Question 1 - 4 marks (750 words) Two fundamental qualitative characteristics of accounting highlighted within the conceptual framework are ‘relevance’ (QC6-10) and ‘faithful representation’ (QC...

Solution-1
Faithful representation is considered as one of the qualitative features of financial information that increases the reliability of the information presented therein. Faithful representation is attained by showing the transactions and events in the manner they are reasonably expected to be reported in the financial statements. For example, the effects of those transactions shall be considered that fulfills the recognition criteria of the elements of the financial statements. To show the transactions and events faithfully in the financial statements, the effects of transactions and events are shown on the basis of economic substance of the transactions instead of legal form of the transaction. For example, company had sold the asset but is still responsible for maintaining it or other risks then if this transaction is reported as sales instead of secured loan will not faithfully represent the transaction and thus will distort the effect of the transaction and may have the potential to influence users’ decisions.
The old lease accounting standards AASB 17, has contributed to some companies’’ financial crisis for example in Australia.GAAS required the Auditor to acquire the confirmation for the Accounts Receivable Balance while ISA not. Various financial crises have been experienced that has been mostly associated financial accounting matters that are provided by the AASB17 aboard. For that reason, the issues concerning financial obligations has not been well defined in the old standard system which made so hard to keep the co
ect financial statements that were globally accepted as some decision relied on individuals input but not the board’s provisions.
The AASB staff, for example, argued that recognizing a particular resource or obligation may offer information about the resource that is not relevant. The accountants also argue that there was little or no issue when it comes to giving an estimate or a measure of the goodwill that is acquired from a transaction. If the workers payment schemes are going to reduce the amount of remuneration to the employees, automatically this will lower the living standard of the workers and even force them to cut their daily spending on essential needs. The social implications based on the board provision will then affect the employee engagement in the given job as they will feel less motivated. Therefore, some provisions in the AASB17 are not clearly indicated and needed some improvement to make the financial system better and improve the services offered by the board. These provisions of the AASB17 were not clearly indicated and could affect the final decision made by accountants and auditors regarding financial statements. For this reason and avoid more financial crisis the need to come up with a new board that is AASB16 was paramount.
The main significance of faithful representation is that it will increase the reliability and accuracy of the financial statement. Appropriate presentation of financial statement increases the confidence of the investors and the goodwill of the company. Faithful representation ensures that the financial statements are free from e
ors and fraudulent adjustments.
A. GAAS possessing specialized skills while on the other hand International Standards on Auditing (ISA).
B. ISA does not contain a requirement for the auditor to consider the results of the assessment of the risk of material misstatement due to fraud during planning while on the other hand GAAS specifically contain provisions for this requirement.
C. GAAS required the Auditor to acquire the confirmation for the Accounts Receivable Balance while ISA not.
Foreign accounting standards affecting the Sampling Techniques:
Difference in Sampling Techniques is divided into two categories, viz., Difference in Language of GAAS and ISA and...