This report is as a feedback to the report plan in part one. The purpose of these report is to address the feedback given in part one of the report. This is through identifying the strengths and weaknesses of the report as well as the areas that can be improved in the report. The issues covered in this report are more substantial arguments for the points, weaknesses, and strengths in the report and the numberings and headings in the report.
The research method that has been used in this report is the analysis method. Some of the limitations that I encountered during the report are: obtaining the data from journals and websites was a tad tricky, the time was somehow limited, and the resources were also limited.
Some of the terms that I have used in the report are:
Lease: this is a contract where one person conveys an asset to another person, for the period agreed upon.
Lessee: this is the person that pays for the lease.
Lessor: this is the person that issues the lease of an asset.
Body
Reflection on the feedback
From the feedback given I was able to come up with a few conclusions. First, the arguments presented in the case of the IFRS 16 leases are not substantial. After reviewing the report and the feedback, I realized that discussions on the new leases were shallow. The report did not give an in-depth explanation of the new leasing of accounting and what it could do for accountants, financial managers, firms and leasing organizations (Beattie 2014).
The report has just outlined what the new leasing accounting standards are and the date of issue by the IFRS which is in the year 2019. The report also gives a brief methodology of the current accounting lease as per the finance and operating lease. It continues to further explain the impact of the new lease on accounting practices. The feedback says that the arguments were not strong meaning that they did not provide an in-depth explanation of the issue in question (Chambers, Dooley and Finger 2015).
The second feedback is that the source analysis in question one two and three are reasonably covered and discussed. From this, I realize that the source analysis is ok but can be improved more. The areas have been reasonably covered, but more effort can be put by covering areas. For example from the feedback, the target audience of the report was shallow in that it did not provide enough reasoning as to why the given examples were the target audience (Choudhry and Mizerka 2018).
The feedback says that question one, two and three needed more strength. This I believe means that as much as the arguments laid were reasonable they did not have enough content to support the arguments. From this, I think that the source analysis was weak and did not have enough supportive information (Czajor and Michalak 2017). The feedback gives an example of the author’s credentials as being insufficient. In this case, I believe that the credentials given for the authors of the sources in the report are not helpful. This is because the names provided are not in detail.
Lastly, the feedback suggests that the numbers and headings provided in the report should be looked at more. In this instance, I believe that the report only needed the headings and therefore the numberings were not needed (Williams 2014).
In this question, I would make the following improvements. When writing the purpose of the report, I would include why the IFRS feels the need to implement the new lease standards. I would write more about the challenges that lessees and lessors face that prompted the IFRS to come up with the new leasing standards (Eades and Eades 2017).
In the target audience, I would carry out more research on who the new leasing standard would affect. I would then include the audience that I believe would be affected by the new leasing standards and also provide an explanation as to why they are the target audience. This would give the reader more perspective on why the audience has been given.
In the area of key decisions to be made, the improvements to be made are adding more details about the decisions that the IFRS and the AASB need to make regarding the new leasing standards as well as if the target audience will adopt the rules. These decisions I would support with reasonable explanations as to why the IFRS and the AASB feel the need for the adoption of the new lease and why the audience should do away with the current (Gimbar, Hansen and Ozlanski 2016).
In the area of the information needed, I will provide more sources of the report data. This will include information such as the current leasing standards, the new leasing standards and any developments that are happening in the standard setting boards. These boards include the Australian Accounting Standards Board, the International Accounting Standards Board and the International Financial Reporting Standards (Gonen and Guryel 2016).
I will also improve the area of keywords given by explaining the words presented in the report such as lessee, lease, and lessor. I will also provide the full names of the abbreviations given in the report such as the AASB and the IFRS. This will help in having a better understanding of what the new leasing standards are and what they propose.
This area I believe is reasonably covered but some of the improvements that it needs is providing more journal articles and textbook sources because most of the references given are from academic articles and websites. This I believe will help in that the information presented will cover a broader scope and therefore cover a lot of information (Leong 2015).
This area, I believe requires a lot of improvements. First, the author’s credentials need to be corrected. Most of the author’s names are not complete or are abbreviated. In this instance, I believe that the author’s name should be given in full as well as their appropriate title if possible. Second, the evidence and examples provided of the sources are inadequate. I believe that more information should be given in the evidence from the references cited and also relevant examples given which were not given for most of the sources (Mora and Molina 2014).
Third, most of the sources did not have any connections or questions. I think this area can be improved by finding more connections to the site given and also questions that have been asked. For instance the website articles I believe have many questions on the articles that have been written. This will provide a better understanding of the evidence in the source given and will also help the reader understand how the source connects to the topic of research. Without a connection, then how is the reader supposed to see the relevance of the reference given to the question? (Scott 2015).
The fourth area of improvement is the conclusion area. A conclusion is not supposed to present any new information to the source. However, from the conclusions given in the sources, I realized that there was a lot of new information that was not presented in the evidence and examples. The conclusion needs to present information that is already contained in the evidence and examples.
This area was the basis of the report and has all the relevant information that the reader needed to understand the AASB 16 and the implications it has had for the target audiences. I believe it needs some areas of improvement so that it can be of benefit to the reader.
First, more information needs to be provided for the background of the new leasing standards. In this instance, an explanation as to how the new standards came into existence needs to be given. This should include information such as the previous leasing standards and how the standard setting boards such as the AASB and the IFRS came to decide on the new leasing standards. Also, the reasoning for the change of leasing standards needs to be improved. Instead of just stating, more explanation needs to be given. Such information will provide better reasoning as to why the new leasing standards need to be implemented (Joubert, Garvie and Parle 2017).
Second, the area for the current methodology for lease accounting needs to be improved on. When providing the situations in which a lease is categorized into either finance or operating lease, more information should be provided. The circumstances are just stated and therefore do not offer strong arguments. The situations should be explained further. For instance, the situation of transfer of ownership should be defined on what it is and the circumstances in which it happens and which category it is. (Lin and Graham 2017).
Third, the recognition of a financial or operating lease needs to be improved on. In this area, how a lease is recognized as an operating lease has not been provided and further clarification on what an operating lease is needs to be given if it was not offered earlier in the keywords section. Also, the recognition of a financial lease needs to be explained further with more explanation of what a financial lease is and when it is issued.
The fourth area that needs improvement is the methodology of the new leasing standards. In this area, more guidelines need to be given on what the new leasing standards propose. This should include information such as the changes that have been made that are not in the current standards and the new standards set. This should consist of an in-depth explanation of the standards by explaining terms used that may be technical.
The fifth area that needs improvement is the impact that the new leasing standards will cause in the industries and the target audiences. Three sectors have been given as the areas that will be impacted the most by the new leasing standards (Hoque 2018). I believe that more industries should be included. Also an explanation as to how the IFRS 16 will affect these industries needs to be given. For instance in the telecommunication industry, information about how the IFRS 16 will impact the industry in terms of how it will improve leasing or how it will affect leasing.
The report has given the adverse effects of the new leasing standards in these industries, but it has not provided the positive impacts of the IFRS 16. Therefore this is an area of improvement because the positive implications of the IFRS 16 are essential in determining whether the standards will be implemented or not (Mayer 2016).
Also, the arguments for and against the need for a specialist need to be improved. Information about what the specialist will be doing with the implementation of the new leasing standards needs to be provided. This will strengthen the argument as to whether the specialist is required or not. (Osei 2017).
This also applies to the area of the argument for and against the IFRS 16. This area needs improvement as well in that the primary goal of the IFRS 16 should be stated before providing a debate as to whether they should be implemented or not. The arguments need to be strengthened further by providing examples as well (MITCHELL and NØRREKLIT 2017).
Another area that needs improvement in this question is that where companies and organizations need to be trained for the new leasing standards (Öztürk and Serçemeli 2016). The area needs to provide more information about the big four and how the training will be conducted including the time that the training will take. This is information about the workshops and how they will be performed and the areas that they will focus on.
Lastly, the area that needs improvement is that of the full plan of the main headings and the subheadings. In this area, the main headings and subheadings used in the report should be provided. Some of the titles and subheadings that I would include in the plan are the introduction, the references and the purpose of the research (Grenier, Pomeroy and Stern 2015).
Conclusion
In conclusion, the report given in part one has raised substantial arguments about the new leasing standards, but the arguments are not strong enough. They provide a shallow review of the IFRS 16 and therefore it is hard to convince a reader about the new leasing standards. Also, a lot of information has been left out in the report, for instance, the definition of terms such as financial and operating leases. This information is essential for the understanding of the new leasing standards and is thus crucial to the report.
The report also needs to include examples in some areas to strengthen the arguments. For example, when giving the arguments for and against the specialist, examples should be provided so that the reasons that have been given for either have reasonable support. A thorough background on the new leasing standards also needs to be delivered. This is because this is the basis of the report and will give a better understanding of the IFRS 16. All these improvements can be used to enhance the report.
The following are the recommendations to make the report more useful and substantial.
When writing the purpose of the report information such as why the IFRS feels the need to set the new accounting standards should be included. Also, include the challenges that lessor and lessees faced that prompted the IFRS 16.
When writing the target audience, include more audiences with examples as to why they are the target audience. Also, carry out more research on the target audience in regards to the IFRS 16.
In the key decisions to be made, include information on the standard-setting boards such as the AASB and the IFRS and the decisions that they need to build on the new leasing standards. Including reasons as to why they have made the decisions (Grenier, Pomeroy and Stern 2015).
For the information needed for the report, include more sources for the new leasing standards. Also, provide what the current leasing standards entail as well as the new leasing standards.
Include the meanings of keywords used such as financial and operating lease as well as who is a lessee and a lessor.
Include more sources from journal articles as well as textbook sources to provide a broader scope of the report.
Question three
The author’s credentials in this area need to be corrected by giving the full title and name where possible and also writing them correctly.
Adequate evidence needs to be given from the sources. This evidence from the sources should relate to the new leasing standards, and also examples should be provided for the evidence. Examples will help to clarify the leasing standards (Warren 2016).
Connections need to be given for the sources provided. These include other articles that are on new leasing standards or organizations and industries that the standards relate to. Questions also need to be provided from the sources. Questions may be in the form of comments from readers, especially on the website sources.
The conclusions on the sources need to entail information that is written in the evidence and example. New information should therefore not be included.
When providing the background information on the new leasing standards, the following information needs to be included: the previous leasing standards, the new leasing standards, how the new leasing standards came into existence, the collaboration of the IFRS and the AASB in the new leasing standards and the reason for the change of the current leasing standards (Sandblom and Strandberg 2015).
When providing the methodology for the current leasing standards information about the situations for categorizing a lease as a financial or operating needs to be expanded. Include a further explanation of the situation and how they come to be.
Include more information on how a lease can be recognized as a financial or operating lease and the explanation of these terms as well.
When providing the methodology of the new leasing standards, include information such as the changes in the IFRS 16 and its primary goal. Also, give an in-depth explanation of the new leasing standards.
When giving the impacts of the new leasing standards provide both the negative and positive effects on the industries. Also, include more industries with relevant examples of how they will be affected by the IFRS 16 (Wong and Joshi 2015).
Give an explanation of the work of a specialist is in accordance with the new leasing standards. With this then provide arguments as to whether the specialist will be helpful or not to companies after they implement the new leasing standards. The arguments should be strengthened by practical examples as well.
Also when providing the arguments against and for the IFRS include what the IFRS 16 is proposing. This is their primary goal. Provide practical examples as well when writing the arguments so that they will be more substantial.
On the training of organizations for the new leasing standards include what this will entail, and the period of time it will take as well. This includes information such as the workshops and what they will consist of.
Lastly, provide the full plan for the headings include the subheadings with the appropriate numbering. These recommendations will help in enhancing the report.
Defined terms
AASB- Australian Accounting Standards Boards
IFRS- International Financial Accounting Standards
Lease- a contract that allows an individual to use an asset
Finance lease- this lease transfers all the risks to the person owning the underlying asset
Lease payments-the payments that are made by the lessee to a lessor
Lessee- the person that pays for the contract of an asset
Lessor- the person that grants the contract of an asset
Lease term- the period in which the lessee has the right to use the asset.
References
Beattie, V., 2014. Accounting narratives and the narrative turn in accounting research: Issues, theory, methodology, methods and a research framework. The British Accounting Review, 46(2), pp.111-134.
Chambers, D., Dooley, J. and Finger, C.A., 2015. Preparing for the Looming Changes in Lease Accounting. The CPA Journal, 85(1), p.38.
Choudhry, T. and Mizerka, J. eds., 2018. Contemporary Trends in Accounting, Finance and Financial Institutions: Proceedings from the International Conference on Accounting, Finance and Financial Institutions (icaffi), Poznan 2016. Springer.
Czajor, P. and Michalak, M., 2017. Operating Lease Capitalization-Reasons and its Impact on Financial Ratios of WIG30 and sWIG80 Companies. Przedsi?biorczo?? i Zarz?dzanie, 18(1, cz. 1 Practical and Theoretical Issues in Contemporary Financial Management), pp.23-36.
Eades, K.M. and Eades, K.M., 2017. Burlington Northern Railroad Company: Equipment Leasing. Darden Business Publishing Cases, pp.1-13.
Gimbar, C., Hansen, B. and Ozlanski, M.E., 2016. The effects of critical audit matter paragraphs and accounting standard precision on auditor liability. The Accounting Review, 91(6), pp.1629-1646.
Gonen, S. and Guryel, A., 2016. Accounting for investment properties within Turkish Accounting Standard 40 context.
Grenier, J.H., Pomeroy, B. and Stern, M.T., 2015. Issues in financial accounting. Pearson Higher Education AU.
Grenier, J.H., Pomeroy, B. and Stern, M.T., 2015. The effects of accounting standard precision, auditor task expertise, and judgment frameworks on audit firm litigation exposure. Contemporary Accounting Research, 32(1), pp.336-357.
Hoque, Z., 2018. Methodological issues in accounting research. Spiramus Press Ltd.
Joubert, M., Garvie, L. and Parle, G., 2017. Implications of the New Accounting Standard for Leases AASB 16 (IFRS 16) with the Inclusion of Operating Leases in the Balance Sheet. The Journal of New Business Ideas & Trends, 15(2), pp.1-11.
Leong, R., 2015. Structuring an undergraduate accounting theory course to enhance the learning experience of Australian students: Preliminary findings.
Lin, K.C. and Graham, R.C., 2017. How Will the New Lease Accounting Standard Affect the Relevance of Lease Asset Accounting?.
Mayer, L.M., 2016. The New Lease Accounting Standard: The Effects of IFRS 16 (Doctoral dissertation, Universität Konstanz).
Mitchell, F. And Nørreklit, H., 2017. Introduction. In A Philosophy of Management Accounting (pp. 15-34). Routledge.
Mora, A. and Molina, H., 2014. Lobbying in the accounting standard setting: The case of the leasing project. In X Workshop de Investigación Empírica en Contabilidad Financiera.
Osei, E., 2017. The Financial Accounting Standards Board (Fasb), And The International Accounting Standards Board (Iasb) Sings Similar Tune: Comparing The Accounting Treatment Of New Ifrs 16 With The Ias 17, And The New Fasb Model On Leases. Journal of Theoretical Accounting Research, 13(1).
Öztürk, M. and Serçemeli, M., 2016. Impact of New Standard” IFRS 16 Leases” on Statement of Financial Position and Key Ratios: A Case Study on an Airline Company in Turkey. Business and Economics Research Journal, 7(4), p.143.
Sandblom, P. and Strandberg, A., 2015. The Value Relevance of the Proposed New Leasing Standard. An event study of the European Stock Markets’ Reaction to the proposed replacement of IAS17.
Scott, W.R., 2015. Financial accounting theory (Vol. 2, No. 0, p. 0). Prentice Hall.
Warren, C.M., 2016. The impact of International Accounting Standards Board (IASB)/International Financial Reporting Standard 16 (IFRS 16). Property Management, 34(3).
Williams, J., 2014. Financial accounting. McGraw-Hill Higher Education.
Wong, K. and Joshi, M., 2015. The impact of lease capitalisation on financial statements and key ratios: Evidence from Australia. Australasian Accounting Business & Finance Journal, 9(3), p.27.
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