According to Botes et al. (2017), CA is alleged in certain cases where they are charged for certain allegations. This further shows that certain mistakes are creating problems for CA. One mistake that CA makes mainly is that they ignore correspondence with the ANZ disciplinary teams, which creates problems for the CA. Stickney has depicted that certain cases that are not required to be transferred to disciplinary tribunal but end up in there. There the case reports show that the member has failed in responding the underlying compliance. In those cases the CAs were targeted with lack of response.
Other problem that has been seen that issues related to communication, client expectations and timeliness are the common issues related to CAs. As per the PS control or CR-3 Public practice regulation it has been seen that expectations of the client are not met by CA. Misbehavior of CAs depicts the cases of dishonesty or cases for integrity. They are not focusing on the expectations of the client. Responses to the demands of clients are the major issue of the client.
Lack of objectivity another issue that has been seen in the behavior of CA, which can be considered as the third issue against the CAs. The CA is unable to handle pressure situations and further they are unable to decide the limit of boundary of personal and professional. Certain cases are lodged in this respect by the professional conduct committee, which further focuses on the lack of objectivity. As proper planning is not prepared therefore, authenticity in decisions could not be maintained by CA. this further depicts that breach of code of ethics.
Financial decisions are to be published so that mainly investors are to be awarded with the information of the financial position of the organisation. Therefore, it can be said that decisions of the CA further helps the investors in getting up to date information about the financial position (Fu, Carson & Simnett, 2015). Therefore, decisions of the investment by the investors depends on the decisions report that are published by the CA. Transparency and authenticity of the financial information further helps the investors in understanding the performance of the organisation. Therefore, in order to understand the authenticity and to receive up to date information CA publish the report. This report further helps the organisation in attracting more investments from the investors.
In the support of this statement it can be said that external users mainly the investors are getting report on company status based on the past trends. This further shows that company are just making assumptions for the future on the basis of past events. Report serves as the mirror for investment for the investors. As the report is published based on the past trend therefore, the future changes are also based on the past trends, which further create uncertainty for investment. For example, the company has published a report that it has earned as profit of 25% and the amount of profit are going to increase by 15% (Van Auken & Carraher, 2013). Therefore, the future profit will be about 40%. Therefore, after checking the profit rate investors are going to invest as the rate of profit will be high as compared to other companies operating in same industry.
Again it is seen that in future years more company has entered into the market and are making good hold in the market therefore, it can be seen that in future years the company where the investors has invested the amount on the basis of return estimation may incur severe loss. But still the future financial condition in the market changes frequently. Moreover, future trends could not be assessed in advance therefore, shareholders need to take the help of past trend to assess the future. Although it causes loss for the investors but still past trends are required for future decision making. As future market could not be assessed in advance therefore, on the basis of past data assumptions are to be made for the future.
On preparation of bean counter new management accountant can provide certain advices, which can be denoted in following ways:
1. At first the plant manager must demonstrate how to take effective decisions where resources have not been given the priority (Carraher, & Van Auken, 2013). Therefore, proper priority analysis needs to be done so that quick decisions could be taken by the plant manager. Advice must also be given where resources and time could be saved easily.
2. Advice in relation to technical aspects is to be given to the plant manager so that technical specifications related to plant floor speaking could be approached.
3. Proper knowledge must be provided to the plant manager so that trends of past success could be improvised in the report. This shows that certain examples are to be provided:
* Providing assistance in budget preparation
* Providing assistance in analysing the situation and further evaluation of non financial and financial aspects are to be analysed so that proper advice could be provided.
* Assistance in relation of submission of requests of capital budgets.
4. Further assistance about legal guidelines of Australia needs to be highlighted so that assistance for the task needs to be provided. Management accountant must further provide detailed report on the importance of the task that is to be performed by the plant manager.
According to DRURY (2013),internet technology must be introduced in the organisation so that management accountant could utilize the technology for preparing authentic information as technology such as computers provide correct record of financial statement. Knowledge of technical specifications must be known by the management accountant so that technical applications of modern technology could be utilized. This further helps the organisation in achieving competitive advantage by remaining up to date in the market. The need of technology can further be justified by focusing on the accuracy of financial statement. As computer technology provides correct data therefore correct assessment of the information could be further done by the accountant. Management accountant provides advice on the financial statements therefore; computer technology is very important (Taipaleenmäki & Ikäheimo, 2013). Judgment power is also required apart from the technology but judgement depends on the availability of correct information. Therefore, I think that Computer technology must be introduced so that proper assessment of financial statements could be done. This further helps in making the task of management accountant easier.
The analysis of current ratio shows that Mobile Net has reported current ratio of 2.22. This denotes strong position of Mobile Net in competitive market. This further shows that Mobile Net has achieved the industry standard of 1 and thereby holds strong position in technology industry. Further as the liability is less therefore, it can be said that Mobile net can easily convert their assets into liquid cash.
Figure 1: Current ratio (Source: learner)
The ROA shows overall position of Mobile Net in terms of profitability and it is referred to as the profitability ratio, which indicates the yield rate of Mobile net. Analysis of ROA shows that net income or profit of Mobile Net has been $7000 only and Mobile Net has shown ROA of 0.09. The company has earned more ROA as compared to the industry standard (0.05). It refers that Mobile net utilize assets more efficiently and generate more revenue.
Figure 2: ROA analysis (Source: learner)
The return on shareholders’ funds helps in understanding the overall profitability earned by mobile net in financial year. Analysis shows that 0.14 returns on shareholders’ funds has been earned, which shows that 14% return has been provided to the shareholders. As per the industry standard 17% is considered as the good rate but the company needs to improve their equity position. Improvement in equity position is to be done so that return could be matched with industry standard.
Figure 3: ROE analysis (Source: learner)
Mobile Net has reported 1.53 debts to equity ratio for the year end and the company has reported debt of $72000(short term debt + long term debt). As per the industry standard report it has been seen that 2 is the ideal rate of Debt to equity ratio, which has not been achieved by Mobile Net. Therefore, reduction in debt needs to be done so that target industry rate could be achieved.
Figure 4: Debt to Equity ratio analysis (Source: learner)
(Refer to Appendix)
Certain details are to be analysed before preparing a successful memo, which can be denoted as follows:
1. Understanding the audience: At first the target audience is to be fixed and in this case customers are main element of Mobile Net (Abubakre, Ravishankar & Coombs, 2015).
2. Accessing authentic information: Memo can only be successful when authentic information could be assessed and the company has prepared the memo on the basis of authentic information that has been provided from the financial report (Goh et al. 2015).
Abubakre, M. A., Ravishankar, M. N., & Coombs, C. R. (2015). The role of formal controls in facilitating information system diffusion. Information & Management, 52(5), 599-609.
Botes, V. L., Botes, V. L., Sharma, U., & Sharma, U. (2017). A gap in management accounting education: fact or fiction. Pacific Accounting Review, 29(1), 107-126.
Carraher, S., & Van Auken, H. (2013). The use of financial statements for decision making by small firms. Journal of Small Business & Entrepreneurship, 26(3), 323-336.
DRURY, C. M. (2013). Management and cost accounting. US: Springer: Fu, Y., Carson, E., & Simnett, R. (2015). Transparency report disclosure by Australian audit firms and opportunities for research. Managerial Auditing Journal, 30(8/9), 870-910.
Goh, B. W., Li, D., Ng, J., & Yong, K. O. (2015). Market pricing of banks’ fair value assets reported under SFAS 157 since the 2008 financial crisis. Journal of Accounting and Public Policy, 34(2), 129-145.
Taipaleenmäki, J., & Ikäheimo, S. (2013). On the convergence of management accounting and financial accounting–the role of information technology in accounting change. International Journal of Accounting Information Systems, 14(4), 321-348.
Van Auken, H., & Carraher, S. (2013). Influences on frequency of preparation of financial statements among SMEs. Journal of Innovation Management, 1(1), 143.
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