In order to get the competitive edge in the global market, organisations have to upgrade their quality of financial reporting. It has become an exigent factor for all the companies to have an effective prior plan on cutting of expenses pertaining to transparent financial report generation. In the recent years, the financial disclosures have cost a huge price to the managers and have posed problems at unmanageable levels. Company managers are on the verge of appealing for the making of adjustments in the IFRS standards and adopting them. In this study it will be seen that how the Australian government will adopt new changes in regulations pertaining to financial accounting and discard the irrelevant appeals of amendment of the existing regulatory laws.
The IFRS standard sets the following rules of reporting practices
● The components of the balance sheet will be reported in an effective manner. It should be organised, transparent and should mention all the vital points in detail.
● The statement of comprehensive income sets out rules for generating profit and loss statements and other statements including equipment and property (feaa.uaic.ro, 2017). It states that the reporting should be done in a cost-effective manner.
● The statement of equity should be made standard (ifrs.org, 2017). It requires the companies to be transparently pertaining to the amount earned and retained in a given financial period.
● The statement of cash flow involving all the financial statements should be reported adequately to the shareholders, investors and other stakeholders.
The recent accounting standards maintained by the companies in Australia have been conflicted with many standards of IFRS practices of financial reporting (bizfluent.com, 2017). In the recent times, the arousal of certain qualitative characteristics that does not go with the flow of the IFRS standards has come up at the forefront
● Duplication of financial reporting results in obligations to various regulatory standards of IFRS since, everyone requires different requirements (Warren and Jones, 2018, p.100).
● Interpretations constituting administrative and fundraising costs differ between different regulatory duplications of financial reporting.
● The financial reporting of various companies in Australia has made it difficult to understand that whether they are economically significant or not (Barth, 2015, p.500).
● A rise in the expectation gap between the stakeholder and the company's generation of a financial report. This is due to the difference created between the actual regulations and regulatory activities performed.
● The inconvenience by the managers in the maintenance of a proper disclosure of financial report has led to the reduction of transparency in financial reporting.
All these above qualitative characteristics have been in compliance with the central objective of financial reporting and that is to maintain effectiveness in the expenditure on financial disclosure by the companies (Giner et al. 2016, p.200). A rise in the duplication of financial reports has led to increased expenses as well as irrelevant gaps between the shareholders and the company has led to the arousal of multiple generations of reports with inadequate information. A change is needed for the Australian Government to adopt IFRS standards in the financial reporting.
The economic structure of a country depends on the source of incomes which include business also. In order to maintain a single structure for business within Australia, the government of that country regulated an Act for the business entities which is Corporation Act. As suggested by Ramanathan (2016, p. 212), it deals with the organisations and the industries in Australia as well as it gives importance to the partnership and investment management. The main aim of this formation of this Act was to take control of the foreign corporations and the foreign business entities and include some legislation on that. This left an effect on the social services and responsibilities also. In order to maintain the work-life balance, the government of Australia set an enquiry process to understand the corporate social responsibilities incorporates. This initiative by the government was in aiming to keep the balance in between corporate and social life. In order to do so, the government of Australia gave suggestion on not including any specific legislation to that act. A government cannot set up any policy or revise any policy without investigating properly. The rules and regulations are made on the demand of the common people or depending on the public interest. The common psychology of the public interest is to meet the general need of common people. The main objective of any government in any country is to take care of the legislation depending on the public interest and the demand of the common people (maloney.people.clemson.edu, 2018). The common public interest is in food, lodging, security, and general facilities to live a normal life. In order to regulate any act or any legislation governments should take care of the public interest. Common public needs can be categories in two sectors such as public good, social environmental regulation and economic regulations. In order to reform any legislation or any act, the government should take care of this interest. In order to take care of the corporate culture, the important factors are the work-life balance, social environment and economic regulation. The main aim of regulating corporation law is to take control of the business entities in such manner that it can help in the development of the economy of the country (uu.nl, 2018). As an effect of this extra load on those industries created a workload on the employees which left a negative effect on the work-life balance of those employees who were working in those business entities. This left an impact on the social and environmental responsibilities. A government of Australia should have given importance to the social values and the responsibilities in order to meet the public interest. According to the regulatory capture theory, the regulatory authority gets dominated by the organisations on the basis of the created regulations and acts. Regulatory bodies are supposed to form regulation in such a way that it can serve the interest of the public as well as the interest of the industries also. In order to take care of the public interest and give growth to the economy of the regulatory body of the Australian government made act on the corporate affairs to take control on the business entities and the industries. This corporation Act was not successful in order to serve the interest of the organisation. As a result, the work-life balance of the employees in those industries was getting affected. This regulatory body of the Australian government wanted to serve economic interest of the countrymen (dlib.bc.edu, 2018). In accord with the group theory on economic interest regulatory bodies in Australia gave importance to the economic interest of the common people and of the country but couldn't recognize its effect on corporate people.
Revaluation of non-current assets to fair value is not allowed by the US Financial Accounting Standards Board. US Financial Accounting Standards Board has also made it compulsory to account for the impairment costs. Statement number 144 by the US Financial Accounting Standards Board states that long-lived assets have to be disposed of (fasb.org, 2018). Statement number 144 was in order to solve some issues regarding the statement number 121. Statement number says that long-lived assets are to be held and used also. It also states long-lived assets are needed to be disposed of by sale. The main problem in that fact was not allowing the non-current assets to the fair value. Non-current assets are the investment done by any organisation or any individual. Non-profit assets are counted for long-term investment as it will add value to future at the time of return. Impairment costs are the cost which exceeds the recoverable amount. This regulation by the US government was in order to serve the purpose of the government which doesn't serve the purpose of the common people. For most of the common people, long-term investment works as the future of them. People do invest in non-current assets as to get benefits in long-term but not the inclusion of it as fair value can leave the common people in trouble. In such case, the government of US is found to be not faithful to the common people of the country.
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