Discuss the requirements according to the respective accounting standard related to disclosures of sources of estimation uncertainty and judgments in applying accounting policies

As a new accounting graduate, you have just joined the financial reporting unit of a company* listed on the S&P/ASX200 index when your boss, the Chief Financial Officer (CFO), approaches you with your first task. In their last meeting, the Board of Directors of your company has discussed ASIC’s press release 14-332MR ASIC’S areas of focus for 30 June 2014 financial reports. The attachment to this press release contains the following item (ASIC (2014): Attachment to 14-332MR: ASIC’s areas of focus for 30 June 2014 financial reports. Last viewed 24 March 2015:

http://asic.gov.au/about-asic/media-centre/find-a-media-release/2014-releases/14-332mr- attachment-findings-from-30-june-2014-financial-reports/

8. Estimates and accounting policy judgements

We observed instances where entities needed to improve the quality and completeness of disclosures in relation to estimation uncertainties and significant judgments in applying accounting policies. The disclosure requirements are principle-based and should include all information necessary for investors and others to understand the judgments made and their impact. This may include key assumptions, reasons for judgments, alternative treatments, and appropriate quantification.

These disclosures are important to allow users of the financial report to assess the reported financial position and performance of an entity.

Following the approval of a new international auditing standard, auditors will be required to disclose information on key audit matters in future audit reports. Directors should ensure that relevant information is already disclosed in the financial report and in the Operating and Financial Review.

The Board was concerned about the company’s reputational standing in the market if ASIC found any deviations from AASB requirements in this matter and therefore decided to have a review of the relevant disclosures in the company’s annual report undertaken as recommended by ASIC, responsible Board member: CFO.

Required;

Based on this Board’s decision, the CFO asks you to draft a business research report addressed to the Board of Directors on the following:

a. the requirements according to the respective accounting standard related to disclosures of sources of estimation uncertainty and judgments in applying accounting policies (10 marks)

b. the current accounting practice of your company regarding these disclosures (15 marks)

c. any potential gap between your company’s current practice and the accounting standard requirements (10 marks)

d. recommended actions to satisfy the potential ASIC reviewers in case there have been some gaps between the company’s current practice and the accounting standard requirements (5 marks)

You need to choose a suitable company from: . Please make sure that you choose one with sufficient disclosures around accounting estimates and policies.

You need to attach a copy of the relevant parts of the annual report (displaying in full all parts of the Notes you have used and referred to in your report). Do not attach the entire annual report.

You are also required to follow the instructions for the Research Based Case Study and Report as provided in a separate document on the ACCG923 iLearn website.

Formal requirements:

Structure: Include a report cover page (not to be confused with the assessment cover sheet as described below), a table of contents, an executive summary and a list of references. You may include an appendix if necessary.

Length: The minimum total word length of the assignment is 1,500 and the maximum total word length is 1 600 words. Cover sheet, table of contents and appendices will not be counted in the word count. Please write the number of words used in the assignment after the table of contents.

Font/print: The assignment should be one and a half spaced in ‘Times New Roman’ font type and font size 12.

Referencing: You are expected and required to use references to support your report, for example, textbooks, accounting standards and other reporting guidelines, journal articles and other academic literature. Any sources of information that you have used must be referenced using the Harvard Referencing System (click to download).

Plagiarism: It is extremely important that you are familiar with the university policy on Academic Honesty (Plagiarism) (click to view the policy online).