Prudence and the conceptual framework

1. Please read paper requirement and all files before you start.
2. Please only use academic sources. use relevant AASB/IFRS to support your paper.
3. No direct quotation. Similarity should under 10%including reference list
4. Please follow the paper structure/word limit
5. I have upload PPT, Draws on relevant theory to underpin analysis;. Lecture slides are not acceptable as a source.
6. Please check your paper with the Rubric before you delivery it
7. Please use academic vocabulary, no grammar errors
8. Please give me a draft of whatever you have at least 3 days before the deadline.
9. FYI, I uploaded the course outline for you to get the overview of this course

Prudence and the conceptual framework
Scenario:
When Australia moved to IFRS in 2005, the IASB’s 1989 Framework for the Preparation and Presentation of Financial Statements replaced the Australian Statements of Accounting Concepts (SACs) 3 and 4. The IASB framework included a specific reference to “prudence” in ¶37-38 as part of the Qualitative Characteristics of Financial Statements. Some viewed this to be in direct conflict with the goals of “neutrality” ¶36 and “faithful representation” ¶33-34. Subsequently the 2010 update to the Conceptual Framework (CF) entitled “Framework for the Preparation and Presentation of Financial Statements” removed any reference to either prudence or conservatism. This new framework was adopted by the AASB on 1 July 2014.

This overturned 100 years of accounting assumptions since Paton’s (1916) seminal work in Principles of Accounting. Many in the profession expressed concern that this may open the door to overly optimistic reporting and thus potentially increase auditor’s liability.

The CF project is a work in progress, and the IASB is currently seeking public comment on their new Exposure Draft for the new CF.

Requirements:
You are in the graduate rotation program at Big Phore Partners, currently your 6 month placement is with the Financial Analysis Team (Corporate Advisory Group). A heated debate has broken out between the partners on the matter of prudence. Mr Price (Executive Director of Audit), believes prudence is a cornerstone of financial reporting, but Dr Waterhouse (Executive Director of Corporate Advisory) believes it is critical that investors get “the right information” to make “the right decision”. Executive Chair Dr Coopers believes that the firm should have an internal debate to settle the matter, and subsequently the firm should make a formal submission to the IASB on the outcome.

You have been asked to draft the initial discussion paper for Board of Executive Directors:
Part 1 Internal Audience Directors’ Brief:
Outline the context of the change, and explain the arguments for and against the re-inclusion of prudence in the new CF

Part 2 IASB Audience ED Submission:
A draft submission letter to the IASB answering to what extent does your firm support re-inclusion of prudence?

Format: Formal Business Report – Academically Referenced

Word Limit: 2500words include abstract. Words are counted by raw word count using Microsoft Word. The word count DOES include in-text references, titles, headings, dates, and abstracts. Word counts do not include the cover sheet, tables of contents, footnotes, endnotes and references in the reference list (bibliography) and other appendices. It explicitly includes the 163 words of the pro forma letter for part 2 of your assignment.

A “long essay penalty” is applied of negative one mark (8.333%) for every 100 words, or part there of, over the word limit after the first 100. For example, a submitted essay of 3,456 words will automatically lose four marks out of a total of 30 marks available.

Assessment coversheet
Coversheets are now optional do NOT count towards word limits. If you do not use one please add the following words in the header or footer of every single page.
Personal FAMILYNAME 100123456
BAC304 Advanced Accounting Theory
Assignment 2019 S2

Reference list and appendices
An appended reference list (bibliography) is mandatory. While there is no minimum or maximum number of references, a paper that cites less than 5 references would usually be considered to be under researched.

Any appended material may add weight to your argument, but will not be directly graded. The use of appendices is not mandatory.

Students MUST use the referencing style as set out by the Learning Commons. There is no choice of systems available. More information can be found at
https://holmesglen.edu.au/Students/Library/Research-and-Referencing/Referencing/

End Note is HIGHLY recommended.
http://holmesglen.libguides.com/c.php?g=243898&p=1623285

Research
The quality of citations and reference works will impact upon your final grade. A research session will be held in tutorial time. Students are encouraged to use Google Scholar <http://scholar.google.com.au> to research their assignment.

Presentation
There are marks awarded for presentation. Please see the grading rubric for further information and exact break down.

Part 2 of your work should look like this:

Big Phore Partners
Level 99
101 Collins
Melbourne VIC 3000

<DATE>

Hans Hoogervorst, Chairman
International Accounting Standards Board
30 Cannon Street
London EC4M 6XH
United Kingdom

Re: Exposure Draft ED/2015/3 Conceptual Framework for Financial Reporting

Dear Chair Hoogervorst:

On behalf of our clients and team at Big Phore Partners, we thank you for the opportunity to provide our comments on the International Accounting Standards Board’s (IASB) Exposure Draft (ED) regarding Conceptual Framework for Financial Reporting (CF).

<YOUR WORK HERE>

Chapter 2 – Qualitative Characteristics of Useful Information
Question 1-Proposed changes to Chapters 2:
Do you support the proposal to reintroduce an explicit reference to the notion of prudence (described as caution when making judgments under conditions of uncertainty) and to state that prudence is important in achieving neutrality;
Why or why not?