Complete the 2 questions given below. A total of 50 marks are allocated to the questions below, which will then be converted to 15% in total. All workings, when appropriate, must be shown to substantiate your answers. Question 1 [35 marks] The regulatory environment for financial reporting You are a member of a large accounting firm which is responsible for preparing financial reports, including statements and notes to the accounts; and for advising staff in client firms who are responsible for preparing financial reports. The firm only deals with large Australian companies listed on the Australian Stock Exchange. One of your key tasks is to monitor the changes and developments in the financial reporting environment and summarise them in a regularly published newsletter. Required: Prepare a 2 page newsletter that identifies and summarises developments and changes in the financial reporting environment for the period June to August 2015, inclusive. Detailed guidelines for completing this question: 1. Monitoring of changes and developments This will involve regular monitoring of a number of sources over the required period. The sources should be varied in range, as you will need to identify and consider developments/changes relating to: Technical issues such as issue of new accounting standards, exposure drafts or other pronouncements or interpretations. Regulation and monitoring of financial reporting. Political influences or other potential developments (such as identification of any reporting failures) that could impact or may be of interest to staff (such as Enron or Parmalat failure). '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. A section on 'international' items/developments must be included in the newsletter. 2. Potential sources Given the scope of the potential influences on financial reporting you will need to monitor a range of sources. Below is a list of sources that may be of interest, note that this list is not exhaustive, you should search for sources outside of these. You 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: (i) 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 in Australia and New Zealand CPA Australia International Accounting Standards Board Financial Accounting Standards Board Websites of large accounting firms. (ii) Professional publications: In the Black (CPA) Acuity (CAANZ) (iii) Newspapers/journals 3. Contents The restriction of a 2 page newsletter means that you need to use your own judgement as to whether to include information about specific changes and 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). The purpose of the newsletter is to alert staff to changes and developments that may impact on their work and provide enough information about these changes/developments to satisfy the following: For staff (the intended audience) to understand the nature of the development/change and its potential impact (so staff can decide whether they need to investigate further given the nature of their own work), Provide sufficient information for staff to be able to obtain further information on the development/change if they wish to, The newsletter should where possible be in your own words with sources adequately referenced using the appropriate referencing system. Some examples of significant items to be considered include: Revised or reissued accounting standards or interpretation (both national and international), ASIC reviews on financial reporting, New ASX disclosures for listed companies. Given the target audience, it would be assumed that they have a working knowledge of common terms and abbreviations (such as AASB, FASB) so abbreviations may be used. Don't be afraid to be creative. The effectiveness of a newsletter is impacted by how interesting the readers find it.