Reference no: EM132600002

ACCT6007 Financial Accounting Theory and Practice - Laureate International Universities

Assessment : Case Study

Learning Outcome 1: Identify the underlying social and corporate imperatives that underlie the accounting conceptual framework.

Learning Outcome 2: Identify the key players in Australian financial reporting regulation and articulate the relationship between International Financial Reporting Standards (IFRSs) and Australian Accounting Standards (AASs).

Learning Outcome 3: Explain the relationship between accounting theory, the accounting conceptual framework and accounting standards.

Learning Outcome 4: Work individually and in groups to identify and apply appropriate accounting standards to a range of authentic accounting scenarios.

Part A Task 1
The AASB Accounting Conceptual Framework provides six qualitative characteristics, including two fundamental and four enhancing qualities.
Utilising AASB Conceptual Framework and relevant evidence, compare and contrast ‘relevance' and ‘faithful representation' qualities. Discuss whether there is a trade- off between the two or they can be considered equally important.

Task 2
In an article that appeared in The Australian on 28 July 2014 entitled ‘Southern Cross CFO quit over write-down' (by Darren Davidson) it was reported that:

Mr Lewis joined Southern Cross after it issued a profit downgrade in May. The owner of the 2DayFM radio network said that it expected full-year net profit to fall 10 per cent below the previous year's underlying NPAT of $89 million. Although the company's gearing remains within its banking covenant of less than 3.5 times earnings before interest, taxes, depreciation and amortisation, there is concern in the market the company is slipping into a danger zone with its debt covenants. Some market analysts believe that if revenues continue to deteriorate, gearing of above three times EBITDA could trigger a breach of banking covenants.
REQUIRED
Critically analyse the above scenario using Positive Accounting Theory.

Task 3
In 2016, the Australian Government established an inquiry into corporate social responsibilities with the aim of deciding whether the Corporations Act should be amended so as to specifically include particular social and environmental responsibilities within the Act. At the completion of the inquiry it was decided that no specific regulations would be added to the legislation, and that instead, ‘market forces' would be relied upon to encourage companies to do the ‘right thing' (that is, the view was expressed that if companies did not look after the environment, or did not act in a socially responsible manner, then people would not want to consume the organisations' products, and people would not want to invest in the organisation, work for them, and so forth. Because companies were aware of such market forces they would do the ‘right thing' even in the absence of legislation).
REQUIRED
Critically analyse the decision of the Australian Government not to regulate social and environmental responsibilities from the perspective of the Public Interest Theory and Capture Theory.

Part B: Video Presentation
Prepare a short video presentation explaining your approach to each task in Part A. Summarise main conclusions reached as the result of your research and analysis. You will be assessed on your understanding and application of the knowledge as well as the presentation itself.

Attachment:- Financial Accounting Theory and Practice.rar