Solve, the following questions with clear explanations.This question is complete.

QUESTION ONE:

In 2004, the IASB and FASB signed a MoU (Memorandum of Understanding) to achieve convergence of their Conceptual Frameworks.

Required:

Discuss to what extent you believe that a Conceptual Framework is needed. Critically discuss the efforts made by international regulators to amend the contents and elements of this Framework in order to enhance its usefulness.

QUESTION 2

The European Commission has in its latest update issued on 13 December 2016 stated the following: "Large public-interest entities (listed companies, banks, insurance undertakings and other companies that are so designated by MemberStates) with more than 500 employees should disclose in their management report relevant and useful information on their policies, main risks and outcomes relating to at least:

environmental matters,

social and employee aspects,

respect for human rights,

anti-corruption and bribery issues,

diversity in their board of directors.

There is significant flexibility for companies to disclose relevant information (including reporting in a separate report), as well as they may rely on international, European or national guidelines (e.g. the UN Global Compact, the OECD Guidelines for Multinational Enterprises, ISO 26000, etc.)."

Required:

With reference to the above EC extract, discuss to what extent you believe that it is important for firms to provide information on non-financial performance. Explain how such information could be disclosed in public-interest entities' annual reports.

QUESTION 3

'IAS19, Employee Benefits, was introduced to improve the quality of reporting for companies who sponsored defined benefit pension schemes. However, the unintended consequences of the introduction of IAS 19 may have a significant impact on both future pensioners and for the State.'

Required:

Discuss to what extent you agree with the above comments.

QUESTION 4

'IFRS 9, Financial Instruments, which will replace IAS 39, Financial Instruments: Recognition and Measurement, is effective for periods beginning on or after 1 January 2018...[and] will lead to significant changes in the accounting for financial instruments.'

Barclays plc, Annual report 2015, p261.

Required:

Discuss to what extent you believe that these 'significant changes' will result in improvements in the transparency and usefulness of the financial statements of banks and other financial institutions.

QUESTION 5'This article has considered how [Social and Environmental Accounting] SEA is perceived and constructed within three very different frames of reference. It has highlighted the tensions and contradictions among the various social actors that have an interest in this field. In doing so we hope that we have provided a more complete picture than accounts that focus on a single frame of reference. SEA is an interpretively complex field. These competing perspectives - business case, stakeholder accountability and critical theory - have important implications for the social realities we construct, embed or seek to change' (Brown & Fraser, 2006).

Brown, J., & Fraser, M. (2006). Approaches and perspectives in social and environmental accounting: an overview of the conceptual landscape. Business Strategy and the Environment, 15(2), 103-117.

Required:

As stated in the above quote, Brown and Fraser (2006) identify three perspectives on Social and Environmental Accounting. You are required to critically evaluate the key assumptions of the three case studies presented, and discuss their differences providing relevant 'real-life' examples.

QUESTION 6'The [IASBs] due process procedures were not the objective, transparent, and representative measures they are claimed to be. Rather, the due process provided a forum within which powerful and self-interested constituents and constituent coalitions could contribute to and capture the standard-setting process in order to secure favourable regulation ...' (Cortese et al., 2010. 85)

Cortese, C. L., Irvine, H. J., & Kaidonis, M. A. (2010). Powerful players: How constituents captured the setting of IFRS 6, an accounting standard for the extractive industries. Accounting Forum, 34, 2, pp. 76-88.

Required:

In light of the above quote, critically evaluate the role of the IASB, considering the issues and benefits of their processes.

QUESTION 7

'It is 25 years since LCP started publishing the analysis of FTSE 100 pension disclosures. Much has changed since then. In 1993, virtually all FTSE 100 companies offered final salary pensions to their new hires; now not a single one does. For some companies, the financial position of the pension scheme vitally affects the health of the company.'

LCP 2018, p2. LCP, Accounting for Pensions - Spring 2018.

Required:

Discuss to what extent you believe that the introduction of IAS19, Employee Benefits, has been responsible for the decline and abolition of the defined benefit schemes of many companies.

QUESTION 8

The IASB has based IFRS9, Financial Instruments, on a mixed model approach. This model requires companies to normally report equity-based and debt-based financial instruments under different methods.

Required:

Carefully explain the aims of IFRS9 and discuss the nature and application of the classification 'tests' involved in applying this 'mixed-model' reporting.

[In your answer you should also discuss whether adoption of a 'single model' approach would usefully simplify the reporting of financial instruments.]

QUESTION 9

Benston, Bromwich and Wagenhofer (2006) argued that as the SEC moves towards a principles-based approach a major '...the shortcoming is the dismissal of a true-and-fair override that we argue is a necessary requirement for any standard-setting approach'.

Required

Discuss the extent to which the true and fair override is necessary for standard-setting and financial reporting.

QUESTION 10

Bengtsson (2011) argued that "the global financial crisis contributed to a Repoliticization of accounting standard-setting... since the crisis, a rebalancing of power has occurred, where political actors have gained influence at the expense of other stakeholders".

Required:

Discuss the influence that the Global Financial Crisis had on the IASB and the extent to which you agree that there has been a rebalancing of power since the crisis.

QUESTION 11

'... accounting played a part in the pension change [from a defined benefit to a defined contribution scheme]. For example, the way pensions were accounted for (by)...IAS 19 (Accounting for Employee Benefits), leading to particular disclosures in the balance sheet, motivated the change. Companies were concerned about the impact of the liabilities disclosed on the face of the balance sheet arising from pension deficits and the image this portrayed of financial stability'. p34.

[Josiah, J. et al (2014), Corporate Reporting Implication in Migrating from Defined Benefit to Defined Contribution Pension Schemes: A Focus on the UK. Accounting Forum, 38(1) 18-37.]

Required:

Discuss to what extent you believe that accounting regulators are responsible for many organisations changing their provision of employee pensions from defined benefit to defined contribution schemes. In addition, explain what you consider may be the financial and social implications of this move to defined contribution schemes for employees on retirement.

QUESTION 12

IFRS 9, Financial instruments, which became applicable on 1st January 2018 is based on a 'mixed measurement' model for the reporting of both equity-based and debt-based assets and liabilities.

Required:

Discuss what you understand by this 'mixed measurement model' and explain the nature of the two tests that assist in determining the reporting of different categories of financial assets and liabilities.

Explain how and why IFRS9 has introduced changes to the reporting of companies' 'own credit adjustments' (debt valuation adjustments) for financial liabilities.

[) Find the slope of the budget line and call this the marginal opportunity cost of bread in terms of cheese. This is the amount of cheese Lisa is able to trade to get an addition unit of bread (rate at which she is able to exchange cheese for bread). g) Set the marginal opportunity cost equal to the marginal rate of substitution to solve for Lisa's utility maximizing consumption bundle. Label the point on the graph and the corresponding optimal consumption bundles on the appropriate axis. h) Find Lisa's utility at the optimal bundle by substituting the bundle back into the utility function [1]. Put a star on the utility maximizing IC. i) Comparative Statics: Suppose that there is a cheese monopoly and the Competition Bureau decides to regulate by putting a cap on the price of cheese which falls to 1.5 S/unit. Illustrate what happens to the budget line and the new optimal bundle. Plot the new IC accurately but you may simply sketch the new optimal IC. No calculation is needed although you may wish to do this for extra practice. Write a short paragraph to explain what happens. Please be concise but complete. i) Give your graphs and the table meaningful titles. 2) Suppose that you are sick and must take pills in a fixed proportion to feel better such that you must always take 2 blue pills (represented by x) with I red pill (represented by y). Suppose that if you take the wrong ratio, you become very ill. Assume that you are cash constrained such that within the region of your budget and a bit higher, more of both pills increases your utility, but only if they are in the correct ratio. If you buy extra pills, you may choose not to cat them but suppose they expire at the end of the week so you have to throw out any that you don't take. a) Sketch a series of indifference curves (ICs) in (x, y) space on Fig. 2 (next page). You will need to choose your axis scale and may want to use pencil initially (but may want to go over in pen). You may want to make a table to help you plot as in Question 1. b) Design a utility function of the form U(x,y) = min(ax,by) where a and b are constants. c) Suppose that the price of blue pills is $1/pill and the price of red pills is also $1/pill and you have a budget of $15 to spend on pills/week. Write down an equation for your budget line and plot it on your graph. d) Label the utility maximizing consumption levels of cach pill. No calculation required. Briefly explain your answer. c) Use the slope of the IC to find the MRS (how many y-goods you are willing to substitute to get an additional x-good) at 3 representative points on the utility maximizing IC. f) Is this an example of perfect substitutes or perfect complements