Question 1

The AASB Conceptual frameworks includes several qualitative criteria that financial information should possess if it is to be useful to decision making. Chapter 2 (2.12-2.19) for example refers to 'faithful representation', with neutrality (2.15-2.16) being one of the key components of 'faithful representation'. In your opinion, is itreallypossible for financial information to ever be neutral and/or representationally faithful? In your discussion you critically evaluate why standard setters choose to refer to 'faithful representation' and 'neutrality' within conceptual frameworks.

Question 2

What criticisms have been made in relation to the current practice of accounting? (For example, where assets that have been purchased in different years are added together unadjusted?). Considering these criticisms, what alternative methods of accounting have been proposed? Critically evaluate these alternative methods. In your response you consider factors such as the level of acceptance these methods have received from the accounting profession.