Question 2

Easy Clean Pty Ltd, a small proprietary company, is managed by seven directors and four of them own 83% of company shares. The remaining percentage of shares is owned by directors' families. For banking purpose, it has an open line of credit with one of the state banks.

(A) Is Easy Clean Pty Ltd a reporting entity? Justify your answer. (5 marks)

(B) The IPSASB identifies citizens as primary users of GPFRs. Is it reasonable to assume that citizens actually read GPFRs produced by public sector entities? If not, does it still make sense to design the GPFRs based on their information needs? (5 marks)

Special requirements:

Q2 (A) Students must first demonstrate a thorough understanding of what is a reporting entity and then evaluate (Yes/No). Also requires reference to regulatory guides from professional accounting bodies.

Q2 (B) Students must also demonstrate a clear understanding on GPFRs and provide appropriate references (Journal articles / Regulatory guides)