing Costs IAS 23

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124 Related Party Disclosures IAS 24

127 Separate Financial Statements IAS 27

128 Investments in Associates and Joint Ventures IAS 28

129 Financial Reporting in Hyperinflationary Economies IAS 29

132 Financial Instruments: Presentation IAS 32

133 Earnings per Share IAS 33

134 Interim Financial Reporting IAS 34

136 Impairment of Assets IAS 36

137 Provisions, Contingent Liabilities and Contingent Assets IAS 37

138 Intangible Assets IAS 38

139 Financial Instruments: Recognition and Measurement IAS 39

140 Investment Property IAS 41

141 Agriculture IAS 41

1004 Contributions

1023 General Insurance Contracts

1038 Life Insurance Contracts

1039 Concise Financial Reports

1048 Interpretation of Standards

Whole of Government and General Government Sector Financial
1049
Reporting
1050 Administered Items

1051 Land Under Roads

1052 Disaggregated Disclosures

1053 Application of Tiers of Australian Accounting Standards

1054 Australian Additional Disclosures

1055 Budgetary Reporting

1056 Superannuation Entities

1057 Application of Australian Accounting Standards

1058 Income of Not-for-Profit Entities

1059 Service Concession Arrangements: Grantors

Standards covered in ACCT 6001
IFRS: International Financial Reporting Standards / IAS International
*
Accounting Standards included for information only

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Question 1

Read the following article and answer the following question.

“ASIC chides companies on faulty preparation of reports”

by Georgia Wilkins Published: SMH December 17, 2013
Companies are failing to accurately disclose the value of their assets in financial
reports, prompting a number of inquiries by the corporate regulator.

The Australian Securities and Investments Commission said it had made 34 inquiries
into listed and public interest entities after they failed to factor in large write-downs to
the value of their assets.

It made another 14 inquiries into companies that had prematurely recognised the
revenue from goods and services before they had actually been sold.

''We continue to identify matters such as inadequate impairment of assets and

inappropriate recognition of revenue in some cases,'' ASIC Commissioner John
Price said.

''While the quality of financial reporting in Australia is comparable with other major
jurisdictions … Preparers of financial reports should ensure that they provide high-
standard, useful and meaningful information.''

A total of 70 inquiries have been made into company reports so far as part of a
review into 280 companies during the period ending June 30.

The probes have sparked a number of companies to make significant write-downs or

reissue financial statements to include material disclosures, ASIC said. ''These
disclosures are important to investors and other users of financial reports,'' it said.

''They enable users to make their own assessments about the carrying values of the
entity's assets and risk of impairment.''

Several companies have announced profit downgrades in recent weeks due to asset
write-downs, including insurer QBE and rail company Aurizon.

Coal freight operator Aurizon said on Monday it would be forced to revise the value
of its fleet of locomotives and wagons by 4 per cent, leading to a $150 million write-
down in the first half.

Earlier in the month, QBE wiped billions from its market worth when it shocked
investors with a $600 million write-down of its US businesses.

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ASIC said the review had revealed a number of other concerning trends among
company reports, including companies using ''boilerplate'' accounting policies to
generalise information.

It said there was also a tendency for companies to describe expenses as ''one-off'' or
''non-recurring'', even though they were ''inherent to the entity's business and occur
every year''. ASIC said 12 inquiries had concluded without changes to financial
reports.

This story was found at: [Link]

[Link]

Required:
a) From the list of current accounting standards, try to identify which standards
are most likely to relate to the three matters underlined in the article.
1._________AASB 15 /139________________________________
2._________AASB 116 /136_______________________________
3._________AASB 7/124/1052_____________________________

b) The role of the Australian Securities and Investment Commission (ASIC) is to

administer and ensure compliance with the Corporations Act. From a
shareholder’s perspective explain why this is important. Use two (2) examples
from the above article to support your explanation.

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Question 2
WRITING SKILLS

This resource has been designed to assist you in developing your writing and
critical thinking skills this semester. The example here reflects the kind of
questions that you will do in class. They also reflect the kind of questions that
you will be asked to answer in an exam.
We strongly advise you to practice these skills. It is with practice that you will
feel more confident both in your ability to write and to evaluate the subject
matter critically.
We hope that you find it useful.

Overview: WRITING A DISCUSSION ESSAY

You need to be prepared to answer a ‘discuss’ question, which requires you to:
• have a good technical knowledge of the subject
• critically evaluate all perspectives to the statement/question
• introduce your stance for or against
• build up a structured argument
• leading to a clear conclusion

Steps in the process

• Research or study the topic and work out what is relevant for the question.
• Think critically about the topic in relation to the question/statement, and how
to answer it.
• Structure your answer in a logical, methodical way.

For example
• An Introductory paragraph to clearly indicate the direction or view that you
are taking.
• The Body
• A definition / explanation / description of the topic to set the scene to
be able to evaluate it.
• Outline any contrasting views on the topic.
• Discuss further details and build support for your point of view.
• Concluding sentence/paragraph
• To reinforce the position that you have argued in the body of the essay.

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PRACTICE QUESTION
“Financial reporting should primarily be concerned with helping users assess
management stewardship.” Discuss this statement.
Your answer should be in the form of a persuasive essay and include:
An introduction;
Two arguments that support the statement;
Two arguments that oppose the statement; and
A conclusion

Technical content:
Good reference material for this question can be found in the lecture, the Conceptual
Framework (2018) and project summary, and on pages 64-67 of Deegan

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