Chapter 4 - Case Writing.docx

Chapter 4 - Case Writing.docx - Chapter 5 The Case Approach...

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Chapter 5 - The Case Approach to Accounting Problems Week 5 – October 19, 2015 Why Do We Use Cases? Important to encourage critical thinking and problem solving skills Helps expose us to real world situations and different user needs Helps illustrate shortcomings of IFRS and ASPE Improve business writing skills Helps us apply professional judgment to a situation The Case Approach Keep in mind that this is a general template and may not be appropriate in all case situations. Each case is unique . 1.What is our role and from what perspective are we writing this case from? (ie. who are we? Are we a user or preparer? Who are we reporting to?) Could be a lawyer, banker, shareholder, manager, auditor, arbitrator, etc Distinction between user or preparer is very important Who we are reporting too is very important but keep in mind that may not necessarily be the most powerful user in the case 2.What are the key facts of the situation which may define how to account? (industry background, type of entity, revenue streams, warranties, returns, type of customers, etc.) Type of entity is important as it may serve to identify the constraints in the case Be sure to not just list or repeat case facts – need to incorporate them in your issue analysis 2.What constraints exist? (ie. ASPE/IFRS, covenants, etc.) IFRS is a constraint for all public companies If ASPE or IFRS is a constraint, make sure you incorporate the relevant technical criteria in your analysis 3.Who are the users of the financial statements and what are their objectives? 4.Prioritize/Rank the main user and objective we wish to cater too This allows us to give focus to our response Users must be relevant (3-4) Rank who is more important, which objective is more important 5.What are the accounting issues? While reading response and doing an outline, rank the issues in order of importance – this is important as in the event you are pressed for time you need to make sure you address bigger issues which will likely be worth the most marks.
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When ranking issues, consider which issues are most material, is there information in the case to develop the issue, is it critical for the business, etc. 6.What are the alternatives (if applicable) and what are the pros and cons of each alternative? Analyze the alternatives, not directly to the answer. Give reasons for why not As we have seen there are many possible choices in accounting for an issue and the use of judgment is required 6. Conclude and make a recommendation on the issue, linking it to impact on main user and objective and making sure to incorporate any case facts and constraints to support your conclusion Goal is to try to select an alternative that helps your main user/objective.
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