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Accounting Theory and Policy - (final paper) - International Islamic University Malaysia

Accounting Theory and Policy - (final paper) - International Islamic University Malaysia

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Published by: Maas Riyaz Malik on Mar 12, 2009
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11/09/2012

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Set 1
END-OF-SEMESTER EXAMINATIONSEMESTER I, 2007/2008 SESSION
KULLIYYAH OF ECONOMICS AND MANAGEMENT SCIENCES
Programme : BACC Level of study : 3 & 4Time : 9am 12noon Date : 29/10/2007Duration : 3 hoursCourse Code : ACC 4001 Section(s) : 1 - 3Course Title : Accounting Theory & Policy(This Question Paper Consists of 6 Printed Pages with 2 Sections)
DO NOT OPEN UNTIL YOU ARE ASKED TO DO SO
INSTRUCTION(S) TO CANDIDATES
1.
 
Section A: Compulsory question2.
 
Section B: Answer
TWO
questions only
ANY FORM OF CHEATING OR ATTEMPT TO CHEAT IS A SERIOUS OFFENCEWHICH MAY LEAD TO DISMISSALAPPROVED BY:
 
 2
PART A: Compulsory questionQuestion 1
a.
 
Among the recent concerns on the failure of corporate governance is the collapse of big business corporations such as Enron, Polly Peck and Baring. Various reasonssuch as lack of monitoring by the relevant parties including board of directors andexternal auditors have been attributed to such a failure. Provide, and briefly discuss,
three
governance mechanisms which could be instituted to enhance the monitoringsystem in a business organization.(9 marks)b.
 
Apart from the collapse of big business corporations, briefly discuss
two
otherrecent concerns on the failure of corporate governance
(You could refer toWhittington (1993) for the recent concerns on the failure of corporate governance)
.(6 marks)c.
 
The issue of transparency of information has been viewed as one of the importantaspect of corporate governance. Discuss the link between financial reportingfunction and corporate governance
(6 marks)
. Based on Whittington (1993),discuss in detail, the following two issues related to the systemic problems of corporate governance, with regard to financial reporting:a.
 
Demand of information
(5 marks)
, andb.
 
Monitoring costs
(5 marks)
.(16 marks)d.
 
In the year 2000, Malaysia introduced its own Malaysian Code of CorporateGovernance (MCCG) in an attempt to improve the level of corporate governance tobe at par with the international standards. Later in the year 2001, theserecommendations in the MCCG became mandatory requirements for all publiclisted companies by Bursa Malaysia. Do you think such institution of corporategovernance requirements as mandatory compliance will help improve the level of corporate governance in Malaysia? Briefly justify your answer.(3 marks)
(Total: 34 marks)
 
 3
PART B: Answer two questions only.Question 1
a.
 
The main underlying factor contributing to a company’s exposure of foreigncurrency risk is the changes of the exchange rates. For example, during the Asianfinancial crisis in 1997, many countries such as Indonesia, Thailand and evenMalaysia, recorded huge losses due to the adverse effects of volatility of exchangerates. Discuss, the measure which has been taken by Malaysia to limit such foreigncurrency exposure
(2 marks)
, and its implication to accounting records
(2 marks)
.Is there any solution which Islam could offer to the above problem
(3 marks)
?(7 marks)b.
 
One of the main requirements in FRS 121 is the determination of functionalcurrency. Why is the determination of the functional currency very important fortreating foreign currency transactions and translations
(6 marks)
? Provide
four
 factors in determining the functional currency of foreign operations
(8 marks)
.(14 marks)c.
 
A related party relationship could have an effect on the financial and operatingresults of an enterprise in several situations. Provide and explain
two
examples of such situations.(6 marks)d.
 
In considering any possible related party relationship, FRS 124 stipulates that weneed to apply the concept of substance over form in identifying such possiblerelationship. Provide
three
situations which might not necessarily lead to relatedparty relationship.(6 marks)
(Total: 33 marks)

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