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
Authors note

1CURRENT DEVELOPMENT IN ACCOUNTING THOUGHT
Table of Contents
Answer to question 1..................................................................................................................2
Introduction................................................................................................................................2
Discussion:.................................................................................................................................2
Disclosure on climate risk......................................................................................................5
Investor actions over climate risk..........................................................................................6
Financial risks of climate change...........................................................................................7
Answer to question 2..................................................................................................................7
References:...............................................................................................................................11
Appendices:..............................................................................................................................14

2CURRENT DEVELOPMENT IN ACCOUNTING THOUGHT
Answer to question 1
Introduction
The above case study deals with the accounting for the climate risks and how it has
become a major concern for the company accountant as well as for the auditors in doing
business. Since global warming have become a major concern for the human being, hence it
has its own effects in the auditor and accounting for every company. Hence, AASB have also
implemented certain changes in the accounting and auditing procedures, which would be very
helpful for the business concerns. The second part of the study deals with an exposure draft
that have been prepared by the AASB highlighting the major areas of the exposure draft,
changes implemented in the exposure draft along with the views which have been presented
in the draft.
Discussion:
The auditors have been put on notice that they need to consider the clients’ climate
related risks along with the materials to determine whether the risks are adequately disclosed
in the company financial statements. Thus a joint bulletin have been issued by the Australian
accounting standard board (AASB) and the auditing and assurance standard board which
discusses about the interpretation of the accounting and standards with respect to the material
risk associated with the business. However, the materiality judgments underpin the
preparation of the company financial statement, which includes the recognition,
measurement, presentation and disclosure practices, which recommend the changes in the
business structure. Thus the Australian securities and investment commission (ASIC) have
reviewed the climate disclosure which is related to the Australia listed companies and1. Thus
1 About us. (April 2019). Pioneer Credit Limited. Retrieved from
http://corporate.pioneercredit.com.au/about-us/

3CURRENT DEVELOPMENT IN ACCOUNTING THOUGHT
the company director understand and assess the possible emerging risks related to accounting
and auditing. They also highlights the report in discussion with the climate changes related to
the OFR and how the same could affect the entities performance in achieving the company
goals and objectives and disclosing of outcomes. However, the bulletin clarifies that the
climate change risks are important to the investor decision making and the material risks
needed to be clarified in terms decision making2. Thus the shift of emphasis from the OFR to
the financial statement is very much significant to the company auditors. Hence they are
required to read and identify the materials inconsistency with the audited financial report.
Thus it will be subjected to scrutiny of an audit and necessary engagement of expertise to
curb the needs of understanding those risks as well as to see the impact it had made over the
company financial statements.
Risk assessment – in order to determine the possible risks, which are related to the
climate change and how the same could affect in the current accounting and auditing process.
Thus the process which have been reflected to financial changes are as follows –
Climate related disclosures are made in the broader annual report could have its
impact on the company financial statements.
Any implications to the entity related to the climate related risks in relation to the
regulatory obligations, market impacts, capital expenditures or the overall objective of the
entity as well as the strategies have been obtained.
These risks are been considered while preparing the financial assets , expected credit
loss and provisions and the underlying assumptions to estimate and disclose impairments.
2
Leadership Principles. (April 2019). Pioneer Credit Limited. Retrieved from
http://corporate.pioneercredit.com.au/about-us/leadership-principles/