Accounting Standards and Regulation

Question: Discuss about theAccounting Standards and Regulation. Answer: Introduction In the year 2015, IASB had certain changes in its conceptual framework within exposure draft ED/2015/3 (Allee et al. 2015). The objective of the paper is to discuss the factors those are required to be considered while selecting a measuring basis and discuss the importance of this conceptual framework for two clients those are supposed to be present in the Adelide office. One of the clients is a financial services company Perpetuity which is contended concerning the leans towards the increased fair value use. Another client is a huge newspaper producer The Minutiser which remains increasingly unsettled and avoids fair value accounting. The paper will intend to offer a discussion regarding the ways a managing partner can distribute to client and the accounting team. Conceptual Framework Changes by IASB and Factors to Consider When Selecting Measurement Basis The International Accounting Standards Board (IASB) has recently proposed a comprehensive Exposure Draft (ED) accounting encompassing proposals for topical aspects that requires a necessary revision and amendment of existing conceptual framework. The aspects considered in ED include proposals for revising assets and liability definitions, establishing guidance on de-recognition along with measurement and introducing a framework for disclosure and its presentation (Linsmeier 2013). The major ED is supported by ED based proposals concerning references to the conceptual framework in certain IASB pro-announcements. Under the IASB-based conceptual framework there are several factors requires to be considered while selecting a measurement basis. ED considers that while selecting a measurement basis it is vital to consider the kind of information the measurement basis will generate in the statement of financial position and financial performance statements. The measurement basis employed for financial performance requires using measurement of assets and liabilities in the financial position statement (Marshall and Lennard 2014). However, when information that is more important is to be mentioned in financial position statement through selecting some measurement basis and consideration needs to be given to either: Distinct measurement basis should be used in financial performance and financial position statement. This is implemented when incremental importance is considerable in warranting further complexity in double measurement, or Measurement basis should be selected which is most relevant in the financial position statement that will be further used in financial performance statement. This will be implemented when measurement basis employed for financial position statement is acceptable under viewpoint of performance reporting (Barker et al. 2014). ED indicates that for generating relevant information, it is vital to consider the ways asset or liabilities add to future cash flows. EFRAG states that initially selection of measurement basis needs to be considered from the financial performance reporting perspective. Such approach has an advantage like the one the measurement basis employed for financial performance is evaluated for individual rights rather than being a result of measurement basis employed for preparing statement of financial position (Gordon et al. 2015). IASB Based Conceptual Framework Related Judgments for Perpetuity Perpetuity is observed to be a financial services entity, which is highly leaned towards increased use of fair value. Increased use of fair value measurement is considered vital for financial services organization because of several reasons. Financial crisis increased the importance of having fair value measurement and this became necessary as the markets for certain financial instruments turned quite inactive (Whittington 2015). The clients increased use of fair value measurement is for the reason that it offers clear disclosure guidelines and offers several effective methods to derive fair value. Increased use of fair value measurement in Perpetuity will increase consistency and comparability along with considering the highest priority to quoted prices for assets and liabilities in active markets and decreased priority to unobservable inputs (Macve 2014). However, considering its importance in a financial services firm to maintain consistency of its financial reports and ensuring f air valuation of its assets and liabilities, Perpetuity should consider the following while using fair value measurement effectively. Specific asset or liability and consistency with its unit of account which is a subject of measurement The principal or beneficial market for asset and liabilities for its measurement and will offer consistency with its highest efficient implementation Valuation premises for a non-financial asset that is suitable Suitable valuation technique for measurement considering information availability that will be used to produce inputs (Shang 2015). This will further represent assumptions used by market participants for asset or liability pricing and the level of fair value hierarchy in which inputs are categorized. IASB Based Conceptual Framework Related Judgment for The Minutiser The Minutiser is observed to be a newspaper manufacturer that remains quite unsettled and tends to remain detached from fair value accounting. This can be because of the reason that the company is not sure whether such accounting technique is desirable for manufacturing companies those posses tangible and intangible assets with distinct risk characteristics than their primarily financial liabilities (Whittington 2015). Fair value accounting is deemed necessary for all listed companies other than financial services company. It is considered that the newspaper manufacturing company should implement fair value accounting, as it will help in making the companys financial information more accurate. Moreover, adopting fair value accounting will help in decreasing the companys tendency to manipulate its reported net income (Linsmeier 2013). As the newspaper-manufacturing business undertakes its economic activity, it adds value to the offerings in which it deals. This accounting technique can serve as best possible measurement aspect in order to induce companys management to prepare voluntary disclosures and for making investors aware of the vital questions to be asked to management. Conclusion The paper intended to offer a discussion regarding the ways a managing partner can distribute to client and the accounting team. It was gathered that the aspects considered in IASB proposed ED incorporate proposals for revising assets and liability definitions, establishing regulation on de-recognition alongside measurement and introducing a structure for disclosure and its presentation. Moreover, it was observed that as per ED before selecting a measurement basis it is imperative to consider the type of information the measurement basis will create in the statement of financial position and financial performance. 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