Accounting Issues

Financial accounting can be defined as a sort of accounting process that keeps track of the financial transactions of an organization. On the very foundation formed by these recording of information the further business procedures of an organization are meant to be reformed under the accounting guideline instructions so that the organization development or decline can be reflected in form of financial statement of the organization. Attributing such importance to the role of accounting standards from an organizational perspective, the need of standardization is paramount in order to provide the guidelines required to run their businesses properly (Ahmed, & Goodwin 2007). In case of this particular report, discussions will be done on the issues in relation to Australian Accounting standards along with the resolving theories that can be utilized to mitigate the effect of these issues.

Major issues

The activities of the accounting organizations in Australia is regulated and monitored by the regulations of Australian Accounting Standards Board (AASB). Though considerable efforts have been paid by the authorities to deal with every sort of potential issues, still the emergence of several issues in the recent times have been recognized. These issues have been discussed below.

2.1 Hold up problem

As a consequence of the intense market competition in the accounting sector all over the globe the organizations tend to keep the bargaining power of the stakeholders and commercial associates into and function in a fashion serving that purpose. This trend has also been identified in the accounting scenario of Australia. Hence, such holding-up activities on the part of the organization has affected the organizational productivity to some extent (Baldwin, Cave, & Lodge 2012). As an aftermath of this the managerial risk of the organization increases significantly that could have been mitigated if the shareholders, organization and stakeholders had cooperated with each other without the intention of putting into check the possibility of increased charges from the end of the other parties.

2.2 hold of manegrial power

The accounting organization of Australia have been noticed to be providing great authority to some of the higher officials in the organizations that has surfaced as quite an issue in the recent times. It is evident that the power of formulating and thereafter enforcing organizational strategies lies in the hand of these people who in an attempt to serve organizational interest have jeopardized the profitability of the firms by developing such strategies that are certainly not beneficial for the organizations in the long run (Chalmers, Godfrey & Lynch 2012). In this regard, attainment of supreme authority in the organizations can therefore demotivate stakeholders to keep collaboration with those organizations once the managers commence utilizing their authority in a negative way. In addition to this, as no directorial election generally takes place in this kind of organizations, hence, the managers consider their authority to be absolute and in order to enhance organizational profitability starts neglecting the interests of the associates.

2.3 Regulatory Consequences

The activities and operations in the Australian accounting sector is not only guided, but controlled as well by the regulation guidelines of Australian Accounting Standard Board (AASB) and International Finance Reporting Standards (IFRS). The accounting organizations in Australia are bound to follow the regulations concerning credits, taxes, etc enforced by AASB. With the continuous amendments in the guidelines the regulations have been made stricter that has led to the situation where the operational flexibility of the organizations has been reduced due to the consolidation of the regulations (Chua, Cheong & Gould 2012). Taking into consideration the increased income rates and modified definition of lease accounting has presented several challenges for the accounting organizations to maintain their profitability.

2.4 Legal Issues

Development and enforcement of The Fair Work Act 2009 and The Corporation Act 2001 has been stimulated by the need of making such an environment prevail where practicing of discrimination and deception can be prevented effectively. The intention behind such development of regulations is to ensure the increasing profitability of the firms by means of following these regulations on the part of the authorities of the firm (Christensen 2017). In the present Australian accounting scenario, it has been noticed that many managers of the accounting firms are nowadays violating the regulations by committing bias practices for individual gains (Deegan 2013). Such activities on the part of the executive officers are not only affecting their personal well-being, but organizational benefit as well.