Current Development in Accounting Thought

Running Head: CURRENT DEVELOPMENT IN ACCOUNTING THOUGHT
CURRENT DEVELOPMENT IN ACCOUNTING THOUGHT
Name of the Student
Name of the University
Author Note

1CURRENT DEVELOPMENT IN ACCOUNTING THOUGHT
Table of Contents
Question 1..................................................................................................................................2
Review of Article...................................................................................................................2
Question 2..................................................................................................................................5
Exposure Draft Major Issues..................................................................................................5
Comments Letter Views.........................................................................................................6
Comment Letter Assessments................................................................................................7
Comment Letter Actions Interpretation.................................................................................8
Reference..................................................................................................................................10

2CURRENT DEVELOPMENT IN ACCOUNTING THOUGHT
Question 1
Review of Article
An article has been published on August 8, 2019, which has highlighted the main
concerns related to credit impairments. The financial assets of the company is termed as
credit impairment when the occurrences of the one or more than one events have detrimental
impact on estimated future cash flows of the financial assets. It generally occurs when the
creditworthiness of the company deteriorates. It is reflected by the assignment of the
reduction in credit rating to the organization. The impairment of the credit makes it difficult
for the company for borrowing more funds. The company might have the impaired credit if
their financial situations change in theway that of having greaterlikelihood of defaulting on
bond. In case of the business organization, creditworthiness would decline, if there is
deterioration of their financial position over time because of the weaker economy, poor
management as well as increasing competition. The impaired credit might requires for having
drastic changes to the procedures or the operations for alleviating the financial stress that
leads towards eventual improvements in the conditions of the balance sheet. The changes
includes reduction of the using of the cash flows for paying down the outstanding debt,
selling of the assets as well as reducing the expenses for bringing it to the manageable level.
The Article published in the news portal of Sydney Morning Herald has raised the
greatest example of credit loss of AMP. This is the financial services company in the country
of Australia as well as New Zealand. The company provides the product and services such as
banking advice and banking products that includes savings accounts and loans as well as
superannuation and the investment products. The issue of the company that has been
highlighted was involvement of the company for choosing to prioritize profit of short-term at
the expense of their best interest and the compliance with the regulatory. It has been found

3CURRENT DEVELOPMENT IN ACCOUNTING THOUGHT
that there was the involvement of company’s senior executive in the misconduct. In this
situation, apart from raising concerns, the company’s employees chosen for not disclosing the
knowledge they were having regarding the actions of the company in breaching of license
duties (Amp.com.au. 2019).
The issue has been raised in the article regarding the fact that how troubled AMP
wealth manager has taken steps in launching massive raising of the capital to underpin new
looking structure for their business controversial sale of life insurance, which is just after
having loss of $2.3 billion, during first half of financial year (Banks, 2016). AMP has
revealed regarding massive business restructure advice that would be affecting slash number
of the financial planners. There was halt of company’s shares to raise $650 million in highly
discounted raising of the capital from the existing investors of institutions. Credit Suisse as
well as UBS have fully underwritten the capital raised. The extension was done of bids
window, which indicated certain price pressures (Brown & Moles, 2014).
During the loss of the AMP of the first half of financial year, there were impairments
of $2.35 billion on financial planning part of the company. The impairments have been
occurred, which includes writing-down of the amount of $1.5 billion on the goodwill of the
business wealth management. In was done in wake of banking royal commission of the
previous year, in which it has been accused of misconduct. There was decline of 22 percent
on the company’s operating profit because of the misconduct done by the company (Creal et
al. 2014) This has resulted into non-payment of interim dividend as there was reduction of
around $1.3 million of earnings of wealth management operations. AMP has suffered on the
part of large net outflows, which was recorded up to $3.1 billion. For re-cutting the deals to
sell the insurance to the group of the UK/Bermudan Resolution Life for the amount of
$3billion, which is less than that of the original resolution of offer of $3.3 billion for the
business, the wealth manager of AMP would be using cash. This new deal would result in