Accounting theory Assignment 2

ACT505 Assignment 2, Semester , 2021 Page 1

ACT505 Accounting Theory, Semester 1, 2021 Assignment 2

30 Marks - Weight 20%

Due Date: Sunday 23rd May Midnight (week 11)

Instructions:

➢ This assignment consists of two question. The due date and time is noted above.

➢ It is your responsibility to ensure you factor in any time difference between Darwin and other locations when submitting your assignment.

➢ Please upload your file using the submission point for the assignment on

Learnline.

➢ Assignments submitted via e-mail will NOT be accepted.

➢ There is no need to complete a university cover sheet but DO please include your name, Student Number, and your tutor’s name.

Ethics:

➢ This is not a group assignment; it is an individual assessment. Your answers will likely be different from other students. If portions of your assignment are copied or very close to copying, all parties will be penalised for copying. Copying would be considered plagiarism and CDU has restrict policies in this regard (please see https://www.cdu.edu.au/academic-integrity for details).

ACT505 Assignment 2, Semester , 2021 Page 2

Question One (15 Marks)

Banks to slash extra 1000 jobs

On 21st August 2002 the Commonwealth Bank (CBA) announced that it would slash 1550

jobs while creating 550 jobs, a net loss of 1000 jobs. It planned to reduce inefficient

operations, task duplication & some back-office processing functions, but stated that it

would not close more branches even where closures had been planned. The news received

hostile reactions from both unions and consumer advocates like the Australian

Consumers’ Association (ACA).

Union officials said that the job cuts were scandalous, and that bank staff were suffering

from uncertainty following previous cuts and closures. ‘ It is unbelievable’ said Tony Beck,

Finance Sector Union national secretary. ‘ They have just shed 500 jobs, all from the retail

network. Now we get this punch with another 1000 jobs.’

The ACA was equally unimpressed. Its finance policy officer Catherine Wolthuizen asked

when the losses would stop. ‘ How much profit is enough for greedy banks like CBA and

how much further will it flout consumer and community demands before the Government

acts?’

The ACA wants a social charter set up to delineate minimum standards around access to

banking and affordability. It has been lobbying the Federal Government to act for

consumers in the face of massive bank profits.

CBA’s annual profit leapt 11percent to $2655 billion in the previous financial year,

increasing income (over $1.8m) from fees, commissions and other charges contributing to

the profit surge. The strong housing market contributed to an increase in lending fees

income: $618m, up 3percent. Commissions and other fees raised a massive $1.242 billion,

up 6 percent.

Required:

Explain whether you think the banks would or should respond to the concerns of the

ACSA and/or concerns of the Finance Sector Union. What theory(s) did you rely on (if

any) to form your judgement?

Question Two (Marks 15) Explain the efficiency perspective and the opportunistic perspective of Positive Accounting Theory. Why is one considered to be ex post and the other ex ante? Give two examples to illustrate your answer.