214 Accounting: Business Reporting for Decision Making
Required
a. Discuss when a liability should be classified as a current liability.
b. Explain why Centro’s debt should have been classified as short-term.
c. Outline the duties of directors in relation to the financial statements.5.55 The following article refers to the ‘goodwill glob’ and implies that it produces data that lacks
serviceability.
Some day someone is likely to challenge a witness on whether the data in a company’s financials
that ASIC has let through... yield the indicators for which it is habitually used to determine. And the
honest, under oath answer will have to be ‘no’. That means it is neither true or fair in any meaningful
sense for the products of many of the current standards fail miserably. They contain fictions.
Source: Clarke, F & Dean, G 2011, ‘Fresh focus on “true and fair”’, The Australian Financial Review, 29 June, p. 63.a. Provide a counter argument to that of the financial statements containing fictions.
b. Each year ASIC conducts a surveillance program of companies’ financial reporting. Identify the
areas that ASIC focused on in its most recent surveillance program.5.56 The most recent financial statements for the Brisbane City Council are available at
http://www.brisbane.qld.gov.au. Referring to these statements, address the following questions.
a. Discuss why the council is preparing general purpose financial statements.
b. Summarise the measurement basis for the council’s various classes of property, plant and
equipment and relate the choice of measurement to the concepts of relevance and faithful
representation.
c. Contrary to some jurisdictions, Australia has adopted a transaction neutral approach to financial
reporting. Explain the meaning of ‘transaction neutral’.
d. List two arguments for and against having a different set of accounting rules for private sector
and public sector entities.5.57 Despite Australia adopting IFRS issued by the IASB, the Australian Accounting Standards Board
(AASB) has not adopted the International Financial Reporting Standard for Small and Medium-
sized Entities (IFRS for SMEs). Instead, the AASB has introduced a differential reporting
framework, referred to as the Reduced Disclosure Requirements (RDRs).
The following publications are technical updates provided by Deloitte, an accounting firm, dis-
cussing IFRS for SMEs and the RDRs:- Deloitte Touche Tohmatsu 2009, IAS Plus Update — Simplified financial reporting — IASB
provides relief for SMEs, update, July, http://www.iasplus.com. - Deloitte Touche Tohmatsu 2010, Accounting alert 2010/02 — AASB’s ‘Reduced Disclosure
Regime’ (RDR) — no laughing matter, accounting alert, February, http://www.deloitte.com.
Required
Read the technical updates to:
a. Discuss the aims of the IFRS for SMEs.
b. Identify if and how the measurement of various asset and liability classes under the IFRS for
SMEs varies from the full IFRS principles outlined in this chapter.
c. Compare the IASB’s IFRS for SMEs approach with that of the AASB’s RDRs.
d. Analyse whether a community bank operating in Australia should be permitted to prepare its
general purpose financial statements using the RDRs.
e. Comment on any recent developments in relation to the reporting entity concept as the basis for
determining entities required to prepare general purpose financial statements.
References
Apple 2014, Annual report, p. 262, http://investor.apple.com/secfiling.cfm?filingid=1193125-14-383437&cik=.
Australian Government, Australian Accounting Standards Board 2011, AASB Standard: Fair Value Measurement, September,
http://www.aasb.gov.au/admin/file/content105/c9/AASB13_09-11.pdf.