This coursework assignment is worth 18% of your final AcF 212 module mark (to be combined with 7% being given for attendance and tutorial preparation and 75% for the year-end examination). The Department reserves the right to adjust coursework marks even after coursework is returned to students in order to ensure that the coursework marks have an appropriate distribution. Any further questions regarding the assignment should be directed to the course director (Pelham Gore) during office hours: your tutorial tutors should not be expected to guide you on this element of the course. Use of Moodle to ask questions is strongly encouraged, thus facilitating the wide dissemination of answers.
In May 1980, the FASB issued its “Statement of Financial Accounting Concepts No.2 (SFAC 2) ‘Qualitative Characteristics’” (QCs). This was the first such document issued by an authoritative accounting standard setter and set a pattern that was adopted by other standard setters in their conceptual frameworks (CFs) including the IASC’s “Framework for the Preparation and Presentation of Financial Statements” (1989) which included a section on QCs. In 2004, the FASB and IASB announced that they were starting a project to produce a joint CF. In 2010 this started to bear fruit when the first two ‘chapters’ of the new joint CF, Chapter 1 on ‘Objectives’ and Chapter 3 on ‘Qualitative Characteristics’ were issued. These chapters were published by the FASB as their new “Statement of Financial Accounting Concepts No.8” and both chapters were also incorporated into the IASB’s CF.
You are required to write a short report comparing and contrasting, and thus analyzing, the differences between the QCs in SFAC 2 and the new (2010) chapter on QCs. You should also conclude on whether you think that 30 years’ development of ideas has resulted in a better treatment of QCs, i.e. whether the 2010 chapter is an improvement over the 1980 SFAC 2. You may assume that the reader of your report has experience of financial reporting but is not an expert on conceptual frameworks.
To produce an appropriate report, you will need to read and understand SFAC 2 and the 2010 chapter on QCs, including their detailed content (what are the QCs that are specified and what is said about each of them?) and structure (how are the QCs related to each other?). Having done this, it would be sensible to consider any problems and criticisms concerning QCs that have been encountered by the joint FASB / IASB joint project.
Apart from reading the two primary documents themselves, i.e. SFAC 2 and the QCs chapter of the joint CF, you might also wish to assess the arguments put forward by both the Boards and commentators and thus consider the nature and scale of any political, technical and other difficulties encountered. In doing this, you will probably find it helpful to refer to other sources such as public pronouncements by the two Boards, letters of comment sent to the Boards, comments in the financial press and articles in both practitioner and academic journals. You If you do this, i) do not spend too much time/space on this aspect (your main focus should be on the comparison/contrast of QCs) and ii) do not restrict yourself to recent materials: many of the issues faced by the FASB and IASB joint project are long-standing and thus have been discussed in the past as well.
Maximum length: 2,000 words – this limit will be strictly enforced and marks deducted for essays exceeding it (I.e. reports x% over the word limit will lose x% of the mark, with a minimum deduction of 3% if it is even 1 word over the limit!). A properly referenced bibliography should be included (this, like all other material submitted, will count as a part of the word limit). Articles quoted and ideas used in the report must be properly referenced and cited using the Harvard referencing system. Marks will be deducted if these aspects are not properly addressed. (For further guidance, see the Departmental Undergraduate Reference Guide that can be found on the Department of Accounting and Finance Moodle site.)
Obvious sources of information include:
• The text of SFAC 2 and the new (2010) chapter on QCs;
• professional (practitioner) journals, such as ‘Accountancy’ and’ Journal of Accountancy’, and academic journals such as ‘Accounting Horizons’, ‘Accounting and Business Research’ and ‘Abacus’;
• the University Library’s ‘OneSearch’ facility; and • the internet for relevant materials.
(A useful source of unpublished academic work is SSRN.com: you will need to create an account to access papers but this is free.)
Apart from the substance of the coursework, marks will also be awarded for use of language and presentation. This assignment therefore provides a good opportunity for you to enhance your report writing skills. Both the University Library and the web offer much advice on report writing, e.g. try http://www.lboro.ac.uk/service/ltd/campus/reportwr.pdf to start you off.
Submission deadline: 12 noon on Wednesday 20th March 2013 (Week 10). Submissions of both hard (paper) and electronic copies will be required by that time, the former via the Department’s essay box and the latter via the AcF 212 Moodle page. Late submissions will be subject to the deduction of marks in accordance with the University’s late submission regulations.