Issue in Financial Reporting
Accounting standard-setters are moving to a fair value regime for measuring and reporting assets and liabilities at fair value. The US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) worked for achieving convergence and providing guidance on fair value measurement. Recently, the international accounting standard IFRS 13 Fair Value Measurement has been adapted in Australia as AASB 13 for moving to the fair value regime. However, the concept and use of fair value have created enormous concerns of the accounting profession, academics and users of accounting information. Required: 1. Describe the purpose of issuing Australian equivalent of IFRS 13 as AASB 13 Fair Value Measurement. (2 Marks) 2. Discuss the role of the FASB and the IASB for harmonisation of fair value requirements. (3 Marks) 3. Explain the major amendments by AASB 13 to other accounting standards in relation to the definition, measurement and disclosure of fair value. (6 Marks) 4. Undertake a review of literature to explain the fair value reporting practices in the past and reliability of fair value in the future. (6 Marks) 5. Select a company from ASX 300 index and use its annual report (financial statements) as on 31 December 2013 or later (in 2014). Prepare an index stating selected company’s fair value measurement and disclosure practices, and then provide your opinion about the quality of such reporting practices. Consider the accounting principles in notes to the accounts for intangibles, financial instruments, and property, plant and equipment.