...[pic] SOUND FINANCIAL REPORTING IS A GOOD THING FOR BRINGING CONFIDENCE BACK TO THE CORPORATE WORLD Submitted By: Ahmed Shafiul Huq 801414063 Principle of Accounting (EIB505) Section: B Executive Master of Business Administration Submitted To: Mr. Mohammad Rakib Uddin Bhuiyan Assistant Professor Department of International Business Faculty of Business Studies EXECUTIVE SUMMARY A company’s financial reporting amalgamates important documents to create an effective spreadsheet to simplify the financial data of an organization. It captures much of the information that organizations prepare, publish, and use. Financial reporting plays an integral role in the capital markets and economic stability and growth, and efforts to enhance its quality are vital. A Sound Financial Reporting provides us relevant, meaningful, reliable, accurate and comprehensive reporting of management stewardship whether in the form of numbers or other operating data. It is increasingly important for businesses to be financially transparent and for governments to establish a sound regulatory environment for corporate financial reporting. Sound financial reporting can benefit business by some ways just like valuing business, easy to identify...
Words: 3507 - Pages: 15
...Testbank to accompany Company Accounting 10e by Ken Leo, Jeffrey Knapp, Sue McGowan & John Sweeting Prepared by Peter Baxter [pic] © John Wiley & Sons Australia, Ltd 2015 Chapter 1: Nature and regulation of companies Multiple-choice questions 1. The advantages of a company over a partnership and sole trader do not include which of the following? a. Members are able to sell their shares at any time to another person without having to obtain permission from the other members. b. Members are liable for only a limited amount of the company’s debts. c. A company has a legal existence distinct from its owners. *d. A company is only entitled to raise small amounts of cash by issuing shares. Correct answer: d Learning Objective 1.1 ~ summarise the nature and attributes of a company 2. In Australia, the Corporations Act 2001 is administered by the: a. Australian Securities Exchange. b. Australian Accounting Research Foundation. *c. Australian Securities and Investments Commission. d. Securities and Exchange Commission. Correct answer: c Learning Objective 1.1 ~ summarise the nature and attributes of a company 3. The two main types of companies permitted to be registered under the Corporations Act 2001 are a: a. private company, and a proprietary company. b. public company, and a trade union. *c. proprietary company, and a public company. d. proprietary company, and a partnership...
Words: 4004 - Pages: 17
...Bloom's: Knowledge Learning Objective: 01-01 Describe the function and primary focus of financial accounting. Level of Learning: Easy 28. The primary focus for financial accounting information is to provide information useful for: A. Option A B. Option B C. Option C D. Option D AACSB: Reflective thinking Bloom's: Knowledge Learning Objective: 01-01 Describe the function and primary focus of financial accounting. Level of Learning: Easy 29. Which of the following is not true about net operating cash flow? A. It is the difference between cash receipts and cash disbursements from providing goods and services. B. It is a measure used in accrual accounting and is recognized as the best predictor of future operating cash flows. C. Over short periods of time, it may not be indicative of long-run cash-generating ability. D. It is easy to understand and all information required to measure it is factual. AACSB: Reflective thinking Bloom's: Knowledge Learning Objective: 01-01 Describe the function and primary focus of financial accounting. Level of Learning: Medium 30. Which of the following groups is not among financial intermediaries? A. Mutual fund managers B. Financial analysts C. CPAs D. Credit rating organizations AACSB: Reflective thinking Bloom's: Knowledge Learning Objective: 01-01 Describe the function and primary focus of financial accounting. Level of Learning: Medium 31. Which of the following was the first private...
Words: 2702 - Pages: 11
...A critical review of the trade-offs between the concepts of relevance and reliability in financial reporting Theme: Financial Accounting Classification: M41 Author: Prof D Coetsee Affiliation: Department of Accountancy, University of Johannesburg, South Africa Contact address: Department of Accountancy R-Ring 607 University of Johannesburg PO Box 524 Auckland Park Johannesburg South-Africa 2006 Telephone: +27-11-559-3047 Fax: +27-11-559-2777 E-Mail dcoetsee@uj.ac.za A critical review of the trade-offs between the concepts of relevance and reliability in financial reporting |Abstract | |In an information orientated system of financial reporting the move from historical cost to fair value | |accounting has created numerous debates surrounding the trade-offs of the concepts of relevance and | |reliability. This article contributes to the debate by critically reviewing the current developments of | |these trade-offs to determine whether current financial reporting guidelines are appropriate to deal with | |the difficulties and uncertainties of financial reporting. The article found that the proposals of the joint| |framework discussion paper goes a long way in resolving the issues around the trade-offs of relevance and | |reliability. Changing the concept of reliability to faithful representation...
Words: 6702 - Pages: 27
...1. Introduction Accounting standards establish the rules for accounting in a country and prescribe what should be reported in a company’s financial statements in that territory. Their purpose is to ensure that consistent approaches of accounting are adopted nationally. They minimize the risk of material misstatement in accounts and help investors make decisions by ensuring they can get comparable information. Accounting standards, as laid down by a country’s law, are applicable to all companies registered within its territory. But in order to ensure the success, the regulating process must be established. In Bangladesh BFRS and BAS are used as the accounting and reporting standards for the companies. Companies are obliged to follow those standards and laws and some are free from such restrictions. In this assignment, a theoretical analysis has been made regarding the accounting regulation and standard setting process in Bangladesh. 2. Accounting Regulation in Bangladesh All the companies in Bangladesh (both public limited companies and private limited companies) are regulated by The Companies Act of 1994 that provides the basic requirements for the companies. It includes the requirements about financial reporting and accounting practices. But most importantly, this act is silent about either Bangladesh Accounting Standards (BAS) or International Accounting Standards (IAS),. description about the laws and regulations for different types of entities in Bangladesh has been...
Words: 1182 - Pages: 5
...programs by unauthorized personnel; and The use of computer programs that have not been authorized. *Accounting estimate—An approximation of a monetary amount in the absence of a precise means of measurement. This term is used for an amount measured at fair value where there is estimation uncertainty, as well as for other amounts that require estimation. Where ISA 540 2 addresses only accounting estimates involving measurement at fair value, the term “fair value accounting estimates” is used. *Accounting records—The records of initial accounting entries and supporting records, such as checks and records of electronic fund transfers; invoices; contracts; the general and subsidiary ledgers, journal entries and other adjustments to the financial statements that are not reflected in formal journal entries; and records such as work sheets and spreadsheets supporting cost allocations, computations, reconciliations and disclosures. Agreed-upon procedures engagement—An engagement in which an auditor is engaged to carry out those procedures of an audit nature to which the auditor and the entity and any appropriate third parties have agreed and to report on factual findings. The recipients of...
Words: 10496 - Pages: 42
...and financial reporting within an organization in general. I will also give a description of the people, processes, and systems that are a part of the accounting and financial reporting processes followed by a conclusion. Purpose of Accounting The purpose of accounting to gather and report on any financial information within the organization about things such as: the performance of the company, their financial position, and the cash flows of the company. With this information the company can then make business decisions about management of their business, investments to be made, or money they can lend. All of this information is known as the accounting records and accounting transactions and recorded as invoices for either suppliers or customers of the company. Once the financial information has been added to the accounting records it is all put together into financial statements to include the following: income statement, balance sheet, statement of cash flows, statement of retained earnings, and any disclosures. Purpose of Financial Reporting Documents, or the financial reports, are gathered in order to keep track of money going in or going out. Essentially, there is a record of how much money your business is making or losing. Anyone investing in the business has the right to know how their money is being used and can know this by looking at the financial reports. Financial reporting must follow common and statutory law and done so in an ethical manner. The financial statements...
Words: 741 - Pages: 3
...Accounting Standards Building international opportunities for Australian business Corporate Law Economic Reform Program Proposals for Reform: Paper No. 1 © Commonwealth of Australia 1997 ISBN 0 642 26110 5 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Australian Government Publishing Service. Requests and inquiries concerning reproduction rights should be directed to the Manager, Commonwealth Information Services, Australian Government Publishing Service, GPO Box 84, Canberra ACT 2601. The Government is seeking comments from interested parties on the detail of the proposals in this paper which should be forwarded to the following address:| First Assistant SecretaryBusiness Law DivisionThe TreasuryParkes PlacePARKES ACT 2600|Telephone:Fax:Email:|02 6263 396002 6263 2882clerp@treasury.gov.au| Copies of this paper are available from the Australian Government Publishing Service and on the Treasury web site (http://www.treasury.gov.au).Enquiries concerning the paper can be made to:Ms Veronique IngramAssistant SecretaryThe TreasuryTelephone: 02 6263 3970| Printed by the Australian Government Publishing Service Table of Contents Page Abbreviations v PART 1: Reform Proposals 1 PART 2: Introduction 9 2.1 Background 9 2.2 Key economic principles 10 PART 3: The Case for Reform 11 3.1 Impetus for reform 11 3.2 What the Government is seeking...
Words: 20265 - Pages: 82
...United States of America Adopt the International Financial Reporting Standards? Since 1936, accountants in the United States have been following a set of generally accepted guidelines, historically set by the American Institute of Certified Public Accountants, for their practices. These guidelines have come to be known as the Generally Accepted Accounting Principles, or GAAP. Since their creation, these principles have protected companies and investors from fraud, as accounting practices can sometimes be questionable. The GAAP holds companies accountable for their financial reporting activities and includes rules accountants must follow regarding recording transactions and preparing financial statements. Recently, there have been questions regarding the Generally Accepted Accounting Principles in the United States as opposed to the International Financial Recording Standards, or IFRS ; and whether or not the United States should adopt these new accounting standards. There are a number of pros and cons to the International Financial Recording Standards as well as the Generally Accepted Accounting Principles; however, I do not think that the United States should fully adopt the IFRS considering the history of the GAAP and the reason for the creation of its principles. As previously mentioned, the American Institute of Certified Public Accountants (AICPA) has been responsible for setting accounting standards. In 1973, the Financial Accounting Standards Board and the Governmental...
Words: 1700 - Pages: 7
...Abstract This paper is intended to explain a joint venture referred to as the convergence project, between the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) (FASB, 2002). This paper will also provide a brief history of the relationships between the two boards, and the equivalents between IASB and FASB. Along with an explanation of how the Master of Science in Accountancy Program helps prepare students for a professional life, within the accounting vocation. Accounting Standards Boards Within each country, there are different types of governments who follow different sets of regulations and require different accounting standards. With the current growth of global commerce, companies conducting business abroad require more consideration in there accounting, versus a business who only conducts commerce in one country. Many countries do not have the same level of regulation boards as the United States, who follows the standard set of principles by FASB, because of the accounting reporting differences, it is extremely important for any global organization to use IASB for best financial practices on a global scale. However with such a high-demand for global commerce, following different sets and types of accounting regulations has caused confusion and has become cumbersome to the stakeholders involved in international commerce (FASB, 2003). National Regulatory Boards Local and state laws, plus a host of regulatory commissions...
Words: 1110 - Pages: 5
...CHAPTER 2: REGULATION IN FINANCIAL ACCOUNTING Chapter 2 regulation in Financial accounting LEARNING OUTCOMES Upon completion of this chapter you should be able to understand: • The difference between management and financial accounting. • Why accounting regulations are important and required. • The need for and the structure of professional regulation, company law, stock exchange legislation and EU Directives. • How the different aspects of regulation work together and complement each other. • The process through which an accounting standard comes into being. REVISION RESOURCES EXAM QUESTIONS: Sample and Past papers are available from the website of Accounting Technicians Ireland and are essential aids when studying Advanced Financial Accounting topics. 7 Chapter 2 : Regulation in Financial Accounting 2.1 Advanced Financial Accounting the FunCtion oF FinanCial aCCounting and reporting The International Accounting Standards Board (IASB) in their Conceptual Framework for Financial Reporting state that ‘the objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders and other creditors in making decisions about providing resources to the entity. Those decisions involve buying, selling or holding equity and debt instruments, and providing or settling loans and other forms of credit’. This Conceptual Framework...
Words: 7356 - Pages: 30
...Why Government Accounting and Financial Reposting is - and Should be-Different. Government and Business Enterprises environments differs. The environment differences between them are organization purposes, process of generating revenue, relationship with stakeholders, budgetary obligation and potential for longevity. Due to these environmental differences the need for their accounting and financial reporting users differs too. The accounting and financial reporting standards for government and business enterprises need to focus and meet the requirements of their stakeholder’s needs. The stakeholders for the business enterprises financial reports are creditors, Equity Investors and their regulators who can use financial reports to make decision on whether to invest or not on those business and creditor whether to borrow them or not .The stakeholders for the Government are creditors and citizens who are primarily the resources provider though taxes, who need assess the government accountability in how public resources were acquired and used so as to make political, social and economic decisions. Creditors generally they look for the assurance if there will be sufficient fund to repay debt. In Business enterprises they seek the how the earnings are generated while in the government they seek information about the ability and willingness to correct taxes and generate other revenue to debt repayment. Major environmental Differences between Government and Business are described...
Words: 734 - Pages: 3
...were created in (Wiecek and Young, 1-2). The increase in globalization coupled with related regulations has given rise to the need for a common set of global accounting standards – International Financial Reporting Standards (IFRS). Leading the charge, the International Accounting Standards Board (IASB), formerly known as the International Accounting Standards Committee, has begun a movement toward harmonization and convergence of GAAP. More than 100 countries currently use IFRS, so if your business goals include global expansion, it is critical to educate yourself about the impact of IFRS on your financial reporting processes and business now (U.S. GAAP vs. IFRS). This paper will focus specifically on the differences and similarities between IFRS and U.S. GAAP with respect to accounting for the effects of changes in foreign exchange rates. The guidance related to accounting for foreign currencies in U.S. GAAP is included in Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 830, Foreign Currency Matters. In IFRS, the guidance related to accounting for foreign currency issues is contained in International Accounting Standard (IAS) 21, The Effects of Changes in Foreign Exchange Rates. Additional IFRS guidance is contained in IAS 29, Financial Reporting in Hyperinflationary Economies. Before delving too deep into the significant differences between U.S. GAAP and IFRS, it is important to understand the terminology used within the two standards...
Words: 2205 - Pages: 9
...Chapter 2 – Consolidation of Financial Information FASB allows reporting for businesses combined using the acquisition method. The acquisition method embraces a fair value measurement attribute. * Adoption of this attribute reflects the FASB’s increasing emphasis on fair value for measuring and assessing business activity. * In the past, reporting standards embraced the cost principle to measure and report the financial effects of business combinations. Expansion Through Corporate Takeovers Reasons for firms to combine: 1. Vertical integration of one firm’s output and another firm’s distribution or further processing. 2. Cost savings through elimination of duplicate facilities and staff. 3. Quick entry for new and existing products into domestic and foreign markets. 4. Economies of scale allowing greater efficiency and negotiating power. 5. The ability to access financing at more attractive rates. As firm size increases, negotiating power with financial institutions can increase also. 6. Diversification of business risk. 7. Continuous expansion of the organization, often into diversified areas (creating conglomerates). The Consolidation Process The consolidation of financial information into a dingle set of statements become necessary when the business combination of two or more companies creates a single economic entity – FASB ASC (810-10-10-1) * “There is a presumption that consolidated financial statements are more meaningful...
Words: 2340 - Pages: 10
...Accounting Standards Boards Paper The Financial Accounting Standards Board (FASB) started the Convergence program back in 2002 and stated that a three-part strategy for seeking greater comparability in accounting standards internationally should be implemented.. FASB sought out to develop a higher quality for Generally Accepted Accounting Principles (GAAP) standards and improve the relations and communication with additional nationwide standards setters. The convergence program is to help increase the quality of recording standards. FASB and IASB recognized that increasing the comparability of principles will not be as easy as they thought. To do so, they will need the help of setters around the world to have an agreement amongst the standards. We also have to remember that FASB priority is to improve financial reporting. Doing so will help investors. Eliminate any other alterations between IFRSs and U. S. GAAP that may remain on January 1, 2005 by undertaking projects that both Boards would address simultaneously. Carry on the progress on the joint projects presently proceeding. Inspire their consistent interpretative bodies to organize their activities. FASB has been the nominated union in the private division for generating standards of financial bookkeeping that administer the training of financial reports by non-governmental entities. To improve and establish principles of financial accounting and reporting that substitute financial reporting by nongovernmental entities that...
Words: 1099 - Pages: 5
