Qualitative characteristics of relevance and reliability

Reference no: EM1378834

Question 1

"Much has been written in previous years about the politicisation of the accounting standards-setting process. Politicisation has occurred because the financial reports of entities impact on a number of competing economic interests in society". What is meant by the politicisation of accounting standards?

Illustrate your answer with examples of various „political pressures? that may arise in the standard-setting process.

Question 2

The International Accounting Standards Board (IASB) releases International Financial Reporting Standards (IFRS). IFRS are adopted directly by some countries, whilst others (such as Australia) release standards under the name of their domestic accounting standard setter, but based upon the standards issued by the IASB. Debate the arguments for and against an individual country adopting IASB standards as the basis for its local accounting rules?

Question 3

The AASB Framework (paragraphs 24-46) specifies four basic qualitative characteristics, all of which are needed to present a 'true and fair' view of a company?s financial affairs. These characteristics are:

1. Understandability
2. Relevance
3. Reliability
4. Comparability.

(a) Explain clearly why each of the qualitative characteristics discussed in the IASB conceptual framework is important. Which characteristic or characteristics do you think are the most important? Why?

(b) Why is there frequently a conflict between the qualitative characteristics of relevance and reliability?

Requirements

You are required to write an essay based on the above topic (by answering the questions). This assessment is an individual assignment and you should complete the assignment in order to pass the course. When preparing your assignment, you should refer to the assessment criteria listed below as well as to any relevant advice posted on the course website by the Course Coordinator. It is your responsibility to check the Moodle website at least weekly.

Reference no: EM1378834

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