Financial Reporting Newsletter for Financial Accounting Course

This financial reporting newsletter, prepared for accounting professionals, summarizes key developments in the financial reporting environment from April 1, 2019, to July 31, 2019. It covers significant updates, including the establishment of an independent review board by CPA Australia, annual improvements to IFRS Standards 2018-2020, amendments to AASB 112, changes to the guidance and definition of not-for-profit companies, pre-meeting summaries for the June meeting of IASB, and disclosures in special purpose financial statements. The newsletter provides concise summaries of each update, along with links to further information, enabling accounting staff to stay informed about changes in standards and their potential impact. The report also includes advice on presenting expenses in the income statement, either by nature or function, referencing relevant accounting standards such as AASB 101.

Running hr
Financial Accounting
News Letter

1FINANCIAL ACCOUNTING
Financial accounting
Name of the student
Name of the university
Course ID
Authors note

2FINANCIAL ACCOUNTING
NEWS LETTER
Independent review
board by CPA
Australia (13th June
2019)
At the board meeting held
on 13th June 2019 it was
decided that they started
the procedure for
establishment of
independent panel for
conducting thorough
review regarding all the
claims those are related to
the CPA Australia. The
panel will provide
recommendation for
making improvements.
The board will be chaired
by the Air Chief Marshal
Sir Angus Houston who is
the former chief from
Australian Defence Force.
For further details please
follow the link –
https://
www.cpaaustralia.com.au
/-/media/corporate/
allfiles/document/
media/media-release/
statement-from-president-
16-june-2017.pdf?
la=en&hash=5EBE1BE6
42C5981EE999DDA3243
BFDCB6C56C625
Annual
improvements to
IFRS Standards
2018-2020 (14th June
2019)
IASB proposed to require
the subsidiary that is to
apply the Para D16(a) of
IFRS First-time Adoption
of International Financial
Reporting Standards in
measuring cumulative
translation difference
through usage of the
amounts that is reported
by parent on the basis of
the transition date to the
IFRSs. Further, the
amendments will be
applicable to the joint
venture associates who
will apply the same. For
further details please
follow the link –
https://
www.aasb.gov.au/admin/
file/content102/
c3/7.4_IASB_ED_annual
_improvements_2018-
2020_M171_NO.pdf
Amendments to
AASB 112 (25th July
2019)
Amendment to AASB
112 is proposed by IASB
that will require
recognition of deferred
tax on any particular
transaction’s initial
recognition that initiates
equal amounts of both
deferred tax assets as well
deferred tax liabilities.
The amendment that is
proposed will also be
applicable for the
transaction that will give
rise to recognition of both
assets and liabilities like
lease obligation by the
entity. Though the
amendments are required
to be applied with
retrospective effect,
however, transition relief
for recoverability
assessment will be
provided which is
required for the deferred
tax assets. For further
details please follow the
link –
https://
www.aasb.gov.au/admin/
file/content105/c9/
ACCED294_07-19.pdf
Summary of the updates regarding latest financial
reporting news
Period covered: 1st April 2019 to 31st July 2019:

3FINANCIAL ACCOUNTING
Pre-meeting
summaries for June
meeting of IASB
(14th June 2019)
Pre-meeting
summaries for June
meeting of IASB
(14th June 2019)
ISAB met in London
during 17-19 June 2019
for discussing some
important issues. The pre-
meeting summaries for
meeting allowed
following decision
making procedure of
IASB more closely. For
each of the discussed
topics agenda papers are
summarised and made
available by IASB staff
and at the same time
pointed out main issues
for discussion and
recommendation of staffs.
Issued discussed are
Impairment and goodwill,
Preliminary financial
statements, Amendments
proposed to IAS 16, rate
regulated activities,
business combination in
common control,
financial statement with
equity characteristics and
comprehensive review of
SMEs and IFRSs
standards. For further
details please follow the
link –
https://
www.iasplus.com/en/
news/2019/06/iasb-
premeeting-summaries
Disclosures in special
purpose financial
statement (4th July
2019)
It has been proposed
through ED 293 that the
SPFS shall be lodged with
the ASIC whereas the
non-for-profit companies
are required to lodge the
SPFS with the Australian
charities and non-for-
profit commission to
disclose the explicit
statements. It will help in
analysing whether the
SPFS prepared by the
company are complied
with all the requirements
of recognition and
measurement criteria of
AAS.
For further details please
follow the link –
https://
www.aasb.gov.au/admin/
file/content105/c9/
ACCED293_07-19.pdf
Guidance and
definition of Not-For-
Profit company (11th
June 2019)
It has been proposed to
change the guidance and
definition of not-for-profit
company through ED-291.
The substantive definition
that has been proposed has 2
independent parts – (i) major
purpose is offering the goods
or services for the benefit of
the society or for the
community it is serving and
(ii) delivering required
equity for supporting the
purpose rather than just
providing returns to the
shareholders. For further
details please follow the link
–
http://www.aasb.gov.au/
admin/file/content105/c9/
ACCED291_06-19.pdf

4FINANCIAL ACCOUNTING
Bibliography
Aasb.gov.au. (2019). News . Retrieved 3 August 2019, from
https://www.aasb.gov.au/News/Conceptual-Framework-for-Financial-Reporting?
newsID=325498
Aasb.gov.au. (2019). News . Retrieved 3 August 2019, from
https://www.aasb.gov.au/News/Exposure-Draft--Amendments-to-Australian-
Accounting-Standards---Disclosure-in-Special-Purpose-Financial-Statements-of-
Compliance-with-Recognition-and-Measurement-Requirements?newsID=325506
Cpaaustralia.com.au (2019). CPA Program. Retrieved 3 August 2019, from
https://www.cpaaustralia.com.au/cpa-program
Iasplus.com. (2019). International Accounting Standards Board (IASB). Retrieved 3 August
2019, from https://www.iasplus.com/en/resources/ifrsf/iasb-ifrs-ic/iasb
Ifrs.org. (2019). IFRS . Retrieved 3 August 2019, from https://www.ifrs.org/news-and-
events/2019/06/iasb-consults-on-amendments-to-aid-implementation-of-ifrs-17/

5FINANCIAL ACCOUNTING
Question 2
Answer (i)
Memorandum
To: Board of Directors, Snow Gear Ltd
From: Kelly Jackson, Account manager
Subject: advice for preparation of financial statement
Purpose of this memo is to provide an idea regarding presenting the expenses in the income
statement by their nature or by their function. If the expenses are presented in accordance of
their nature the expenses are reported as per the categories for which they have been
expensed like cost of raw material, depreciation, transport cost, staff’s wages and salaries,
rent expenses. Under this the expenses are not further segregated into any other head. On the
other hand, if the expenses are presented in accordance of functions the expenses are reported
as per the functions for which they have been expensed like manufacturing expenses,
operating expenses and selling and distribution expenses. Generally the expenses presented as
per their nature are followed in the single-step format of income statement and expenses
presented as per function is followed in the multi-step format of income statement.
However, whatever method is followed by the company both will provide same amount of
earnings that is to be reported to the shareholders. However, to comply with the requirements
of AASB 101 and present the income statements with true and fair manners and with detailed
approach it shall be prepared with reporting the expenses by their function.
Sincerely,
Kelly Jackson, Account manager

6FINANCIAL ACCOUNTING
Answer (ii)
Answer (iii)

7FINANCIAL ACCOUNTING

8FINANCIAL ACCOUNTING
Bibliography
Aasb.gov.au. (2019). Retrieved 3 Aug 2019, from
https://www.aasb.gov.au/admin/file/content105/c9/AASB101_07-15.pdf
Hodgson, A., & Russell, M. (2014). Comprehending comprehensive income. Australian
Accounting Review, 24(2), 100-110.