Task In your accounting career you will be required to analyse current accounting issues and communicate your theoretical understanding to your professional colleagues and your clients. For this...

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Task


In your accounting career you will be required to analyse current accounting issues and communicate your theoretical understanding to your professional colleagues and your clients. For this assignment assume that you are the senior accountant working for a major firm.



Question1 - 9 marks (1,500 words)



The CEO has forwarded to you an interesting article and requires you to provide her with a deeper theoretical understanding of the issues discussed so that she can fully engage in the lively discourse at an upcoming conference.


You are required to find a newspaper article or web page report of an item of accounting news, i.e. it refers to a current event, consideration, comment or decision that has been published after the 1st of January 2018. Your article could also come from one of the professional journals. The article should not come from an academic journal. Academic journals generally do not contain news articles or articles of less than one page and are usually only published 2 or 4 times a year. If you are having a problem ensuring that your article is from an appropriate source contact your subject coordinator.


You then need to explain the article that you have found in your own words and clearly relate the concepts, ideas and facts within the article to one or more of the theories or topics that you have studied this session. Support your analysis of the assumptions and implications of the topic or theory as appropriate with reference to sources in APA 6 style. For example,thisarticle from the Sydney Morning Herald in April 2016 could be linked to the topics of accounting regulation and measurement (and perhaps others). You must provide a copy of the article or web page, with details of the source, date and page number with your answer.



Question 2 - 10 marks (1,500 words)



The Senior Partner of the firm you work for has appointed you to a new role. It is now your responsibility to review upcoming accounting standards and provide a report to the partners on the proposed standard and the opinions of other industry players on the changes.


Firstly, you are required to find a current exposure draft or proposal for a new accounting standard which has been opened for public comments. (These can be found on the websites of most standard-setting organisations, such as the IASB, AASB and FASB. Hint: These websites can be quite difficult to navigate, so as a first step try typing “IASB exposure draft and comment letters”/”FASB exposure draft and comment letters” into Google or other search engine of your choice). Read a sample of the comments from a range of respondents. Select four respondents, ideally from different types of organisations for example, from accounting bodies, industry, companies or corporate bodies. If you are having a problem finding suitable comments letters then contact your subject coordinator.
In your own words, supporting your evaluation with appropriate citations, appropriately referenced in APA 6 style, you are required to include the following information in the report.



  • An outline of what the exposure draft is introducing or changing.

  • An assessment as to whether the exposure draft is being introduced in the ‘public interest’.

  • An outline of the views presented in the comments letters which highlights the areas of agreement and disagreement with the exposure draft and/or other comments letters.

  • An assessment (with relevant examples) as to whether the comments letters utilise any of the arguments 'for' or 'against' regulation.

  • An application of each of the theories of regulation (public interest, private interest and capture) to the comments letters and a justification as to which theory(ies) is most effective at explaining the comments and which theory(ies) is least effective at explaining the comments.


Please note: you need to attach the comment letters you selected for your report (there is no need to attach the exposure draft)


Answered Same DayMay 06, 2020ACC518Charles Sturt University

Answer To: Task In your accounting career you will be required to analyse current accounting issues and...

Aarti J answered on May 09 2020
145 Votes
Accounting and Exposure analysis
Course Name
Course Date
Student’s Name
Accounting and Exposure Analysis        16
Accounting and Exposure Analysis
Task 1:
General Electric under surveillance
Introduction
General Electric a one of the biggest companies which is indulged in wide range of operations. The company has wide divisions, ranging from aircraft engines, electronic equipment and financial services. Headquarters are in Boston. The company came into existence in 1892 and has been in this industry from more than last one decade. Considering the d
iversified portfolio of General Electric, we cannot say that the company operates in one industry. The company operates in more than one industry with its diversified portfolio.
Story and news article
The news article taken for analysis is the ‘G.E. Reports $9.8 billion loss and discloses SEC accounting inquiry’ written by Steve Lohr and was published on 24th Jan’ 2018 in the New York Times.
The news article stated, that company has reported a loss of $9.8 billion in the last quarter and the company also disclosed that on the basis of this loss, the Securities and Exchange Commission has opened an investigation to analyse the handling of insurance obligations and service contracts. The company declared that Securities and Exchange Commission has opened an investigation into the company which is handling the insurance obligations and service contracts. The loss includes a big charge for the insurance obligation and around $3.5 billion charge is related to the tax law. As per the reports, many other companies have done this to evade the taxes. With this, the earnings per share of the company came down to 2 cents from 27 cents in a quarter which is a decline of 41% in a quarter.
Reporting and Accounting inquiry
In the recent reporting of the quarterly results of the company, the company has reported a loss of $9.8 billion in the quarter. The loss reported by the company came as a shock to the market as well as to the investors. With the announcement of the loss, the share prices of the company has tremendously fallen down. The share prices slashed down to $12 after the reporting of the huge losses from the price of $30 per share.
The company declared that Securities and Exchange Commission has opened an investigation into the company which is handling the insurance obligations and service contracts. The loss includes a big charge for the insurance obligation and around $3.5 billion charge is related to the tax law. As per the reports, many other companies have done this to evade the taxes.
With this, the earnings per share of the company came down to 2 cents from 27 cents in a quarter which is a decline of 41% in a quarter. The major issue that the SEC is spectacle about is issue related to the GE’s revenue recognition practices. Apart from this the other issue that is being highlighted is GE’s contract assets which are likely to be over stated.
The company has also agreed that the company has not follows the new accounting standards and the company will be restating its 2016 and 2017 financial reports (Lohr Steve, 2018)
GE has also been accused and fined for incorrect accounting policies and accounting fraud in 2009. In the year 2009, the company had been inflating its earnings and revenue, the earnings and revenues was inflated for the year 2002 and 2003, which led to increased reporting and incorrect reporting. With the inflated reporting, the company has misled the investors. In the year 2009, the SEC had reported four violations in the year 2009 which included false bookkeeping for different investments. For this the company had to pay $50 million to settle the charges. That year the company did not agree nor it denied for the false accounting practices (Matt Krantz, 2009)
Revenue recognition related to service agreement is the concerning area for SEC as the aggressive accounting by the company can hide a deterioration in a business line. The SEC stated, that the revenues reported by the company needs to be material where the company lacks. The company has been recording the revenues without considering the revenue recognition principle and have been concerned about increasing its revenue.
IFRS 15 Revenue recognition from contracts with the customers and ASC 606 As per the accounting standard and codification
The revenue recognition principle states that the company should recognize the revenue when the services against the same is rendered. As per the new issue of the FASB board, the new guidelines includes: As per the new rule, the inconsistency and the weakness in the existing revenue requirements have been removed. The new rule issues a new and the improved framework to address the issues for revenue recognition. With the new principle of accounting, the company’s new revenue recognition will help in improving the comparability and comparing the financials with the competitors. The new rule also simplifies the preparation of the financial statements.
“The concept of a completed contract is used when applying the practical expedients available under the transition options, which help to simplify how contracts are restated or reduce the number of contracts to be restated” (ASC 606)
The companies have two options for reporting its revenue, it includes the retrospective method where the entities will be recognizing the application of the new standard on the start of the earliest period presented. The other method is the cumulative effect method where the company will apply cumulative effect on applying the...
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