In order to get the coinpetitii’e edge in the global market. organisations have to upgrade their quality of financial reposing. It has become an exigent factor for all the companies to hat e an effective prior plan on cuttmg of expenses pertainin g to transparent financial report generation In the recent j ears. the financial disclosures hai’e cost a huge price to the managers and has e posed problems at unmanageable let els Company managers are on the i erge of appealing for the making of adjustments in the IFRS standards and adopting them. In this study it will be seen that hon the Australian government u ill adopt new’ changes in regulations pertaining to financial accounting and discard the irrelei ant appeals of amendment of the existing re gulaton lan s
The IFRS standard sets the follou’ing niles of reporting practices
The components of the balance sheet u ill be reported in an effectis’e manner It should be organised. transparent and should mention all the i ital points in detail.
The statement of coinprehensii’e 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. 2G l7). It requires the companies to be transparently pertaining to the amount earned and retained in a gis en financial period.
The statement of cash flou inx’olx ing all the financial statements should be reported adequately to the shareholders, irn estors and other stakeholders
The recent accounting standards maintained bj the companies in Australia hai’e been conflicted u ith many standards of IFRS practices of financ iaI reporting (bizfIuent.com. 2017). In the recent dirties, the arousal of certain qualitatii e characteristics that does not so u ith the flou of the IFRS
standards has come up at the forefront
Duplication of financial report •s results in obI s• tions to various regulator standards of I FRS since. ei’ey’one requires different requirements (Warren and Jones. 2018. p,l0G).
Interpretations constituting administratix e and fundraising costs differ betw een different regulatory duplications of financial reporting.
The financial reporting of various companies in Australia has made it difficult to understand that i hether they are economically significant or not (Barth, 20.15, p,500),
A risc in thc cxpcciation gap bgtii ccn thc staLcholdcr and the company ’s gcncration of n financial report. This is due to the difference created bet» ecu the actual regulations and regulator actin ities performed
Thc incorn’cnicncc b; thc managers in the maintcnancc of a propcr disclosure of financial report has led to the reduction of transparency in financial reporting.
Figure 1: Conceptual frame» ork of financial reporting
All these aboi c qualitatii c characteristics liar e bcen in compliance » ith the ccntral objective of financial reporting and that is to maintain effccti eiiess in tlic expenditurc on financial disclosure by thc coinpanics (Giner cr al. 2G 10. p.2G0). A risc in thc duplication of financial rcports has lcd to incrcased cxpenscs as i cll as irrclei ant gaps bet» ecu tlic sharelioldcrs and the company has led to thc arousal of iniiltiplc gcncrations of reports ii ith inadequatc inforin;ition A changc is nccdcd for thc Australian Goi’crnmcnt to adopt I FRS standards in the financial rcporting
The economic structure of a country depends on the source of incoities » hich include business also, In order to maintain a single structure for bnsincss u ithin Australia. the goi’omincnt of that county re s ulated an Act for the business entities u hich is Corporation Act As suss ested bj
Rainanatlian (201fi, p 212), it deals u ith the organisations and the industries in Australia as » e11
as it gii’cs importance to the partnership and ini’cstmcnt management, The main aim of this formation of this Act » as to take control of the foreign corporations and the fore ign business entities and include some legislation on that. This left an effect on the social seri’iccs rind responsibilities also. In order to maintain the ii ork-life bnlnnco, the goi’cmincnt of Australia set an eiiquin process to understand the corporate social respoMibilities incorporates This initiatii e by the goi’crnmcnt is as in aiming to keep the bal;inco in bctii’eon corporate rind soci;il life. In order to do so. the government of Australia ga e suggestion on not including anj specific lcgislation to that act. A goi’crnincnt cannot sct rip any policy or rci’isc any policy ii’ithoiit
irn’cstigating propcrly, The rulcs and regulations arc madc on thc demand of the common pcoplc or depending on the public interest. The common psjcIioIop of the public interest is to meet the general need of comiiion people The main objectii e of any goveniinent in any counts' is to taLe care of thc legislation depcnding on thc public interest and the demand of thc common pcoplc (malonev people clemson.edu. 201S) The common public interest is in food, lodging, security, and gcncral facilities to lii’c a nonnal life. In ordcr to regulate am act or anj legislation goi’crnmcnts should takc care of thc public intcrcst. Common public necds can be catcgorics in t» o sectors such as public good. social eni’ironinental regulation and economic regulations. In ordcr to rcform am legislation or anj act. the goi’crnmcnt should takc care of this interest. In order to take care of the corporate culturc. tlic important factors are the i ork-life balance. social end ironment and economic regulation. The main aim of regulating corporation lai is to taLe control of thc biisincss cntitics in such mnnner that it can hclp in thc dci’clopincnt of thc economy of the counts' (uu.ml. 201S). As an cffect of this extra load on those industrics creatcd a ii orkload on the cinployces ii’hich left a ncgatii’c cffcct on thc ii ork-lifc balancc of thosc cinployccs ix’ho ii crc ii orking in those business cntitics This lcft an impact on the social and environmental responsibilitics. A goveniincnt of Australia should Iiai’e gis en importance to the soci;1l i’altics and the rcsponsibilities in ordcr to incct thc public intcrcst According to the re gulatoy capture theon . the regulaton' authority gets dominated bj the organisations on the basis of the created rcgulations and acts Regulator bodies arc supposcd to fonn rcgulation in such a ix at that it can scri’c thc intcrcst of thc public as ii cll as thc interest of thc indiistrics also. lii order to take care of the public interest and gis e gro» th to the economy of the regulator body of thc Australian goi’erninent made act on the corporate affairs to taLe control on the business entitics and the industrics This corporation Act ii as not successful in ordcr to seo’e the interest of the organisation As a result. the ii ork-life balance of the empIoj ees in those industries i as getting affccted This rcgulaton bodj of thc Australian goi’eminent ii’anted to seri’e economic interest of the county men (dlib.bc edu, 2018) In accord » ith the group tlieoy on economic interest regulaton bodies in Australia gas e importance to the economic interest of the common people and of the countn but couldn't recognize its cffect on corporate pcople
Rex aliiation of non-current assets to fair x alue is not allou’ed by the US Financial Accounting Standards Board. US Financial Accounting Standards Board has also made it compulsoy to account for the impainne costs Statement number 144 bj the US Financial Accounting Standards Board states that long-lii’ed ossets hax’e to be disposed of (fosb.org. 2G lS). Statement number 144 u as order to solve some issues regarding the statement nuiJer 121. Stateitient number says that long-lived assets are to be held and used also. It also states long-lix assets are needed to be disposed of by sale The main problem in that fact u’as not allou ing the non-current assets to the fair › alue. Non-current assets are the ink estinent done by any organisation or any indii’idiial. Non-profit assets are counted for long-term ini’estment as it u ill add value to future at the tune of return Impairment costs are the cost u’hich exceeds the recoi’erable amount. This re gulation by the US go emment u as in order to see e the purpose of the government which doesn't serf e the purpose of the common people. For most of the common people. long-term ink estinent u orks as the future of them People do irn est in non-current assets as to get benefits in long-tenn but not the inclusion of it as fair value can fear e the common people in trouble. In such case. the goi’erninent of US is found to be not faithful to the common people of the county’
The revaluation numbers are based on the opinion of individual appraiser rathcr than a comparatii’e standard of measure like the other market prices. The revaluation methods lead to the formation of expcnses pertaining to dcpreciation. in each pcriod of the year. It leads to the formation of expenses » ith each usage of assets value e en u lien there shouldn't hat e been large
expenses (Barth ei u/ 20.14. p 200) Thus the re aluation of equipment, propert,y and plan leads
to the i’iolaiion of thc conceptual frameii’ork of IFRS. directly In accordancc ii’ith thc re aluation of the plant and equipitient, it is seen that large depreciation expenses are incurred bj the company. As a result. ai’oiding the revaluation techniques by the directors u ill help in us’oiding the irrelex ant financial expenses of the company.
u} The effects of a› oiding re› aluation on firms financial statcmcnts
Thc ai’oidancc of rci’aluation by thc dircctors of the companies in Australia has led to thc follo» ing impacts on the financial statements.
The accounting regulations have been greatly manipulated due to the duplication of the financial statements in mam companies
The amount of irrelei ant expenses pertaining to the financial reporting gets a oided
Thc liability of tax is ai’oidcd. This creates a hugc difference relating to the gcncrntion of a positii’c relationship bctii ccn thc shnrcholdcrs and the company.
At oidaiice of the rei aluation techniques » ill lead to the generation of reports in an organised manner
The components of the balance sheet i 'ill bc reported in an effecti c manner. It should bc organised. transparent and should mention all the i ital points in dctail.
Thc managcrs of the company bccoinc corn’cnicnt pcrtaining to thc cffectix’c disclosure of the financial report.
b} The rclcvance of at oiding rci aluation on thc wealth of the shareholders
Ai’oidancc of rci’aliiation of cqiiipincnt. plant. and property ii’ill hclp in profit maximization of the sliarcliolders bj effectivclv cutting off the expeiiscs from the report. It has hclped the sharcholdcrs in gaining profit through taxation liability ai’oidancc. It has lcd to the increase in thc liquid assets of the companies i 'hich in tuni has helped the shareholders in dealing ii itli the debt paj ments during a tiinc of eincrgeiicj It has also hclped in the increase in the gross profit margin as ii cll as an incrcincnt in thc operating profit (Li and Yang. 2G15. p.2G0) The opcrating profit increased bi’ an increase in the supply chain management. It helps the shareholders in gaining surplus earned from the compare . This is done through maximization of dii’idend in thc long rim of the company. The application of rei’aluation ii ould hai’c siircly made a negatix’e impact pertaining to the IFRS standards and i ould hat e caused a great problem for the shareholders. Ai’oiding rei’aluation has hclped both the company and the shareholders in gaining profit.
This study has shades light on the Unu ieldi rules useless for iiu estors’ in Australia It also made a discussion on the financial rei ieu on the economy of Australia on fith February in 2012 This study' has also shed light on the global capital market and the irn estment systems Ei’aliiation is done on the qualitatix e characteristics of reporting of finance. This article also made an analytical discussion on the corporation act in Australia. A discussion has been made on the FASB statement number 144 Ei aluation is done on the ineasureiiient of propen; process and rise of cost model.
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