This study has indicated that financial reporting is mandated by different financial authority boards. In Australia, financial reporting and accounting activities are controlled by AASB. The study has mentioned that the financial reporting and accounting activities of the managers must be controlled by the legal system, so that the interests of all the stakeholders can be maintained. On the other hand, analyzing the debt and equity positions of the four retailers in Australia the study has indicated the retailers have used more equity capital than the debt capital.
Financial reporting is one of the essential duties that every firm needs to perform adequately. The term “financial reporting” indicates the preparation of financial reports by considering each accounting and financial transaction, analysis and other information of the business. Preparing and presenting the financial reports a company can disclose its actual financial position during a particular time span. This is also important to the stakeholders of the company because stakeholders can make their decisions by using the financial reports of the business.
In this study the discussion will be made on financial reporting in the organizational context. At the same time, the study will also make a discussion on Australian Accounting Standard Board or AASB. In the last section of the study, the discussion will be made on the capital structure of four companies, which belong from the same industry. The study will focus on the capital structure of four retail companies in Australia.
In the introductory section of this study it has been mentioned that financial reporting is one of the most essential activities for the firms. The decision making of the stakeholders highly depends on the financial reporting and disclosure of the company. In the other words, it can be stated that the interests of the stakeholders are associated with the financial reporting of the business (Cereola et al., 2017). Considering this fact, it must be mentioned that the financial accounting and reporting must be done as per the regulations not as per the managers’ will.
If this matter is critically analyzed, it can be stated that managers are the internal stakeholders of the business and due to that their interests are also associated with the performance and financial position of the company. It is very natural that if the activities of the managers are not regulated or restricted by any law, they will try to fulfil their interests as much as possible. This may hamper the interests of the other stakeholders. For example, shareholders are the owners as well as key stakeholders of the business and their interest is to maximize the income level of the business and return from the business. In this context, if the activities of the managers are not regulated, they will definitely try to maximize their revenue, which will increase the cost of the business and decrease the income level and return percentage of the shareholders (Hellman et al., 2018). Hence, in that case the interests of the shareholders will be hampered. However, in this context, it is also important to be mentioned that if the managers’ activities are not properly regulated shareholders may influence them illegally and unethically to maximize their interests, which is also not right for the other stakeholders and future of the business. Therefore, from this discussion, it can be stated that the activities of the managers within an organizational territory must be regulated by the proper legal system and the company must not allow the managers to disclose the financial accounting information voluntarily