The aim of this assignment is to evaluate students’ understanding of critical issues which have an impact on accountability of a firm particularly with reference to the effect of compliance or non-compliance of corporate governance principles. A secondary aim is to develop and assess students’ critical appreciation of how globalization impacts the accounting and auditing profession.
- The learning outcomes being assessed
ILO 4 will be assessed – The ability to appraise critically the role of accounting and auditing in the arena of corporate governance.
- Overview of assignment
Following the ‘Brexit’ referendum, the following blog appeared on the global website, Accounting Web:
“I hope we take back control of our accounting,” said University Professor Stella Fearnley.
“Once we’re out of the EU, we won’t have to follow the directives if we don’t want to or comply to the letter with IFRS. So far the EU’s EFRAG committee has endorsed everything the IASB has done with almost no criticism.”
The UK has gone along with financial reporting and auditing decisions coming out of the EU – and the UK Financial Reporting Council (FRC) and BIS still hasn’t resolved the highly significant semantic differences with IFRS and UK company law such as the requirement for accounts to present a “true and fair” view and the definition of distributable profits.
“If we give ourselves the power to push back the IASB, it’s something other countries might follow.
“In the future if we want an Urgent Issues Task Force, we can have one and adapt IFRS to our own needs,” she said. “We can go with what the UK demands. It’ll give us more flexibility and we could call it ‘UK IFRS’ if we want.”
According to Fearnley, the big accounting firms were very enthusiastic about the global convergence project, partly because it would protect US standards-setters (and auditors) from the impact of the Enron scandal, and partly because those firms stood to make billions of dollars from IFRS adoption. “But the state boards and the Securities and Exchange Commission would never give up control of their accounting to a group like the IASB,” she said.
Based on the US model of stronger, more interventionist regulation, Fearnley would like to see the creation of an official UK Companies Commission to take over responsibility for reporting and auditing and investigation of misconduct from the FRC, which has recently been designated as a ‘single competent authority’ by the EU arising from its recent auditing directive.
“The FRC can only investigate UK-qualified accountants,” she said. “If a CFO is a South African accountant or MBA, they can’t go near them. And what about other managers or directors – who goes after them? We need an organisation that can call anyone to account and go in quickly and get on with investigating scandals in a more timely manner than the UK’s ridiculously fragmented system currently allows.”
With reference to the contents in the blog above, write a critical review of extant literature which covers the following requirements:
- Keeping in mind the sense of globalisation and the current Brexit status, critically analyse and discuss if it is reasonable for the UK to develop “UK IFRS” and the possible impact on the accounting and auditing profession.
- Critically evaluate corporate governance principles that should be addressed in the IASB to resolve the semantic differences and meet UK’s demand.
Word Count Guidance
The word count for this assignment is 2,000 words
What is included in the word count?
- Footnotes, except where these are used ONLY to give references to your sources. The use of footnotes to expand upon points you have made in the body of your report will count towards the word limit.
- Appendices – except where these merely reproduce material from your sources / calculations / tables / graphs / diagrams
- Any additional explanation of terms / glossaries etc. WILL count towards the word limit.
- Any tables pasted as picture (.jpeg for example) will be reviewed by the marker and word count added to the main body of the text.
What does not count towards the word limit?
- Appendices exceptions noted above.
- Brief quotes – about 5 lines is the maximum acceptable for each quote, and you should not have more than 6 quotes in your essay. You don’t need to include any at all if you don’t want to. If you do use quotes, it is important that you have a good reason for including it – the quote must be properly introduced, appropriately referenced and you must make some comments on each one.
- References and bibliography
How the word limit will be enforced:
Up to 50 words above the limit – no penalty
For each additional 50 words (or part thereof) beyond that, 1 mark will be deducted from whatever mark would have given in the absence of a penalty.
Thus for an essay with a limit of 1250 words, which is actually 1430 words, which has marked at 65% initially, a penalty of 3% would then be applied, bringing the mark down to 62%.
- Assessment criteria and weightings
This assignment is an individual assignment and accounts for 40% of your total mark. Elements of this assignment are being assessed as Assurance of Learning in accordance with AACSB standards.
You will be assessed on the critical content you can bring forth in your answers. Critical discussion on a topic is often improved by the following –
- a clear and confident refusal to accept the conclusions of other writers without evaluating the arguments and evidence that they provide;
- a balanced presentation of reasons why the conclusions of other writers may be accepted or may need to be treated with caution;
- a clear presentation of your own evidence and argument, leading to your conclusion; and
- a recognition of the limitations in your own evidence, argument, and conclusion.
The marking criteria have been clearly set out in a rubric appended to this assignment brief.
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