Accounting is considered to be the oldest known professions that even existed in the Sumerian civilisations. In the modern scenario, the work of accounting is not quite dissimilar from the work of bookkeepers. Though modern accounting is extremely complex and requires a lot of field work but it can be divided into two categories: Financial accounting and Business accounting. Financial accounting requires a coded set of accounting standards which is applicable to the financial records of any organisation. Business accounting basically focuses in the requirement of the business rather than the standards of the external accounts. It basically includes the model making process which ultimately helps the management in making decisions better and evaluating their performance.
Every business in the world has a principle demand, which is the final disclosure. It is an essential part of the business. It is quite essential as it helps in dealing with the shareholders of the company for making an idea about the financial base and present finance condition of the business. Another way of saying it is that the financial declaration helps the shareholders in making the important decisions related to the business.
The study will principally be focusing on the importance of the financial declaration for the company. At the same time, the focus will be also on the Australian Accounting Standard Boards or AASB that takes part in International Financial Reporting Standards or IRFS. The final section of the study will be focusing on the information’s of the shareholders of four retail companies in Australia.
For a proper financial disclosure of any company, as proper accounting and financial reporting is quite essential. Reports regarding the various financial performances and position can be made only when they are prepared of different financial statements along with the detailed information of the annual reports of the organisation. Here, it is also important how the firms on an individual basis make the different financial accounting and financial reporting. Financial accounting is a special branch of accounting that keeps the record of the financial records of the company. Financial reporting refers to the annual financial records of the company that provides a summary of the income and the expenditure of the company for a particular year.
There are various rules and regulations connected with accounting and financial reporting of the business is developed to maintain proper standards of financial reporting for each business. The various shareholders associated with the firms have different interests regarding the various activities of the firm; where the reporting is basically done keeping in mind the various interest of the shareholders on the activities can be satisfied. Here the regulations on the financial reporting should be in a proper manner. If the financial reporting are not in proper manner and left upon the decisions of the managers then there are chances of high risks about the non-fulfilment of the shareholders. As the managers are the shareholders of the business in itself, there are high chances that the mangers will try to maximize only their only sole interests which might result to the obstruction in the interest of other shareholder.
Accounting Standard Setting
International Accounting Standards (IAS) are considered to be one of the oldest accounting standards which were replaced by the International Financial Reporting Standards (IFRS) in the year 2011 that was issued by the IAS as an international standard setting body. Accounting Standard have been developed to help companies and their respective management in different activities related to accounting and financial activities. Since these activities and reporting are not easier, these can be made easier by adhering to the standards set by different accounting boards. Considering the Australian companies, the various activities of the companies are regulated according to the standards mentioned under AASB. The primary aim of the standards set are made in such a way that the interest and the trust of the shareholders can be easily dealt with by various organisations.
The rules and standards made by AASB are in close connection with the rules and standards set by the IRFS. For a better understanding, we can take into consideration any particular standards set by the AASB. For example: It can be easily identified that the standards under the material disclosure that is AASB134 have a close relation with the particular standards of the IRFS standards that is IRFS7. From the above example it is understood that in Global accounting process or IFRS, AASB is one of its part.
Moreover, following the IRFS standard on an essential basis is not followed by the companies of those countries which are already members of the IASB. The basic reason for developing the IRFS standards keeping in consideration the standards and regulations made by the IASB. The standards under IFRS are quite new considering the standards under IASB. When the IRFS standards were being developed, importance was provided to the IFRS standards. Here it can be said, a country which is already a member of IASB the companies of that country follows the IASB which on its own follows the IRFS standards. Thus, these companies separately do not require to follow the IRFS standard.
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