Introduction

In this report the whole discussion is related to financial reporting based on the organizational context. Not only this, the report will also discuss about AASB or Australian Accounting Standard Board (Tan et al 2016). The final section of the report, the discussion must be based on the four companies’ capital structure, which belongs to no other industry than the same one. The report is focusing on Australia’s four retail companies’ capital structure. 

Corporate regulations

The beginning section of the report contains the part where it is been already mentioned about the importance of a company’s financial reporting. Stakeholders highly depend on financial reporting of a company to come forward with any decision related to the company’s accounting and disclosure of it. It can be put in front, as this that a company’s financial reporting is hugely associated with the stakeholders’ interests (Howieson 2017). Keeping in mind this fact, it must not be left behind that financial reporting and accounting should follow the proper regulations not managers’ will. 

If the subject is being analysed critically, it can be said that a company’s internal stakeholders are the managers. This leads to their massive interest in the company’s performance as well as its financial position. Therefore, it is extremely natural for the managers to be motivated by their own interests rather than the others and to restrict this issue certain rules must be followed. This may result in the hampering of the stakeholders’ interests. For instance, shareholders also own the company and their functions do not end here. They are key stakeholders too and their interest lies in the maximization of the level of income as well as the business’s returns. Under this situation, if the managers’ activities do not get restricted, they will obviously try to increase the revenue and this will lead to cost growth of the business and lowering in income level as well as the percentage of the return of shareholders (Chang, Jackson & Wee 2017). Under this situation,  it must not be left behind that the activities of the managers do not get controlled then some shareholder may inspire them unethically to increase their interests and this is also illegal and wrong attitude to the other shareholders as well as the business’s future.

Therefore, from the previous discussion, it can be said that the managers’ activities within organizational atmosphere should be controlled by perfect legal rules and the company must be strict about the managers’ capability of disclosing the financial reporting information to anyone else. 

Setting of Accounting Standards

AASB or Australian Accounting Standard Board works as the authorized body to regulate Australia’s business’ financial activities. The main focus of AASB is developing an accounting system based on principles in Australia as well as to contribute in the Australian economy of the stakeholders’ confidence. AASB has developed the accounting regulations in accordance with International Financial Reporting Standards or IFRS’s rules, stated by Lovell (2014). From this it can be referred to that AASB is associated with IFRS. Here it gets important the identification of how AASB takes part in the functions of IFRS. Under this context, it can be said that among IFRS’s various key requirements one is complete disclosure of financial information by preparing the financial reporting. On various note it can be said that the standards of AASB have also made the complete disclosure of principle must for Australia’s every business. Therefore, it can be said that fixing the total disclosure of principle AASB has playing a part in IFRS. 

On a similar note, there are multiple other regulations, for example, PPE or fixed assets’ valuation of a business. Based on the IFRS standards no fixed rule is there to follow through which a company’s PPE or fixed assets’ value can be determined. There are multiple choices for the company to determine the value. The methods are as follows- fair value process or historical cost process or mixed method. Similarly, AASB is not of the view to fix any specific method to determine company’s PPE or fixed assets’ value. From this perspective it can be said again that AASB is still taking part in the system of IFRS.

The countries who are member of IASB, they do not need to follow the rules of IFRS. The reason behind this is that IFRS’s rules are developed by keeping in mind the regulations of International Accounting Standard Board or IASB. This refers to the fact that IASB’s member countries are already working according to the rules of IFRS. Most importantly, the rules of IASB are far stronger than IFRS’s rules. Under this circumstance, the companies of IASB’s member countries are actually following the rules of IASB properly and they can ignore the IFRS’s rules. Therefore, member countries of IASB can easily avoid the rules of IFRS. 

Equity of the owner

Woolworths Limited: