2009_1 T04 S

2009_1 T04 S - ACCT2101 Financial Reporting Tutorial 4...

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ACCT2101 – Financial Reporting Tutorial 4 Solution 1 TOPIC 4: REGULATORY ENVIRONMENT 1. What are GPFR? General Purpose Financial Report. It is a financial report intended to meet the information needs common to users who are unable to command the preparation of special-purpose reports specifically tailored to satisfy all of their information needs. Recall the components of a financial report (see week 1). 2. Explain the factors that serve to protect the integrity of financial reporting. Factors that aim to ensure best practice in financial reporting and maintain integrity would include: ± GAAP – including Accounting Standards, conceptual framework (Statements of Accounting Concepts), the Framework for the Preparation and Presentation of Financial Statements, corporate legislations (e.g. Corporations Act), and ASX Listing Rules. ¾ Recent legal reforms – Corporate Law Economic Reform Program (CLERP 9) – Introducing reforms to corporate disclosure, corporate governance and auditing. ± Corporate governance – Measures put in place to protect stakeholders – e.g. independent board of directors; audit committee; directors’ qualifications; promotion of ethical and responsible decision making. ± The external audit report – Provides an independent, unbiased and professional perspective on the fairness of the financial statements to enhance the credibility of financial reports. ± Standard setters such as the Australian Accounting Standards Board (AASB) set guidelines and rules (e.g. the conceptual framework and accounting standards) to improve the quality of financial reports. For example, restriction of accounting method choices can improve comparability; disclosure requirements can increase the reliability and understandability of financial statements. ± Monitoring and enforcement of companies’ compliance with accounting standards / regulations by regulators. The most important regulators include the Australian Securities and Investments Commission (ASIC) and the Australian Securities Exchange (ASX). ASIC enforces Corporations Act and ASX enforces its Listing Rules. ± Self-regulation by the accounting profession. For example, professional accounting bodies such as CPA Australia and the Institute of Chartered Accountants in Australia (ICAA) require their members to comply with professional standards and ethics (e.g. Code of Ethics for Professional Accountants, issued by the APESB).
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ACCT2101 – Financial Reporting Tutorial 4 Solution 2 3. T&G DQ 6.8 What is the purpose of an external financial statement audit? The purpose served by the auditor’s report is to provide a competent and independent opinion on the fairness of the financial statements. It is not a guarantee but rather an opinion that the financial statements have been properly drawn up to give a true and fair view of the company’s financial performance and financial position in accordance with the provisions of the Corporations Act 2001 and applicable accounting standards. The standard auditors’ report consists of the following sections: scope, opinion and (optional) a
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This note was uploaded on 06/06/2009 for the course HHH #$#$)0 taught by Professor Mria during the Three '09 term at Queensland.

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2009_1 T04 S - ACCT2101 Financial Reporting Tutorial 4...

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