Deck 14: Emerging Issues in Accounting and Auditing

Question 1

With respect to the concept of sustainability which of these statements is not true?

A)Sustainability is about eco-efficiency and eco-justice
B)A sustainable entity needs to consider objectives relating to economic,social and environmental performance
C)Recently the focus in the sustainability debate has been on eco-efficiency
D)None of the statements are untrue,i.e.all are true statements

Answer 1

D

Question 2

The most widely used set of guidelines for sustainability reporting are published by:

A)The IASB
B)The United Nations
C)The FASB
D)The Global Reporting Initiative

Answer 2

D

Question 3

A criticism of the XBRL system is:

A)Haka suggests that it could mean less interest in small companies
B)It will make auditing redundant
C)CFO's will lose their ability to choose the level of disaggregation of accounting information
D)All of the above are criticisms

Answer 3

C

Question 4

The Sarbanes-Oxley Act in the United States decided not to restrict auditors' provision of non-audit consulting services to their clients as the evidence that the practice comprised auditor's independence was mixed.

Question 5

International auditing standards are issued by the International Accounting Standards Board.

Question 6

In October 2008 the IASB changed the rules for financial assets so that,under certain circumstances,the assets could be reclassified to avoid charging mark-to-market losses to the income statement.

Question 7

SFAS 157 explicitly uses exit price as a definition of fair value but IFRS fair value is neither explicitly an exit nor an entry price.

Question 8

The statement that is most correct regarding the application of fair value accounting and the global financial crisis (GFC)is:

A)There is no connection between the application of fair value accounting and the GFC
B)Some regard the practice of fair value accounting as a contributing factor in the rapid spread of the GFC from its origins in the US sub-prime mortgage market to the rest of the world
C)Fair value accounting was one of the primary causes of the GFC
D)There were no changes in international accounting standards relating to fair value as a result of the GFC

Question 9

It is agreed among accountants that a big contributor of the 2008 global financial crisis was the practice of requiring firms to mark their assets to fair value.

Question 10

It is usually considered that IFRS standards are more principles-based and US standards are more rule-based.

Question 11

In 2008 the IASB voted to require the 500 largest companies of each member to file their 2009 financial reports using Extensible Business Reporting Language (XBRL).

Question 12

The statement concerning the XBRL system of reporting that is not true is:

A)It was developed by the IASB
B)It is required to be used by the largest companies to file their reports
C)It is hoped that it will allow much faster analysis of company financial data by a wider group of users,with less error.
D)None of the statements is untrue,i.e.all are true statements

Question 13

It is not true that:

A)The IASB does not report to any higher body
B)The FASB reports to the US Congress
C)The Australian Accounting Standards Board ultimately reports to the Australian government
D)No statement is untrue.i.e.all are true statements

Question 14

Despite the existence of 'the Roadmap',it is not certain that the United States will adopt IFRS.

Question 15

In a recent survey KPMG reported that what percentage of the reporting companies worldwide use the Global Reporting Initiative guidelines?

A)30%
B)50%
C)60%
D)70%

Question 16

The statement that is not true in relation to the internationalisation of auditing standards is:

A)Many multinational firms voluntarily choose to have their financial statements audited according to international accounting standards
B)Auditing standards are being internationalised for the same reasons as accounting standards were internationalised
C)In the past the International Auditing and Assurance Standards Board (IAASB)has been praised for its independence from the auditing profession
D)None of the statements are untrue,i.e.all are true statements

Question 17

The body that has been formed to oversee the International Auditing and Assurance Standards Board is:

A)PCAOB
B)The PIOB
C)The IASB
D)XBRL

Question 18

The water standards currently under development in Australia will essentially require qualitative rather than quantitative reports.

Question 19

The statement that is correct concerning the convergence of IASB and US accounting standards is:

A)The Securities and Exchange Commission released a 'Roadmap' for the potential use of International Financial Reporting Standards by US companies by 2014
B)The Securities and Exchange Commission has agreed to adopt international accounting standards in 2014
C)The Securities and Exchange Commission has agreed to adopt international accounting standards by 2014
D)None of the statements are correct

Question 20

Social accounting and reporting aims at observing and assimilating issues not necessarily covered by traditional accounting functions into a form that can be used for decision making by individuals not necessarily directly or only concerned with the financial success of the entity.

Question 21

A difference between water accounting and greenhouse gas emissions accounting is:

A)The purpose of the Greenhouse Gas Protocol standards is to aid companies in their measuring and reporting decisions whereas the purpose of water accounting is to assist external decision makers in their decisions.
B)Water accounting is evidence of the pressure on governments to obtain data on scarce resources other than those traditionally captured by financial accounting whereas green house gas standards has a different motivation
C)Water accounting is based on generally accepted financial and accounting reporting principles whereas greenhouse gas accounting is not based on those principles
D)All are differences between water accounting and greenhouse gas emissions accounting

Question 22

Discuss how social accounting differs from financial accounting.

Question 23

Which of these is a future direction in accounting and auditing?

A)The convergence of international accounting standards and the FASB standards
B)An improvement in the quality of international auditing standards and their increased acceptance
C)An increase is sustainability accounting and reporting
D)All of the above

Question 24

Discuss some of the problems that auditors face in providing assurance for sustainability reports issued by companies.

Question 25

'Despite the existence of the Roadmap,it is not certain that the United States will adopt IFRS'.J.Godfrey,et el,'Accounting Theory',7^th Ed.p.492.Discuss some advantages that adopting IFRS would have for the US and some of the problems that have yet to be resolved concerning the US adopting International Financial Reporting Standards.

Question 26

Meeting the needs of the present without compromising the ability of future generations to meet their own needs,is a definition of:

A)Environmental accounting
B)Green accounting
C)Sustainability
D)All of the above

Question 27

Explain how the Extensible Business Reporting Language ( XBRL)system works and discuss the effects that its use is likely to have on financial reporting.

Question 28

What,in your opinion,was the role of fair value accounting in the Global Financial Crisis?

Question 29

In a recent survey KPMG reported which group of countries as having the highest level of formal assurance for their sustainability reports?

A)The North American countries
B)The European countries
C)The Australasian countries
D)The African countries