The International Accounting Standards Board (IASB) published for public comment in May 2015 an Exposure Draft (ED) of a revised Conceptual Frameworkfor Financial Reporting.Â The objective of the revision was to improve financial reporting âby providing a more complete, clearer and updated set of conceptsâ (IASB, 2015, p. 6) that can be used by the IASB when developing accounting standards. More specifically, it aimed to clarify some aspects of the existing conceptual framework (CF). In response to comments made by constituents on the Discussion Paper on the CF published in 2013 the IASB decided to âreintroduce an explicit reference to the notion of prudence (described as caution when making judgements under conditions of uncertainty) and state that prudence is important for achieving neutralityâ (IASB, 2015, p. 9). Prudence is sometimes understood as conservatism in financial reporting, but like prudence this is understood in different ways in the literature. The ED thus includes an explanation of prudence and its use. The IASB asked its constituents whether they support the proposals to âreintroduce an explicit reference to the notion of prudence (described as caution when making judgements under conditions of uncertainty) and to state that prudence is important in achieving neutralityâ (IASB, 2015, p. 10).
You are required to write an essay considering the following matters:
- i) Identify the explanations of the concept of prudence given in the ED and consider whether the concept is adequately explained by considering how it is explained in the previous literature and by considering the comment letters relating to the ED.
- ii) Examine critically the IASBâs arguments for introducing a reference to the notion of prudence, so explained, into the CF and consider whether it will improve financial reporting.
Your answer should be in essay format. You should include an introduction and conclusions and use appropriate headings to divide up the work and inform the reader of the content of each section. It should be no longer than 4,000 words (I know that I have requested 3250 words, I intend to add some of my own research into the essay), excluding the reference list.
Assignments must be presented in the following format:
- Assignments must be word-processed in 11 point Arial font with 1.5 line spacing
- All pages must be numbered
- Margins must be as follows: Top: 1 inch, Bottom: 1 inch (2.5 cm), Left: 1.25 inches, Right: 1.25 inches (3.2 cm)
Harvard Style â mostly academic journals but due to the nature of the assignment, you can (and should) refer to the comments letters on the IASBâs website.
It is very important that you note the guidance on cheating and, in particular, avoid plagiarism. When you submit electronically, the electronic copies of your assignment will enable the teaching team to check your work for plagiarism or syndication (cheating) using software.
- Referencing (5%): presentation of citations in the text and accurate referencing, in the correct format. If you cite sources in the text and do not include them in the list of references, the assumption will be made that you have not in fact consulted these sources but have copied material from another text which included them. This is plagiarism and attracts severe penalties. It is therefore essential that you check your text very carefully to ensure that all citations are listed as
- Presentation (5%): this includes consideration of general presentation issues such as the inclusion of a separate introduction and conclusion to the works, the use of separate headings identifying the material covered in each section, the use of page layout, the use of paragraphs, accurate spelling, and compliance with presentation instructions.
â¢Â Â Â Â Â Â Â Â Â Â Â Â Use of literature (25%): under this heading the extent and quality of your sources will be assessed. You are expected to demonstrate that you have undertaken an independent literature search so your list of references should include more than the sources to which you have been directed by the suggested reading. You are also expected to be able to distinguish authoritative sources: these are books and journal articles which have academic authority. Professional magazines, newspaper