Current Development in Accounting Thought

This document discusses the current development in accounting thought, focusing on an accounting issue related to the International Monetary Fund forecasting a sluggish global economy. It explores the impact of global trade tensions and uncertainty on the world economy, particularly the United States and China. The document also covers the IASB exposure draft proposing amendments to IFRS 9 and IAS 39, addressing issues related to cash flow hedging and fair value hedging. Overall, it provides insights into the current state of accounting thought and its implications.

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
Question 2..................................................................................................................................2
References..................................................................................................................................2

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Question 1
From the newspaper journal Perth Now, there could be found an accounting issue that
relates to the issue of the International Monetary Fund forecasting sluggish Global Economy.
According to the journal dated 23rd July 2019, the Global Trade tensions and continuation of
the uncertainty are weakening the merits of the world economy, that would be facing a
precarious year ahead as said by the International Monetary Fund (2019 PerthNow). As per
the update of the World economic Outlook, the International Monetary Fund had forced the
countries for not using the tariffs in the place of the negotiations. The World Economic
Outlook got update on this regard that the International Monetary Fund shaped the Global
Forecast issued in the month of April, with an expected growth to hit 3.2 per cent in the year
2020 (2019 PerthNow). As per the declaration of the International Monetary Fund, they are
expecting an expansion of the global economy by a sluggish 3.2 per cent in the year 2019,
down from 3.6 per cent in the year 2018 and from a growth rate of 3.3 per cent it forecasted
for this year back in the month of April. The 189 country lending organisation blamed the
lack lustre growth on the heightened trade tensions and it specifically a war of tariff between
the two biggest economies of the world, that is the United States of America and China. The
international Monetary Fund further said that it has an expectation that the United States
economy to grow 2.6 per cent in the year 2019, down from 2.9 per cent last year, but up from
the 2.3 per cent it forecast in the month of April (2019 PerthNow). The Federal Reserve
underwent the process of improvement of the prospects for the growth in the United States by
the help of the restricting the plans to keep the interest rates increased. The policies are being
simplified partly in order to offset the economic fallout from the trade wars of the president
of the United States, Donald Trump (Lea, R. 2019). As per the update of the World economic
Outlook, the International Monetary Fund had forced the countries for not using the tariffs in
the place of the negotiations (2019 PerthNow). The World Economic Outlook got update on

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this regard that the International Monetary Fund shaped the Global Forecast issued in the
month of April, with an expected growth to hit 3.2 per cent in the year 2020. There are wide
expectations from the Federal Reserve to cut the rates at its meeting next week. The
International Monetary Fund expects the nineteen country Eurozone to record the modest1.3
per cent growth this year. The main target of the trade actions of the United States is China.
China had already been facing a slowdown. However, according to the reports, the negative
impacts of escalating the tariffs and sapping the external demand have added pressure. A
sudden slowdown in China is a key risk to the economy of the world. There has been a
caution from the side of the International Monetary Fund. There are plenty of triggers that are
potent for the situation to quickly turn negative that is inclusive of the possibilities of more
United States tariffs on China or on the European autos and a no deal Brexit and high levels
of debt in many countries (2019 PerthNow). The international Monetary Fund further said
that it has an expectation that the United States economy to grow 2.6 per cent in the year
2019, down from 2.9 per cent last year, but up from the 2.3 per cent it forecast in the month
of April (2019 PerthNow). The Federal Reserve underwent the process of improvement of the
prospects for the growth in the United States by the help of the restricting the plans to keep
the interest rates increased (Mughal, R. A. 2019). The current forecast was again full of
downgrades with small downward revisions for Germany and Japan. However, larger cracks
for Brazil, Mexico, Russia, India and South Africa (2019 PerthNow). They are the countries
that were the engines for the international growth in the rise of the 2008 financial crisis. The
International Monetary Fund again put emphasis on the resolution of the uncertainty that
remains the most stagnating issue for the global economy and said Government authorities
should avoid the policy missteps that would be having a deliberate impact on the emotions,
growth and the creation of the job (2019 PerthNow). In the reports it was said, “countries
should not use tariffs to target bilateral trade balances.” The President of the United States Mr

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Donald Trump and the president of China Xi Jinping in the month of June agreed to an
understanding in their trade hostilities. Several senior officials from Beijing and Washington
had taken two phone calls in the current weeks (2019 PerthNow). However, they had no face
to face meetings that have been scheduled. The International Monetary Fund expects the
nineteen country Eurozone to record the modest1.3 per cent growth this year. The main target
of the trade actions of the United states is China (Guide, G. P. 2019). China had already been
facing a slowdown. However, according to the reports, the negative impacts of escalating the
tariffs and sapping the external demand have added pressure. A sudden slowdown in China is
a key risk to the economy of the world. There has been a caution from the side of the
International Monetary Fund, that there is plenty of triggers (Palley, T. 2019). They are
potent for the situation to quickly turn negative that is inclusive of the possibilities of more
United States tariffs on China or on the European autos and a no deal Brexit and high levels
of debt in many countries (2019 PerthNow). The international Monetary Fund further said
that it has an expectation that the United States economy to grow 2.6 per cent in the year
2019, down from 2.9 per cent last year, but up from the 2.3 per cent it forecast in the month
of April. The Federal Reserve underwent the process of improvement of the prospects for the
growth in the United States by the help of the restricting the plans to keep the interest rates
increased (2019 PerthNow). The International Monetary Fund also added that some major
economies that are inclusive of China and Germany might be in need of taking short term
actions to increase the growth and which a severe downturn would be requiring stimulus
measures that are well coordinated (Kent, C. 2019). The International Monetary Fund further
said that it still has expectations that a steep slowdown in the Europe and some rising market
economies will be giving way to the general reboost in the second half of the year
(2019 PerthNow). However the chances of further cracks to the site are very high is what was
said by the International Monetary Fund. the International Monetary Fund and the World

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Bank are taking the charge to hold the spring meetings in Washington this week. The
International Monetary Fund chief Economist also said that a steep weakening might be
requiring a well synced fiscal stimulus across the economies and loose the monetary policy
(2019 PerthNow). The Federal Reserve underwent the process of improvement of the
prospects for the growth in the United States by the help of the restricting the plans to keep
the interest rates increased (2019 PerthNow). The International Monetary Fund also added
that some major economies that are inclusive of China and Germany might be in need of
taking short term actions to increase the growth and which a severe downturn would be
requiring stimulus measures that are well coordinated (2019 PerthNow). The International
Monetary Fund further said that it still has expectations that a steep slowdown in the Europe
and some rising market economies will be giving way to the general reboost in the second
half of the year. However the chances of further cracks to the site are very high is what was
said by the International Monetary Fund. the International Monetary Fund and the World
Bank are taking the charge to hold the spring meetings in Washington this week. The
International Monetary Fund chief Economist also said that a steep weakening might be
requiring a well synced fiscal stimulus across the economies and loose the monetary policy
(2019 PerthNow).
Question 2
Major issues covered in the exposure draft
The IASB exposure draft mainly focuses on the proposing amendments resulting in
occurrence to the preparation for the company’s amendments relating to both of the IFRS 9
as well as IAS 39. The exposure draft discusses on the variance of different sort of
uncertainty arising which is caused due to changes in benchmarks associating of the market
interest rates on the requirements causing in due to the risk in cash flow occurrences. It is also
focused in the flow of hedges and it determine about the case of designated risk which is

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being practiced in the current scenario in association of the cash flow. The fair value hedges
in association to the market level are being discussed in the draft in order to finalize the
amendment for beginning the work on the second phase in recognition to it. The draft also
express concern about the lack of clarity in application to the retrospective hedging
effectiveness, it also focuses on the part of measurement in the version of hedging in
effectiveness in the market association.
Lastly, it mainly discusses on the scenario about the amount of deferred cash flow of
the hedging reserve and it is required to be classified in the effect of profit and loss entity that
is being ceases by applying the amendment structure.
Outline of the view in exposure draft
In the aspect of the agreement for the function of exposure draft it is considered to be
supportive in focusing on the aspect of exceptions which is being provided for exploring
higher probabilistic criterions and also functioning for the hedging effectiveness considering
the assessment. However, it is being considered as the relevant structure for agreeing on the
course of agreement, cash flow hedging and fair value hedging for incurring the issue of
contractual hedging and non-contractual hedging is disclosed on the preference in order to
estimate and measuring the time period. It is also being done by referring the time for
associating the hedging techniques and focusing the measurement by replacing with the
constitution of the risk-free rates. There are different sort of reasoning out the disagreements
in associating with the market players in the company. The financial officers always try to get
into newer sources of constitutional effects in order to review the problems that are being
faced by them and they deserve to change the amendment of the financial benchmarks rates
to affect the marketers to use the things very easily and to undergo with large complexion.
Frequency by which it is being considered is redesigned with various sources of dynamic

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hedging and there are some instances where IFRS do not permit the entity to use it for every
resource.
Comment for the purpose of exception which is being identified in the purpose of
uncertainty in relation to the benchmark of the application of interest rate. Several instances
are being focused to apply in order to hedging the purpose. These are referred as the
disagreements where uncertainty is regarded in relation to the assessment of it. There are
different sort if risk that is being associative to it in regard of the pre-reform benchmark of
the forecasting values regarding to it. The disagreement is also concluded due to the floating
issue debt in the current market with a remaining of five years. It is applied because it is
currently focused on hedging with the effective receive of IBOR-pay fixed rate in relation of
the associative skills aggregated to the requirement of market. Cash flow hedging in relation
to the accounting relationship focusing on the variable cash flows of the hedging item is
usually not being effected with uncertainty for the replacing of the next two years. The
effectiveness associated with replacement associative with existence for the respect of
performing the hedging efficiencies (Drechsler,. Savov & Schnabl, 2019). Disagreements are
caused due to optimal uncertainty in the financial resources operating in the market.
However, the amendments which is being associated are usually ceased to apply for
the arising of benchmark rates which are no longer been associated for neither the hedging
instrument nor the hedged item, the requirement in support of hedged item stands to be
uncertainty process for being the higher probable forecasting cash flows of the hedging risk.
Certain proposals are referred to disagreement hedging relationships which is being affected
by reformation of the accounting standards relating to the meaningful information. The
amount of the adjustment that is being stated as the persuasive impact of the reform.

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Analysis of the arguments
In the context of effective date and transition condition based in the paragraph of
BC45-BC47 it is explained that the board is purposed of the amendments that is being made
with standing of effective date for the annual period that is starting from January 1, 2020. The
consideration of the earlier application that is being given permission which is being given to
the board of directors retrospectively. The specific transition, which is being given out in the
market, is being proposed by the provision. However, the comment is considered supportive
for the conditions of accepting the amendments issued by the structural body (Gobet.,
Pimentel., & Warin, 2019). The amendments are considered to be applied successfully in
every context for the consideration of entity being reinstated successfully. There are situation
which is referred in respecting to the exceptions as it is being proposed for highly criterion
and also prospective type of hedging concept. As there are differences between contractual
and the other is non-contractual type of cash flow, hedges, which are being issued for the
interbank rates in order to estimate cash flow risk. However, the approach is not perfect in
relation of what is to be achieved for the proposal to be prepared.
However, there are instances where comment letters are issued in against of the
regulation. It gently, justifies the measurements that consists interest rate benchmarks. The
rates are considered quite higher in nature (PsycNET., 2019). This is the main reason where
marketers are not even satisfied of the implementation occurred, rising amount of interest
rates create a huge problem for the investors who are dealing with the investment in the
market. The measurement of ineffectiveness in the market that is being solicited with the
effective return in the cash flow hedging. Prospective test of hedging is underwent by the
officials to undergo and the design which is being performed by them to render effectiveness
for the forthcoming season (Brehmer et al., 2018). The application of them in order to satisfy
the needs of clients in the market are performed most effectively and it is however generates

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them to help the solution of assessing the effectiveness. For this purpose, apportion made by
the entity performer in order to prepare the amendment in focusing the cash flow hedging.
However, the value is completely unchanged and later it helps to reinstate the hedging of cash
flow reserve.
Interpretation of the comments letter
There are four sections of comments which are associated to the feedback of the
regulation. The first one significantly discusses about the proposals enacted in respect to the
expectation in order to create higher probability creation and it also focuses on discussing
about the sources of hedging effectiveness incurred about the prospective study about the
given information. The comment generally focuses on the cause of fair value and cash flow
technique that is being associated on the interbank rate. This accumulates the generic study
about the effectiveness of the requirement function in related to the associative information
focusing on the retrospective assessments. The other valuable feedback is associated to
uncertainty of interest rate association, which generally do not affect the hedged cash flows.
However, it is also been noted that probability of the highly probable effectiveness is
assessed as the measurement study that is revealed with purpose of positive assessment of
efficiency.
During the second comment section, it is being stated hedging requirements for the
significance of interest rate has been stated as the component which is been contractually
specified by the interest rate benchmark. However, in relation to IAS 39 it has been specified
that frequency of the identifiable requirement in purpose of hedging relationships that is
being redesigned by the application of hedging risk. It is specially focused on the portfolio-
hedging scenario where the increasing amount of benchmark creates a huge problem for the
marketer who in return incurs loses (Harvard Journal of Law & Public Policy., 2019).
Provisions are practiced that is being identified and practiced very effectively in order to

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undergo with designation of preparing the benchmarking rates by which the market will
follow and it will be considered as the average value that is to be initiated.
In comment 3, it is being analyzed for the mandatory exceptions that is implemented
by the government and which is being applied for a limited period. However, it also specifies
about proposed exceptions to considering hedging relationships which is being affected in the
market caused by interest rate benchmark. The amount of time that is being taken in order to
present in the case where the interest rate has been presented in the market.
In comment 4, the extent of hedging relationships associated with relation to the
specific requirement, which is being used by the financial statements. It also criticizes about
the adjustment of diluted earnings incurred during the process. The scenario also focuses to
rendering about earlier version of hedging accounting. However, the board usually believed
in the process of meaningful relation to the financial statements by avoiding the uncertainties
associated to it.
Attachments
Comment 1

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Comment 2
Comment 3

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Comment 4

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References
A Common Law for the First Amendment The First Amendment in Contemporary Society:
The Thirty-Sixth Annual Federalist Society National Student Symposium on Law and
Public Policy - 2017 41 Harvard Journal of Law & Public Policy . (2019). Retrieved 3
September 2019, from https://heinonline.org/HOL/LandingPage
Brehmer, J., Dawson, S., Homiller, S., Kling, F., & Plehn, T. (2019). Benchmarking
simplified template cross sections in $WH$ production. Retrieved 3 September 2019,
from https://arxiv.org/abs/1908.06980
Drechsler, I., Savov, A., & Schnabl, P. (2019). Banking on Deposits: Maturity
Transformation without Interest Rate Risk. Retrieved 3 September 2019, from
https://www.nber.org/papers/w24582

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Gobet, E., Pimentel, I., & Warin, X. (2019). Option valuation and hedging using asymmetric
risk function: asymptotic optimality through fully nonlinear Partial Differential
Equations. Retrieved 3 September 2019, from https://hal.archives-ouvertes.fr/hal-
01761234/
Guide, G. P. (2019). Investment Analysis of Turkish Real Estate Market.
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https://www.perthnow.com.au/business/economy/the-international-monetary-fund-
forecasts-sluggish-global-economy-ng-4f07dcb8baa3f48245ba8542d973fe5a
Kent, C. (2019). Christopher Kent: Financial conditions and the Australian dollar-recent
developments.
Lea, R. (2016). Brexit really does mean Brexit: Article 50 to be triggered by end-March
2017. Arbuthnot Banking Group, 10.
Lea, R. (2018). The Government’s White Paper on the future UK-EU relationship. Arbuthnot
Banking Group, 23.
Lea, R. (2018). The world economy is slowing and growth forecasts are revised
down. Arbuthnot Banking Group, 3.
Lea, R. (2019). Increasing concerns about global economic growth, especially in the
Eurozone. Arbuthnot Banking Group, 28.
Lea, R. (2019). The IMF downgrades growth prospects again, especially for the
Eurozone. Arbuthnot Banking Group, 15.
Mughal, R. A. (2019). Global Economic Outlook For 2019.

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Palley, T. (2019). Inequality and Stagnation by Policy Design: Mainstream Denialism and Its
Dangerous Political Consequences. Challenge, 62(2), 128-143.
PsycNET. (2019). Retrieved 3 September 2019, from https://psycnet.apa.org/record/2017-
07265-001