Reference no: EM133081959

You should demonstrate that you are able to select appropriate matters from the core and additional research materials, analyse them and present a cohesive set of arguments for or against the issues that have been raised in the assignment and come up with a solid conclusion.

Articulate a number of the potential benefits - at least theoretical benefits - of IFRS. Your assignment should review the readings you have been given( do see the read file attached) , together with any additional research you undertake.

The assignment requires you to critically evaluate the issues. To reiterate, critical evaluation is not just setting out the points but explaining their significance and showing how and why they help you to answer the question that has been set.

It is one matter to identify relevant materials and set out key points, it is another to assemble them in a way which makes sense. It is not uncommon for individual paragraphs to read well on a standalone basis but to lack an ongoing thread - a flow - which promotes a well-constructed assignment which makes it easier for the marker to award higher marks. In this assignment you should consider the following:

i. Set out an introduction clearly outlining what it is you are looking at, why you are looking at it, and how you intend to set about looking at it.

ii. You should address the potential benefits of IFRS and why it is important to have a transparent reporting system.

iii. Consider the need for earnings manipulation - any benefits for having this type of process? How can regulators differentiate between legitimate practice and one that deliberately attempts to lower taxable profits? Should the process be banned? Consider whether there is a process by which both of these potentially conflicting processes can work together.

iv. Are there any conflicts between the two concepts discussed above in points ii and iii.

v. Draw a conclusion based on the evidence you have produced.

vi. Ensure that all of the points above that you include, together with any others, are set within a piece of writing which is integrated and coherent and ‘flows'. Do not put forward a set of standalone paragraphs work must flow, and build up to a clear set of recommendations at the end of the work. Work that does not "flow" is likely to lead to a lower mark.

vii. Key points to remember: a) adhere to the word count and instructions regarding use of charts, diagrams, tables, etc., and b) incorporate ‘proper' referencing. Harvard-style referencing is must. Apply your referencing consistently.

QUESTION :

There are benefits, both actual and perceived, that regulators believe accrue from IFRS, in general, but specifically on those that arise from harmonisation of IFRS. These benefits include, improvements in the quality and transparency of financial reporting so that the value of earnings in a period are accurately produced and investors can be confident when using financial reports to make investment decision.

However, many focus on issues with tax avoidance by corporations and the effect this can have on stakeholders. In such circumstances, managers are effectively using earnings management techniques to report lower than actual profits. These techniques may be allowable within the reporting regulatory framework but could adversely affect the transparency of reporting.

When reviewing the two paragraphs above there appears to be a conflict of interest. On the one hand IFRS is designed to improve the information obtained by financial reporting but on the other hand it is still possible for firms to undertake earnings management with the deliberate intention of reducing tax liabilities.

Required - What to answer in the assignment based on the question given above :

Discuss the issues raised by the apparent conflict between the application of IFRS, with the benefits it provides, with earnings management which is designed to avoid paying corporation tax liabilities. Consider if there is justification for allowing any form of earnings management within IFRS.

A ) Introduction

Introduction clearly outlining what it is you are looking at, why you are looking at it, and how you intend to set about looking at it.

b) The potential benefits of IFRS and importance of having a transparent reporting system.

Discuss the benefits, both actual and perceived, that regulators believe accrue from IFRS, in general, but specifically on those that arise from harmonisation of IFRS. These benefits include, improvements in the quality and transparency of financial reporting so that the value of earnings in a period are accurately produced and investors can be confident when using financial reports to make investment decision

c) Earning Manipulations

Consider the need for earnings manipulation - any benefits for having this type of process? How can regulators differentiate between legitimate practice and one that deliberately attempts to lower taxable profits? Should the process be banned? Consider whether there is a process by which both of these potentially conflicting processes can work together.

d) Tax avoidance caused by earning manipulations

issues with tax avoidance by corporations and the effect this can have on stakeholders. In such circumstances, managers are effectively using earnings management techniques to report lower than actual profits. These techniques may be allowable within the reporting regulatory framework but could adversely affect the transparency of reporting

e) The conflicts

Discuss the conflicts. There appears to be a conflict of interest. On the one hand IFRS is designed to improve the information obtained by financial reporting but on the other hand it is still possible for firms to undertake earnings management with the deliberate intention of reducing tax liabilities.

Also address how to tackle such conflicts if they can be tackled.

f) Other factors to consider

Discuss any other factors related to the topics in this assignment if any.

Identify who is beneficial / vulnerable in tax avoidance and IFRS? You will find that two sets of beneficial and vulnerable people overlap. Hence, you are better to focus on stakeholders approach instead of shareholders approach. Based on these factors, Tax avoidance & IFRS can be linked up with concept of the CSR.

Also discuss other factors you deem necessary for this assignment.

g) Conclusion

Draw a conclusion based on the evidence you have produced by discussing both sides. Your opinion with sufficient academic/real-world figure supporting Consider if there is justification for allowing any form of earnings management within IFRS.

f) References as per Harvard referencing

Attachment:- Transparent reporting system.rar