XYZ Company is an accounting and auditing firm which provides auditing services to its listed clients and

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Question:

XYZ Company is an accounting and auditing firm which provides “auditing” services to its listed clients and “accounting and auditing” services to both listed firms and SME clients. Mr. John is the CEO of the firm. Listed firms are those organizations which are traded in MSM (Muscat Securities Market). SME firms are small and medium sized organizations and require very less documentations. There are no obligatory audits for these SMEs unlike listed firms. Regulatory framework is very strict for listed firms as compared to SMEs. XYZ Co has nearly 20 listed firms and 500 SMEs as clients in any accounting year. XYZ Co charges nearly 30,000 OMR (per client) for their auditing work from the listed companies and approximately 5,000 OMR (per client) from their SME clients. Recently Ms. Hana has joined XYZ Co as a planning manager. She has identified that a listed firm requires a lot of documentation and formalities and therefore XYZ Co is involving a lot of time and resources for these clients. SME clients are easy to handle as their regulation is not as thorough compared to the listed firms. The resource commitment for SME clients is negligible as compared to listed firms. She has suggested to give away auditing services to listed firms and only concentrate on the SME clients. Mr. John has given this assignment to you and has asked few of the pertinent questions. 4

Task 1: Emphasize the need of regulatory and conceptual framework applicable for listed firms in Oman. Use GAAP principles to synthesize your answer (LO 1.1)

Task 2: Underline the structure of accounting standard setting bodies relevant to the international standards. Elaborate the application of these standards in Omani context. (LO 1.2)

Task 3: Explain various components of theoretical accounting framework applicable in the given scenario. (LO 1.3)

Task 4: Critically analyze the IASB standard setting process. Give your opinion for any improvements or tailored for Omani context. Give your suggestion to Mr. John regarding the identified issue in the scenario.