Part A (1,000 words) As accounting standards globalise, the standard setting bodies face the challenge of accommodating the Islamic prohibition on interest, and other aspects of Sharia law, into money making. There are two contrasting views on how to account for Islamic financial transactions. a) A separate set of Islamic accounting standards is required; or b) International Financial Reporting Standards can be applied to Islamic financial transactions. The differing approaches to accounting for Islamic financial transactions can be generally attributed to opposing views on two main points of contention. a) The acceptability of reflecting a time value of money in reporting an Islamic financial transaction; and b) The conventional approach of recognising and measuring the economic substance of a transaction, rather than its legal form. Discuss Part B (1,200 words) In the Australian accounting sphere the concept of due process is applied within the institutional arrangements for regulating financial reporting and falls particularly within the promulgation of accounting standards. a) What is due process. b) Is there a difference in due process in law and the due process as applied within the accounting standard setting regime c) What is procedural due process and substantive due process. Is there a difference and if so what is it. Part C (1,000 words) It is well documented that the setting of accounting standards is the outcome of a political, rather than a technical or economic, process. Regulatory bodies endeavour to balance the competing demands and views of lobbyists, while also being mindful of their own situation and the extent to which their activities fall within the ambit of their political masters. If accounting rules have widespread and significant economic and social implications, then proposed accounting rules would be of interest to many individuals and groups, whose wealth and welfare may be affected. Lists of Exposure Drafts Proposed Amendments to AASB 132 Financial Instruments: Presentation and AASB 101 Presentation of Financial Statements 150 Australian Additions to, and Deletions from IFRSs 151 Proposed Amendments to AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards – Cost of an Investment in a subsidiary 152 Proposed Amendments to AASB 124 – Related Party Disclosures – State-controlled Entities and the Definition of a Related Party 153 Proposed Amendments to AASB 102 – Inventories Held for Distribution by Not for Profit Entities 154 Financial Reporting by Whole of Governments 155 Proposals Arising from the Short-term Review of the Requirements in AAS 27, AAS 29 and AAS 31” 156 Joint Arrangements 157 Proposed Amendments to AASB 139 Financial Instruments: Recognition and Measurement – Exposures Qualifying for Hedge Accounting 158 Proposed Improvements to Australian Accounting Standards 159 Proposed Amendments to AASB 1 First-time Adoption of International Financial Reporting Standards and AASB 127 Consolidated and Separate Financial Statements - Cost of an Investment in a Subsidiary, Jointly-Controlled Entity or Associate 160 Proposed Amendments to AASB 2 Share-based Payment and AASB Interpretation 11 AASB 2 - Group and Treasury Share Transactions - Group Cash-settled Share-based Payment Transactions 161 Proposed Amendments to Key Management Personnel Disclosures by Disclosing Entities 162 Proposed Amendments to AASB 1049 for Consistency with AASB 101 163 An improved Conceptual Framework for Financial Reporting: The Objective of Financial Reporting and Qualitative Characteristics and Constraints of Decision-useful Financial Reporting Information 164 Proposed Improvements to Australian Accounting Standards 165 Simplifying Earnings per Share: Proposed Amendments to AASB 133 166 Discontinued Operations: Proposed Amendments to AASB 5 167 Additional Exemptions for First-time Adopters: Proposed amendments to AASB 1 168 Improving Disclosures about Financial Instruments: Proposed amendments to AASB 7 169 Relationships with the State Proposed amendments to AASB 124 170 Consolidated Financial Statements 171 Embedded Derivatives (Proposed Amendments to AASB Interpretation 9 and AASB 139) 172 Investments in Debt Instruments (Proposed Amendments to AASB 7) 173 Amendments to Australian Accounting Standards to facilitate GAAP/GFS Harmonisation for Entities within the GGS 174 Post-implementation Revisions to AASB interpretations 175 Proposed Amendments to Australian Accounting Standards - Borrowing Costs of Not-for-Profit Public Sector Entities 176 Derecognition (Proposed Amendments to AASB 139 and AASB 7) 177 Income tax 178 Superannuation Plans and Approved Deposit Funds 179 Income from Non-exchange Transactions (Taxes and Transfers) 180 Fair Value Measurement 181 Prepayments of a Minimum Funding Requirement 182 Management Commentary 183 Financial Instruments: Classification and Measurement 184 Rate-regulated Activities 185 Classification of Rights Issues (proposed amendment to AASB 132) 186 Discount Rate for Employee Benefits (proposed amendments to AASB 119) 187 Improvements to IFRSs 188 Financial Instruments: Amortised Cost and Impairment 189 Limited Exemption from Comparative AASB 7 Disclosures for First-time Adopters (proposed amendment to AASB 1) 190 Measurement of Liabilities in AASB 137 (Limited re-exposure of proposed amendment to AASB 137) 191 Revised Differential Reporting Framework 192 Conceptual Framework for Financial Reporting: The Reporting Entity 193 Request for Comment on IPSASB Exposure Draft 'Service Concession Arrangements: Grantor’ 194 Defined Benefit Plans (proposed amendments to AASB 119 195 Fair Value Option for Financial Liabilities 196 Exposure Draft 197 – Presentation of Items of Other Comprehensive Income 197 Revenue from Contracts with Customers 198 Measurement Uncertainty Analysis Disclosure for Fair Value Measurements (Limited re-exposure of proposed disclosure 199 200A Proposals to Harmonise Australian and New Zealand Standards in Relation to Entities Applying IFRSs as Adopted in Australia and New Zealand 200 200B Proposed Separate Disclosure Standards

 

Summer 2011-12

ASSIGNMENT

 

 

This assignment can either be completed in pairs or individually and constitutes 25 per cent of the marks in this unit. All four parts are to be completed. Due Date – Monday, 23 January 2012 at 4:00 pm.

 

Assessment Criteria:

 

Student work will generally be assessed in terms of the following criteria:

 

1. Effectiveness of communication - ie readability, legibility, grammar, spelling, neatness, completeness and presentation will be a minimum threshold requirement for all written work submitted for assessment. Work that is illegible or incomprehensible and does not meet the minimum requirement will be awarded a fail grade.

 

2. Demonstrated understanding - This will be evidenced by the student's ability to be dialectical in the discussion of contentious issues. Few, if any, accounting concepts are scientific facts and stereotype answers will demonstrate poor understanding on the part of the student.

 

3. Evidence of research - This will be evidenced by the references made to the statutes, accounting standards, books, journal articles and inclusion of a bibliography.

 

Note:

 

1. All written work must conform with the University of Ballarat General Guide for the Presentation of Academic Work.

 

2. For all written work students must ensure that they submit their own original work. Any act of plagiarism will be severely penalised.

Part A (7.5 marks)(1,000 words)

As accounting standards globalise, the standard setting bodies face the challenge of accommodating the Islamic prohibition on interest, and other aspects of Sharia law, into money making.

 

There are two contrasting views on how to account for Islamic financial transactions.

 

A separate set of Islamic accounting standards is required; or

International Financial Reporting Standards can be applied to Islamic financial transactions.

 

The differing approaches to accounting for Islamic financial transactions can be generally attributed to opposing views on two main points of contention.

 

The acceptability of reflecting a time value of money in reporting an Islamic financial transaction; and

The conventional approach of recognising and measuring the economic substance of a transaction, rather than its legal form.

 

Discuss

 

Part B (10 marks) (1,200 words)

In the Australian accounting sphere the concept of due process is applied within the institutional arrangements for regulating financial reporting and falls particularly within the promulgation of accounting standards. 

 

What is due process.

 

Is there a difference in due process in law and the due process as applied within the accounting standard setting regime

 

What is procedural due process and substantive due process. Is there a difference and if so what is it.

 

 

 

 

 



Part C (7.5 marks) (1,000 words)

It is well documented that the setting of accounting standards is the outcome of a political, rather than a technical or economic, process. Regulatory bodies endeavour to balance the competing demands and views of lobbyists, while also being mindful of their own situation and the extent to which their activities fall within the ambit of their political masters.

 

If accounting rules have widespread and significant economic and social implications, then proposed accounting rules would be of interest to many individuals and groups, whose wealth and welfare may be affected. 

 

Lists of Exposure Drafts 

 

 

Proposed Amendments to AASB 132 Financial Instruments: Presentation and AASB 101 Presentation of Financial Statements 150   

Australian Additions to, and Deletions from IFRSs 151   

Proposed Amendments to AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards – Cost of an Investment in a subsidiary 152   

Proposed Amendments to AASB 124 – Related Party Disclosures – State-controlled Entities and the Definition of a Related Party 153   

Proposed Amendments to AASB 102 – Inventories Held for Distribution by Not for Profit Entities 154   

Financial Reporting by Whole of Governments 155   

Proposals Arising from the Short-term Review of the Requirements in AAS 27, AAS 29 and AAS 31” 156   

Joint Arrangements 157   

Proposed Amendments to AASB 139 Financial Instruments: Recognition and Measurement – Exposures Qualifying for Hedge Accounting 158   

Proposed Improvements to Australian Accounting Standards 159   

Proposed Amendments to AASB 1 First-time Adoption of International Financial Reporting Standards and AASB 127 Consolidated and Separate Financial Statements - Cost of an Investment in a Subsidiary, Jointly-Controlled Entity or Associate 160   

Proposed Amendments to AASB 2 Share-based Payment and AASB Interpretation 11 AASB 2 - Group and Treasury Share Transactions - Group Cash-settled Share-based Payment Transactions 161   

Proposed Amendments to Key Management Personnel Disclosures by Disclosing Entities 162   

Proposed Amendments to AASB 1049 for Consistency with AASB 101 163   

An improved Conceptual Framework for Financial Reporting: The Objective of Financial Reporting and Qualitative Characteristics and Constraints of Decision-useful Financial Reporting Information 164   

Proposed Improvements to Australian Accounting Standards 165  

  

Simplifying Earnings per Share: Proposed Amendments to AASB 133 166   

 Discontinued Operations: Proposed Amendments to AASB 5 167   

Additional Exemptions for First-time Adopters: Proposed amendments to AASB 1 168   

Improving Disclosures about Financial Instruments: Proposed amendments to AASB 7 169   

Relationships with the State Proposed amendments to AASB 124 170   

Consolidated Financial Statements 171   

 Embedded Derivatives (Proposed Amendments to AASB Interpretation 9 and AASB 139) 172   

 Investments in Debt Instruments (Proposed Amendments to AASB 7) 173   

 Amendments to Australian Accounting Standards to facilitate GAAP/GFS Harmonisation for Entities within the GGS 174   

Post-implementation Revisions to AASB interpretations 175   

Proposed Amendments to Australian Accounting Standards - Borrowing Costs of Not-for-Profit Public Sector Entities 176   

Derecognition (Proposed Amendments to AASB 139 and AASB 7) 177   

Income tax 178   

 Superannuation Plans and Approved Deposit Funds 179   

 Income from Non-exchange Transactions (Taxes and Transfers) 180   

Fair Value Measurement 181   

Prepayments of a Minimum Funding Requirement 182   

Management Commentary 183   

Financial Instruments: Classification and Measurement 184   

Rate-regulated Activities 185   

Classification of Rights Issues (proposed amendment to AASB 132) 186   

Discount Rate for Employee Benefits (proposed amendments to AASB 119) 187   

Improvements to IFRSs 188   

Financial Instruments: Amortised Cost and Impairment 189   

Limited Exemption from Comparative AASB 7 Disclosures for First-time Adopters (proposed amendment to AASB 1) 190   

Measurement of Liabilities in AASB 137 (Limited re-exposure of proposed amendment to AASB 137) 191   

Revised Differential Reporting Framework 192   

Conceptual Framework for Financial Reporting: The Reporting Entity 193   

Request for Comment on IPSASB Exposure Draft 'Service Concession Arrangements: Grantor’ 194   

Defined Benefit Plans (proposed amendments to AASB 119 195   

Fair Value Option for Financial Liabilities 196   

Exposure Draft 197 – Presentation of Items of Other Comprehensive Income 197   

Revenue from Contracts with Customers 198   

Measurement Uncertainty Analysis Disclosure for Fair Value Measurements (Limited re-exposure of proposed disclosure 199   

200A Proposals to Harmonise Australian and New Zealand Standards in Relation to Entities Applying IFRSs as Adopted in Australia and New Zealand 200   

200B Proposed Separate Disclosure Standards  

 

Choose ten Exposure Drafts between ED150 and ED200 and comment on who is submitting (Go to the AASB site) and any other generalities you consider interesting.