Accounting Theory Report: Analysis of ESMA Enforcement Decisions

This accounting theory report examines ESMA's enforcement decisions report published in 2018, focusing on the application of IFRS standards. The report deconstructs the issues presented in the news article, covering standards like IFRS 5, IAS 7, IAS 32, and others, highlighting their implications. It identifies relevant accounting theories, including positive regulation theory and public interest theory, applicable to the article's context. The report further analyzes comment letters related to share-based accounting, assessing the exposure draft's impact and public interest. It explores areas of agreement and disagreement among respondents, such as Heiskell and MacGillivray and Associates, regarding the proposed changes. The analysis aims to understand the role of accounting standards in ensuring financial transparency and the importance of stakeholder feedback in shaping accounting regulations.

Running head: ACCOUNTING THEORY
Accounting Theory
University Name
Student Name
Authors’ Note

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Table of Contents
Solution to Question 1:...............................................................................................................3
Solution to Question 2:...............................................................................................................8
Reference..................................................................................................................................14
Appendix..................................................................................................................................17

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Solution to Question 1:
Presentation of the news article
A copy of the news article is attached in the appendix of the task.
Identification, description and discussion of important issues presented in news article
The study particularly at hand considers report declared on 30th April during the year 2018
titled “ESMA publishes 22nd enforcement decisions report”. Essentially, this article taken
into account the European Securities as well as Markets Authority and publishes
supplementary extracts from diverse private data bases of specifically enforcement decisions
that are particularly undertaken by national enforcers of Europe (Cao et al., 2015).
Particularly, this specific group handles decisions associated to different accounting standards
that include IAS 36, IFRS 10, IFRS 5, IFRS 3 and IAS 29 among many others.
The primary matter under consideration is the pronouncement of ESMA related to diverse
extracts from diverse private data sources of specifically enforcement decisions on monetary
statements. There is the issue of understanding the extent to which this can strengthen
administrative convergence and present different issuers together with users of pecuniary
information pertinent financial information on appropriate application of the regulations
stipulated under the International Financial Reporting Standards (Ho et al., 2015). in addition
to this, the selected article expounds publications of selected enforcement decisions that can
inform market participants about which accounting treatment of mainly enforcers of Europe
and this might probably take into consideration conformation with accounting pattern IFRS.
Diverse standards of accounting essentially considered are particularly within the purview
along with range of particularly the ones permitted by the IFRS (Henderson et al., 2015).
Thus, the primary issue that can be considered in this regards include understanding the

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justification behind the specific decisions that can direct the way towards persistent
application of standard or regulation of IFRS stated in particularly the EEA. The article taken
into account states enforcers of the Europe of specific financial statements analyse and
monitor financial declarations (Di Pietr et al., 2016). In essence, the declarations are
mentioned by diverse issuers with specific securities that are normally traded on a guarded
market located in Europe and specifically the ones who arrange financial statements
according to the IFRS.
Furthermore, the selected article of the study deals with examination of degree of
conformation with the standards of IFRS together with applicable requirements of reporting
including national directive. ESMA also formulated a secret database of specifically
enforcement decisions undertaken by particular enforcers of Europe as a basis of information
to foster appropriate implementation of IFRS standards. Also, the article at hand also explains
publication of specific decisions on particularly enforcement is designed to inform diverse
partakers of the market concerning treatments of accounting. This article includes
examination of whether different accounting treatments can be considered as being with the
recognized range of the ones allowed by the standard IFRS. In addition to this, ESMA also
considers declarations of particular decisions together with purpose behind the same (Hodges,
2015). Thus, this aspect can help in contributing towards consistent execution of the standard
IFRS in particularly the European Union.
Deconstruction and evaluation of issues reported in the news article
As presented in the selected news article, diverse topics are covered in the present group. The
standard included IFRS 5. This is necessarily on the Non-Current Assets that are essentially
held sale as well as discontinued operations covering the subject matter of classification of
asset (Nobes & Stadler, 2015). In essence, this is not expected to be marketed with the

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specific period of 1 year. In essence, this subject matter can be included in this specific piece
of writing under consideration. Particularly, in standard context, this permits evaluation of
assets otherwise disposal batch that are necessarily held for sale are necessarily not
depreciated (Davis et al., 2015). In itself, this is calculated at comparatively lower value of
specifically the carrying amount along with fair value deducting the cost borne to the market.
IAS 7 focussing on the statement of flows of cash is included in this article. This covers
presentation as well as disclosure of restricted cash balance. Also, topic involved in the study
also includes IAS 32 on particularly Financial Instruments that stresses on presentation. This
study therefore highlights perpetual notes that can be classified as liabilities and are presented
in this particular section (Brown et al., 2014). Additionally, IAS 1 is also covered in this
batch emphasizing presentation of financial statements. Also, IAS 36 replicating Impairment
of Assets aids in reflecting disclosures on particular assumptions concerning different
competitive prices that have substantial risk of resulting in material adjustments to specific
amounts of carrying (Correia, 2014). IFRS 3 is covered in the study on Business
Combinations, IFRS 13 on mainly fair Value enumeration and IAS 38 on particularly
intangible assets reflecting price of purchase assignment of a specific group of different
accumulated assets. Furthermore, the IFRS 17 replicates distribution of different non-cash
assets to varied owners explaining demerger along with appropriate distribution of specific
section to shareholders of issuer. In addition to this, IAS 1 reflecting Presentation of Financial
Declaration explicates presentation of different loss of revaluation of diverse assets used in
functioning activities (Kim & Ouimet, 2014). Further, IAS 10 concentrates on consolidation
of financial statements. This particular sector indicates towards acquirement of authority over
a particular investee subsequent to particular offering of tender.
In addition to this, the current article also lists IAS 8 that reflects aspects of the accounting
policies, changes in the policies as well as systems of accounting in different approximations

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along with error counting insufficiency of exchangeability of particularly foreign currency
along with hyperinflation. Thus, it can be hereby mentioned that the current news article
bears mention about particular standards and suggests criteria for selection along with
alteration of estimations and reflection of rectifications of mistakes of prior period. IAS 21
reflects about the influence of alterations in specifically rates of foreign exchange. Also, IAS
29 also concentrates on financial reporting in specifically hyperinflationary economies.
Again, IAS 38 reflects intangible assets and this necessary includes covering amortisation of
content rights for particularly movies together with television programs (Correia, 2014).
Identification of a range of pertinent accounting theories applicable
Positive theory of particularly regulation talks about emergence, modification, abolishment
along with institutional execution of sector specific directive. Influence exercised by business
concerns, consumer interests along with bureaucratic self interest of regulatory agency need
to be taken into consideration for illustrating regulator behaviour. Different interest groups of
particularly consumers, producers along with associated interest groups might perhaps
compete with one another for the purpose of political influence (Brown et al., 2014). This
institutional framework can be associated to the current article as this article on enforcement
including various regulations necessarily exerts influence on Business Corporation operating
in different segments, interests of consumers along with regulators.
Again, the public interest theory can also be associated to the current study of the article
under consideration. Essentially, this is a specific notion that can be associated to the notion
related to welfare (Brown et al., 2014). This delivers theoretical validation for regulation. The
theory also mentions that market characterised by specific features might be inefficient ad
might perhaps experience failure of the market that necessarily can be corrected with usage of
specific regulations.

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Essentially, this public interest theory founded on important suppositions regarding the nature
of different regulators, use of full information and in this way can make certain appropriate
enforcement. This theory also orients around enforcement of regulations that are essential for
welfare. Thus, this article under deliberation can be comprehended using the public interest
theory as well in addition to positive theory of regulation.
Conclusion
The above mentioned study elucidates in detail about the selected news article on ESMA’s
publication enforcement decisions report. In essence, this theory helps in examining
enforcement decision of particular assertions with the intention of strengthening convergence
of administration and presenting different issuers with relevant information on appropriate
implementation of the standards of IFRS.

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Solution to Question 2:
Comment Letters
The copies of the comment letters are hereby attached in the appendix section of the current
study. The current proposal can necessarily be related to specific suggestions regarding
standards of accounting along with establishment of updates on compensation of share
according to the theme number 718 (Kim & Ouimet, 2014).
Outline of what the exposure draft is transforming
The specific standard or regulation of accounting that is under deliberation refers to
Enhancement of various Share Based Accounting of payment of Non-Employee. As such, it
can be hereby witnessed that enhancement and update of directives slated in enhancement to
share based accounting of payment of different non-employees is crucial (Chang et al., 2015).
This progression is necessary for the purpose of diminishing the costs along with difficulties
associated and for decreasing intricacies observed in the process of maintaining as well as
developing efficiencies of data that are presented by pecuniary pronouncements.
Assessment whether exposure draft is introduced as per public interest
The study at hand considers four diverse respondents from different comments that are
presented from the official websites of mainly accounting board. However, it can be hereby
viewed that critical analysis of four diverse comments from specifically selected respondents
can prove to be a dominant facet in the process of evaluation of accounting
regulation/standards. Thus, this process can aid in comprehending different issues or else
concerns. In addition to this, supplementary aim is to comprehend the manner execution of
guiding principles of accounting can enhance standards of accounting (Bettis et al., 2016).
Additionally, present study also intends to analyse different comments of

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approval/disagreements for appearing at conclusive results with reference to precision of
standards of accounting.
In addition to this, it can be hereby stated that accounting of particularly disbursements to
non-employees based on shares can be considered to be important since protection and
safeguarding of sentiments of different non-employees of business enterprises can be
regarded to be important for effective operations of the business. Also, a powerful and at the
same time enduring bond among different enterprises as well as their workforces can aid in
process of development of effectual business setting (Chong & Wang, 2018). Thus,
development or else upgrading of this kinds of processes of payment of accounting is vital. In
essence, standards or in other words regulations of accounting indicates towards specific
ideas, knowledge and is necessarily influential for entities of different segments to engage in
procedure of proposing comments. Essentially, effective feedback can essentially be gained
on specific proposals and this is the way by which public interest can also be augmented.
Particularly, pertinent questions associated to the changes are presented in models of
Financial Accounting Standards Board (Semanyuk, 2017). Essentially, this is a liability of
enterprises to put forward their answers to the specific questions mentioned in the form and
discusses regarding agreement/disagreement. In itself, there are numerous questions that are
mentioned and all the prescribed questions necessarily need to be replied in the interest of the
public.
Views presented in comment letters highlighting areas of agreement/disagreement
It is discussed in the study at hand that the feedback obtained from different respondents can
be considered for deciphering knowledge regarding assents and dissents ad regards
transformations suggested and proposed in the guidelines of standards/regulations of

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accounting. In essence, the feedback acquired from different respondents can be considered
in this perspective (Sahakiants & Festing, 2016).
Heiskell and MacGillivray and Associates
Business enterprise is related to audit along with different operations or functions of
accounting in the nation Australia. In essence, this enterprise also presents responses to
varied inquiries associated to the enhanced along with novel standards or regulations of
system of accounting. In itself, they are supposed to assent to the case of termination of
specifically PIC pool of accounting. Basically, this is supposed to decrease expenditure
together with difficulties related to accounting (Oluwadare & Samy, 2015). Further, the
enterprise articulates agreement to the related costs for explicit pay. Also, this is built-in in
the statement of earnings. Essentially, the benefits of tax together with deficiencies can be
considered to be important and has the need to be executed appropriately. Moreover, the
enterprise also consents to the fact that there is necessity for restricting delays in the process
of recognition of surplus tax advantage.
Raytheon Company
Raytheon Company is well known USA based corporation functioning in the sector of
innovation as well as technology. This firm is also popular for their technologically
sophisticated range of offerings in the section of defence, varied instruments of security along
with software associated to civil market throughout the entire world. Essentially, this business
concern also exerts immense effort for designing and developing effective corporate
governance (Gaffikin & Aitken, 2014). Particularly, this business concern also presents their
comments and reactions to Questions numbered 2, 3, as well as 5 mentioned in particularly
the Exposure Draft. Also, it can also be hereby observed that business enterprises presents
opposing opinions with regards to the suggested processes of the directives of the standards

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concerning recognition of additional advantages of tax plus tax scarcity stated in the income
assertions. On the other hand, this business enterprise also mentions that Financial
Accounting Standards Board has the necessity to undertake a framework in which all the
benefits along with disadvantages of extra tax are disclosed in mainly the segment of equity
(Bublitz et al., 2015). As such, the business enterprises also recommends about the usage of
specific symmetrical tactic of equity that subsequently can deliver enhanced results.
Visa Inc
Visa Inc is a well known business concern operating in the segment of technology induced
system of accounting. This has the intent to enhance processes of disbursements throughout
the world. Furthermore, enterprises under deliberation also accept the opportunity to deliver
recommendations as regards advances that are offered by the FASB. In essence, it can be
witnessed that business segment acts in response to all the questions sketched in particularly
the exposure draft. In addition to this, it can be hereby mentioned that business enterprises
delivers agreements to the recommendations of the firm’s board opposing all proposals of
supplementary benefits of specifically tax and shortages in the assertion of income.
Particularly, the entity also have belief in the FASB proposal and are of the opinion that this
proposal might perhaps help in the process of alleviation of difficulties of the company
(Freeman et al., 2014). Nonetheless, this also can direct towards the process of advancement
of volatility of costs related to the tax on earnings.
American Bankers Association
In essence, this is a particular business enterprise in which contributors of different banks in
the United States are existent. In essence, this can be witnessed that this enterprise praises the
transformations presented by the Financial Accounting Standards Board according to the
developments mentioned in Share Based Payment Accounting of employees. In addition to

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this, it can also be necessarily observed that this business enterprise articulates their responses
to each one of the questions and presents opposing responses to a single question.
The study at hand can necessarily said to be vital in the section of system of accounting of
share based disbursement of employees. In essence, this amendment proposal has the intent
to enhance advancement of financial statements and decrease pressure associated to work of
diverse professionals of accounting (Scott, 2015). As a result, notion of public interest theory
that indicates towards an economic concept related to welfare presenting theoretical
validation for the specific directive can be regarded as the most effectual theory in this
context.
Application of theories to the comment letters along with justification
The public interest theory of particularly regulation/directive illustrates in general terms the
regulations intends the shielding and advantage of the entire public in general. Essentially,
this notion can be associated to welfare that necessarily delivers justification for particular
directives. As per the theories, regulations of corporations as well as other economic facets
direct the way towards promotion of particularly public interest. In this situation, proposal for
amendment intends to augment enhancement of financial assertions and diminish amount of
stress and work pressure on particularly specialised accountants. Accordingly, theme of
public interest theory can be said to be most effective in this regard as this specific proposal
also intends to shield interests of the public.
Critical analysis of underlying suppositions of theories of particular regulation
The notion of the public interest theory supposes that markets are exceedingly fragile and
appropriate to function very effectively when left alone. However, the government is
supposed to be neutral in this regard. Essentially, the public interest opinion states that

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different governments work towards regulation of banks for facilitating the effective
functioning of different banks by way of ameliorating failures of market, for particularly the
benefit of wider civil society. Particularly, in the segment of banking, the public interest
theory can be served in case if the system of banking assigned resources in particularly
socially effective manner. This means maximization of output and at the same time
minimization of particular variances and operated diverse other functionalities of finances.
The said proposal under consideration also is aimed at maximization of social welfare and
this regulation can be regarded as the outcome that can enhance operations. In this case, the
costs are also said to outweigh overall enhanced social welfare.
Conclusion
Thorough analysis of the present proposal delivered by the Financial Accounting Standards
Board helps in understanding the share based system of payment to workers. The above
mentioned study helps understanding the fact that barring only a single respondents all other
selected respondents have presented their opinions in favour of transformation in the present
proposal concerning identification of excess benefit otherwise tax deficiencies in earnings
statement. In addition to this, diverse other proposals have also been permitted by other
respondents, nonetheless, the current proposal is not taken into account as it might probably
create movements in cost in statement of earnings. Thus, it is suggested that developments in
this specific segment can enhance circumstances associated to augmentation of system of
accounting relatable to stock based system of payment.

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Appendix
Appendices 1
Source: https://www.iasplus.com/en/news/2018/04/esma-enforcement-decisions

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Appendices 2

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