Advanced financial accounting

BAO 3309 Research Assignment TNE Campus Semester 2 2018


Group research assignment, weighting 20%

Due Date: Week 9

Maximum word length: 3000 words

Research topic: A review and revision of the Conceptual Framework for Financial Reporting

In January 2013, the International Accounting Standards Board commenced the process of reviewing

and revising the existing Conceptual Framework for Financial Reporting and subsequently release a

discussion paper in July 2013. Within this discussion paper, the IASB identified a number of problems

with the existing Conceptual Framework at the time, specifically:

(a) important areas were not covered. For example, the existing Conceptual Framework provided very

little guidance on measurement, presentation, disclosure or how to identify a reporting entity;

(b) the guidance in some areas was unclear. For example, the existing definitions of assets and liabilities

could be improved; and

(c) some aspects of the existing Conceptual Framework are out of date and fail to reflect the current

thinking of the IASB. For example, the existing Conceptual Framework states that an asset or a liability

should be recognised only if it is probable that there will be a flow of economic resources.


This Discussion Paper suggested that the IASB should make the following significant changes to the

existing Conceptual Framework:

(a) a revised statement of the primary purpose of the Conceptual Framework;

(b) revised definitions of assets and liabilities;

(c) additional guidance on applying the definitions of assets and liabilities;

(d) revised guidance on when assets and liabilities should be recognised;

(e) new guidance on when assets and liabilities should be derecognised;

(f) a new way to present information about equity claims against the reporting entity;

(g) a new section on the concepts that should guide the IASB when it selects measurements in a new or

revised Standard or Interpretation; (h) a new section on presentation and disclosure;

and (i) principles for distinguishing profit or loss from other comprehensive income (OCI).


Subsequent to this, in March 2018, the IASB issued the revised Conceptual Framework for Financial

Reporting (Conceptual Framework), which set out:

(a) the objective of financial reporting;

BAO 3309 Research Assignment TNE Campus Semester 2 2018


(b) the qualitative characteristics of useful financial information;

(c) a description of the reporting entity and its boundary;

(d) definitions of an asset, a liability, equity, income and expenses;

(e) criteria for including assets and liabilities in financial statements (recognition) and guidance on when

to remove them (derecognition);

(f) measurement bases and guidance on when to use them; and

(g) concepts and guidance on presentation and disclosure


1. With reference to the IFRS (IASB) website and associated resources, as well as the relevant

accounting literature, explain the objectives and purpose of the conceptual framework

2. With reference to the IASB Conceptual Framework Project website and associated resources,

as well as the relevant accounting literature, explain why the IASB decided to revise the

conceptual framework with specific reference to:

a. Measurement, presentation and disclosure;

b. Definitions of an asset and liability and recognition criteria; and

c. The roles of stewardship and prudence in financial reporting

3. Identify and explain, according to the IASB, the following main improvements which have

been made to the conceptual framework:

a. Factors to be considered when selecting a measurement basis;

b. The classification of income and expenses in other comprehensive income; and

c. Guidance on when assets and liabilities are to be removed from financial statements;

4. How does the revised conceptual framework update:

a. The definitions of an asset and a liability; and

b. The criteria for including assets and liabilities in financial statements

5. Explain how and why, with reference to the IASB Conceptual Framework Project website and

associated resources, information used in assessing stewardship is needed to achieve the

objective of financial reporting.

6. With reference to the references below, identify and explain arguments as to whether the

conceptual framework needed to be revised in order to provide the IASB with a better basis for

standard setting


Richard Barker (2015) Conservatism, prudence and the IASB’s conceptual framework,Accounting and

Business Research, 45:4, 514-538, DOI: 10.1080/00014788.2015.1031983

Arjan Brouwer, Martin Hoogendoorn & Ewout Naarding (2015) Will the changes proposed to the

conceptual framework’s definitions and recognition criteria provide a better basis for IASB standard

setting?, Accounting and Business Research, 45:5, 547-571, DOI: 10.1080/00014788.2015.1048769

Craig, R., Smieliauskas, W. and Armenic, J. (2017), ‘Estimation Uncertainty and the IASB’s Proposed

Conceptual Framework’, Australian Accounting Review, 27 (1): 112–14.

BAO 3309 Research Assignment TNE Campus Semester 2 2018


Andrew Lennard (2007) Stewardship and the Objectives of Financial Statements: A Comment on

IASB’s Preliminary Views on an Improved Conceptual Framework for Financial Reporting: The

Objective of Financial Reporting and Qualitative Characteristics of Decision-Useful Financial

Reporting Information, Accounting in Europe, 4:1, 51-66,DOI: 10.1080/17449480701308774

Sutton, Cordery, & Zijl (2015) Sutton, D. B. , Cordery, C. J. , & Zijl, T. (2015). The purpose of

financial reporting: The case for coherence in the conceptual framework and standards. Abacus, 51(1),


Submission requirement

1. Assignment submission a. Each group consists of no more than three members. b. Submission of this assignment by due date is compulsory for the successful completion

of the subject.

c. The submitted hardcopy of the assignment must be the identical version of the electronic copy submitted through the Dropbox (i.e. Turnitin) on VU Collaborate.

Inconsistence in the hardcopy and the electronic copy may result in a zero mark of the


Note: If you cannot submit your assignment through the Dropbox on VU Collaborate

due to technical issue, then email your assignment to your tutor or lecturer no later than

the due date.

d. The Turnitin/Dropbox Similarity Report should be no more than 25%. e. Late submission without the extension approval from your local lecturer will be

penalised at two marks (out of 20) per calendar day (including weekend).

f. Completed extension application form must be submitted to your tutor at least three days in advance of the due date.

g. Students are responsible to protect their work and save data by making necessary backup. Loss of data due to a computer or storage devices problems will not be

considered a legitimate reason for an extension.

2. Referencing and style

 Assignment must be typed using Word document, with double alignment, and 1.5-lines space.

 Assignment is required to use either an APA or Harvard referencing style (see VU library for Referencing Style guides


 Assignment without proper referencing (in text and end of text) will be subject to substantial deduction of marks. This may result in the assignment being marked zero.

3. Preventing plagiarism

3.1 Academic Honesty and Preventing Plagiarism Policy

Plagiarism is defined as ‘The practice that involves use of another person’s intellectual output and

presenting it (without appropriate acknowledgement) as one’s own’.

Examples of plagiarism:

 Word-for-word copying of sentences/paragraphs in an assignment without acknowledgement or with insufficient or improper acknowledgement;

 Downloading essays or assignments from the web and presenting these for assessment;

 Presenting another student’s work or research data as the student’s work;

BAO 3309 Research Assignment TNE Campus Semester 2 2018


 Copying out parts of any text without acknowledging the source(s). This may be written text, structures within texts, diagrams, formulae, sound files, still photographs, audio-visual material

(sound and image files), graphics/animations/multimedia objects, other computer based

material, mathematical proofs, art objects, products and others. This can be done as verbatim

copying or paraphrasing.

 The use of someone else’s concepts, experimental results, experimental conclusions or conclusions drawn from analysing evidence or arguments without acknowledging the originator

of the idea(s) or conclusion(s).

3.2 Students are responsible for:

 Understanding and respecting the University’s policies and procedures regarding plagiarism, collusion, and other forms of academic misconduct, and as such should only

submit work for correction or academic credit that is their own or that properly

acknowledges the ideas, interpretations, words or creative works of others;

 Avoiding the lending or making accessible original work to others;

 Being clear about the appropriate referencing rules that are applicable to their field of study;

 Refusing to be a party to another student’s efforts to undermine the academic integrity of the University.

 Seeking assistance with their learning and assessment tasks if they are unsure of appropriate forms of acknowledgement.

BAO 3309 Research Assignment TNE Campus Semester 2 2018


Assignment Marking Sheet

Student Name………………………………………..Student No……………….



Assessment Criteria Possible




R1 Demonstrates the ability to understand the concept and the

underlying assumptions of the conceptual framework 10

R2 Demonstrates the ability to apply the literature to evaluate

the arguments as to why the IASB decided to revise the

conceptual framework


R3 Demonstrates the ability to apply the literature to evaluate

the improvements which the IASB believe were made to

the conceptual framework 20

R4 Demonstrates the ability to analyse how the revised

conceptual framework updated the definition and

recognition criteria for assets and liabilities 15

R5 Demonstrates the ability to collect data and conduct

analysis as to the relationship of stewardship to the

objective of financial reporting 15

R6 Demonstrates the ability to develop persuasive argument

to draw conclusions from results analysis and literature

review 15

Style and

presentation  The presentation of the results, which should be

clear, concise and accompanied by expository text

accessible to the reader

 The presentation of the entire assignment, which should be written in English of an appropriate

academic register and of a format and standard of

presentation acceptable to business study


Total possible marks out of 100 100

Weighted marks out of 20 20