Research, and apply theoretical aspects of financial accounting and reporting to practical

Learning Outcome 4: Research, and apply theoretical aspects of financial accounting and reporting to practical scenario(s). Work in teams (groups) of 3 members (you must obtain your lecturer’s approval for a group of a different number). You may discuss the selection of teams with your lecturer, who may decide to allocate you into teams or he/she may decide to form teams using a random process. You must notify your lecturer of your teams by the Friday of week 6 and be prepared to be allocated into teams if the lecturer so decides. Any work which has been copied or shared between groups or teams will result in a Fail grade for all students concerned. So please make sure that the answer to this team assignment is your own work and not copied from any source. Submission: The assignment will need to be submitted electronically through the student portal – use the link under “Assessments” to submit the information. Required: Answer the questions below, in a maximum of 1,500 words (as a guideline, allow 1000 words for the memo and 500 for the letter). You work as a graduate for a medium sized accounting firm and a number of clients are asking questions about a forthcoming change in the leasing standard, due to come into effect from 1 January 2019. As such one of the partners has asked you to prepare an internal briefing paper (memorandum) for all accounting staff together with a draft client letter. You need to prepare both of these documents, bearing in mind that the internal briefing paper is for accountants whilst the client letter needs to be written for non-accountants. Also bear in mind that the format of each document is quite different. The internal memo should cover the following points as a minimum: Briefly remind staff of the existing standard IAS 17 (AASB 117) Leases – in particular what are operating and what are finance leases? Explain the concepts briefly with reference to lessees only, rather than providing all the technical details. Critically analyse the main differences between IAS 17 (AASB 117) and the new IFRS 16 (AASB 16) from the lessee perspective only Explain what is meant by ‘off balance sheet liabilities’ (as referred to in the article highlighted above) Some partners and staff are concerned about the potential negative impact on clients from this change. In particular, explain why may the change lead to ‘defaults on debt covenants’ (as referred to in the article highlighted above). Using your judgement, explain how your firm should deal with this change in terms of communications with clients and what you feel the overall impact will be on those clients. The draft client letter should include the following points as a minimum (remembering that technical accounting language will not help the client to understand): Outline the reasons the leasing standard is changing. Outline the impact the change may have (or problems it may cause) and how these problems can be overcome. Summarise the letter and offer further advice if needed.