...Presentation of Financial Statements’ Summary OVERVIEW The conceptual framework applicable on adoption of Australian equivalents to International Financial Reporting Standards (IFRS) will be: • SAC 1 ‘Definition of the Reporting Entity’; • SAC 2 ‘Objective of General Purpose Financial Reporting’; and • ‘Framework’ - Framework for the Preparation and Presentation of Financial Statements. The existing Australian conceptual framework is provided in: • SAC 1 ‘Definition of the Reporting Entity’; • SAC 2 ‘Objective of General Purpose Financial Reporting’; • SAC 3 ‘Qualitative Characteristics of Financial Information’; and • SAC 4 ‘Definition and Recognition of the Elements of Financial Statements’. SAC 1 and SAC 2 will continue to apply in order to provide guidance for the IFRS application paragraphs. The ‘Framework’ will replace SAC 3 and SAC 4 which will be withdrawn. Although the ‘Framework’ is brief in comparison to SAC 3 and SAC 4, the concepts are similar with the key differences being that the ‘Framework’: ( includes prudence as a qualitative characteristic; and ( identifies two components to both income and expenses. INTRODUCTION The conceptual framework sets out the concepts underlying the preparation and presentation of general-purpose financial reports. The accounting standards, rules and guidance applicable under AASB 101 ‘Presentation of Financial Statements’ and AASB 108 ‘Accounting...
Words: 1089 - Pages: 5
...Descriptive: Attempt to develop a set of interrelated concept which server as codify and explain financial reporting practices * Rationale for Conceptual framework Rationale for Conceptual framework Prescriptive: Develop a conceptual basis for what accounting practice should be. Element of financial reporting Element of financial reporting What we mean by FR? What we mean by FR? What should be the scope? What should be the scope? Qualitative characteristic Qualitative characteristic Objective of financial reporting Objective of financial reporting Need to address issues such as: * Without agreement, these issues will develop ad hoc manner * Building block of Conceptual framework Building block of Conceptual framework Absence of conceptual framework led to criticism. * The framework must be developing in a particular order. * Some issues need to be resolved before move to subsequent building block. * Must be develop in developing framework * Framework develops by IASC and later adopted by its successor IASB. History development of Conceptual Framework History development of Conceptual Framework Development in United States Development in United States * 1961 & 1962: accounting practice should be practice based on current values. * 1965: develop theory based on existing practice. * Lead to the release of APB statement no.4 but got critic for lack of real framework. * 1971: Lead to formation of Trueblood...
Words: 586 - Pages: 3
...Assessment Task 1 – Issues in Financial Reporting Question 1 There are many potential benefits associated with the international standardisation of accounting standards. Firstly, the standardisation of accounting standards makes it easier for international investors to better understand, compare, and interpret the financial performance and position of companies from different countries that are in competition with each other or are operating within a similar industry. Greater comparability and analysis of information helps these international investors to make more efficient, educated and intelligent investment decisions, particularly when it comes to deciding between the alternative investments on offer, and helps them to take advantage of the risk reduction that is possible through international diversification. Secondly, the harmonisation of international accounting standards reduces barriers to capital inflows by helping companies raise capital in domestic as well as international markets. This is useful particularly for those companies that find it difficult to obtain the funding necessary for their long-term growth and expansion projects in their local economy due to a scarcity of resources. To overcome this problem, companies can have their securities listed on foreign stock exchanges and in doing so, be able to significantly expand their base of capital funding. Harmonisation makes this possible because investors as a result are better able to understand the status...
Words: 2353 - Pages: 10
...helps its users make decisions. Different accounting principles grew out of the divergent economic and social environments of various nations and regions. Difference among national accounting become more disconcerting when trade barriers between nations were reduced due to international cooperation developments. Efforts have increased during the past decade to move nations toward using international standards. The International Accounting Standards Board (IASB) is an organization that regulates the accounting standards which are accepted globally by almost all the countries in the world. This paper will first discuss the history of IASB. Next it will explain the structure of IASB. After that, the paper will talk about how International Financial Reporting Standards (IFRS) are created. Finally, it will describe the effort to converge IFRS with Generally Accepted Accounting Principles (GAAP). History of IASB International Accounting Standards Board was first known as International Accounting Standard Committee (IASC) which existed from 1973 to 2001. It was responsible for developing the International Accounting Standards (IASs) and promoting the use and application of these standards. After nearly 25 years of achievement, the IASC concluded that it must find a way to converge between national accounting standards and practices, and create high-quality global accounting standards. To do that, IASC saw a need to change its structure in order to better work together toward...
Words: 1743 - Pages: 7
...Statement of Accounting Concepts SAC 3 (8/90) Qualitative Characteristics of Financial Information Prepared by the Public Sector Accounting Standards Board of the Australian Accounting Research Foundation and the Accounting Standards Review Board Issued by the Australian Accounting Research Foundation on behalf of the Australian Society of Certified Practising Accountants and The Institute of Chartered Accountants in Australia and by the Accounting Standards Review Board The Australian Accounting Research Foundation was established by the Australian Society of Certified Practising Accountants and The Institute of Chartered Accountants in Australia and undertakes a range of technical and research activities on behalf of the accounting profession as a whole. A major responsibility of the Foundation is the development of Statements of Accounting Concepts and Accounting Standards. The Public Sector Accounting Standards Board is one of the boards of the Foundation. The Accounting Standards Review Board was established by the Ministerial Council for Companies and Securities. It has responsibility for the development of Approved Accounting Standards for application by companies, and for the development of Statements of Accounting Concepts and Australian Accounting Standards. Copies of this Statement are available for purchase from the offices of the Australian Accounting Research Foundation, 211 Hawthorn Road, Caulfield, Victoria 3162, Australia...
Words: 4386 - Pages: 18
...Assignment 1 Introduction According to AASB, the financial reporting about a reporting entity that provide to users who lack knowledge about information and the it also reflect an entity perspective focussing on the needs of all capital provides, not just equity investors. The financial statement must truly reflect the qualitative characteristics of information (Leo et al, 2009). However, IASB and FASB try to develop a new conceptual framework recently. The project's objective is tried to create a new sound foundation for future accounting standards that are principles-based, internally consistent and also internationally converged. This assignment is about if Australia accepted the financial reporting that proposed in ITC 17, will it affect AASB and is there any inconsistency with the AASB? Discussion As mentioned earlier, in accounting, the separate entity concept treats a business as separate from its owners. In other words, the business is separate with the owners as economic unit (Financial Accounting Series, 2008). It is important for business has separate transactions with the owner’s personal transactions. Under SAC 1 Definition of the reporting entity is ‘general purpose financial report" means a financial report intended to meet the information needs common to users who are unable to command the preparation of reports tailored so as to satisfy, specifically, all of their information needs (Board, 2008) .’ Both IASB and FASB published documents that seek public...
Words: 1166 - Pages: 5
...Basic Financial Statements Jane Antonovsky Colorado Technical University Online Instructor: Dr. Tracie C. Edmond ACCT614-1301A-02: Applied Managerial Accounting January 14, 2013 Abstract The Board of Directors and executive management team of Sparklin Automotive Company (SAC) need to make informed and accurate decisions regarding the management of the enterprise, therefore it is up to the corporate business financial analyst to provide the financial information essential to that decision-making process. In this memo, we will review the basic financial statements that must be submitted to the Board of Directors and executives, as well as what each statement contains. Furthermore, we will evaluate how the information contained within these statements will be useful for the management as far as helping them in the enterprise management. As in most processes, there is maximum and minimum that can be achieved, therefore we will review specific limitations of the information provided within these statements. In addition, management team must be aware of the possible information limitations, as well as how they can make sure that they receive whole picture of the enterprise. * Some work repurposed from ACC350-1101B-01, Instructor: Johnnie Bannier, 2/17/2011 Basic Financial Statements This memo will address the basic financial statements that must be submitted to the Board of Directors and executives of SAC, as well as what each statement does and contains within...
Words: 2596 - Pages: 11
...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
...International Accounting Standards Board (IASB) little by little surpasses Financial Accounting Standards Board (FASB) in dominance over accounting framework. There are more than 100 countries have adopted or have permitted to use or have been converging with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS), instead of following Generally Accepted Accounting Standards (GAAP) and Statements of Financial Accounting Standards (SFAS). For example, the United States, who requires foreign firms listed on America should compile financial statements under IFRS or SFAS, declares its specific adoption road-map for local firms. The European Union requests its member states starting to take up IFRS at 2005. When it comes to Asia, China has already announced to adopt IFRS since 2007. Over the last few decades, the fruitful areas of research have focused on the variation that arises from disparity between IFRS and GAAP. The two accounting systems have many constitutional differences, such as IFRS is principle-based standard while GAAP is ruled-based one, the former is fair value accounting while the latter is conservative. * Background of the FASB’s due process The FASB claims that, “The FASB is committed to following an open and orderly process for setting standards. It designed its comprehensive due process procedures to permit timely, thorough, and open study of financial accounting and reporting issues and to encourage broad public participation...
Words: 1568 - Pages: 7
...10.14 26.10.14 Qualification Unit number and title Edexcel BTEC Level 4 HNC Diploma in Business Unit-11-Financial Accounting and Reporting A Assignment title Financial Accounting and Reporting In this assessment you will have opportunities to provide evidence against the following criteria. Indicate the page numbers where the evidence can be found. Criteria reference To achieve the criteria the evidence must show that the student is able to: Task no. Evidence 1.1 Describe the different users of financial statements and their needs 1 4-5 1.2 Explain the legal and regulatory influences on financial statements 1 6-7 1.3 Assess the implications for users 1 7-8 1.4 Explain how different laws/regulations are dealt with by accounting and reporting standards 1 8-9 4.1 Calculate accounting ratios to assess the performance and position of a business 4 9-10 4.2 Prepare a report incorporation and interpreting accounting ratios,including suitable comparisons 4 11-12 2.1 Prepare a report incorporation and interpreting accounting ratios,including suitable comparisons 2 13-19 2.2 Prepare financial statements from incomplete records 2 24-27 2.3 Prepare a consolidated balance sheet and profit and loss account for a simple group of companies 2 21-23 3.1 Explain how the information needs of different user groups vary 3 20 3.2 Prepare financial statements in a form suitable for publication by a sole trader, partnership and limited company 3 13-19 Learner declaration ...
Words: 4622 - Pages: 19
...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
...ABSTRACT Auditing disclosures play an important role within accounting reports as they provide a level of assurance to the users (public). These disclosures will be discussed in light of the collapse of Health International Holdings (HIH). The HIH collapse warranted a Royal Commission investigation and also recorded the biggest corporate collapse in Australia's history. Corporate failures of similar magnitude such as Enron and Parmalat have occurred elsewhere and sparked large scale investigation and media scrutiny. In all of these corporate failures, the level or absence of disclosure has had a lot to do with the unexpectedness of the collapse. This paper analyses the HIH collapse within a Foucaldian framework to demonstrate the need for accountants and auditors to work together so as to avoid criticism of the profession arising from unexpected corporate failures in the future. INTRODUCTION The purpose of this paper is to analyse the collapse of HIH and the role of its auditor, Andersen, within a Foucauldian framework encompassing archeology and genealogy of power and knowledge. The mythical Jedi force is used as a metaphor for power attained by the accounting profession through its claim to superior knowledge and skill to be applied in the public interest. Accordingly, the force includes professional ethics. The dark side is used as a metaphor for the collapse of HIH because accounting standards and practices, the accounting profession's power base, were used to conceal...
Words: 7735 - Pages: 31
...TASK 1 a) All businesses have to meet the interior and outer reporting normal of economic activities as a way to provide meaningful and suitable financial assertion. There were a lot of development associated with regulations in great UK in occasion past which often different businesses used in preparing their own financial statement as it suite all of them. For instance in1844 this Joint investment companies React incorporated by means of registration associated with audited balance sheet is necessary, 1855 this JSCA formation of minimal liability combination of 1844 and 1855 Acts, 1900 the organization Act necessary the taxation of balance sheet while required 1929 the organization Acts call for profit assertion 1948 the companies act calls for balance bed sheet and profit and reduction accounts to be true and fair and also to be revealed at minimum amount level and so forth. Accounting regulations in great Britain is portioned into three main regulating authority and governance which often all organizations whether lone trade relationship or minimal company which often all organizations must abide by in organizing their economic year finish. These regulating bodies are the company React 2006, UNITED KINGDOM Accounting Standards Board and International Accounting Standards (IAS). There have been no specific legal or regulation requirement managing the lone trader and partnership accounts inside company React 2006. For instance if these firms registered pertaining to...
Words: 3209 - Pages: 13
...BUSN7050 Corporate Accounting Lecturer: Dr Sorin Daniliuc Course details • This course covers: – the characteristics of the Australian accounting environment and its financial reporting requirements for companies – accounting for owners’ equity (share capital and reserves) – accounting for liabilities (with a focus on debentures) – accounting for income tax – accounting for leases – accounting for non-current assets (revaluation, impairment) – accounting for intangible assets – a comprehensive coverage of consolidation issues – equity investments. Research School of Accounting and Business Information Systems 2 Lecture outcomes • Outcome 1: An understanding of the regulatory environment in which the companies are formed and operate in Australia. • Outcome 2: A solid foundation in accounting and reporting requirements of the Corporations Act and relevant Australian Accounting Standards Board (AASB) accounting standards. • Outcome 3: A comprehensive understanding of the advanced issues in accounting for assets, liabilities and owner’s equity. • Outcome 4: The ability to account for income taxes. • Outcome 5: The ability to account for leases. Research School of Accounting and Business Information Systems 3 1 Lecture outcomes • Outcome 6: The ability to account for intangible assets. • Outcome 7: An understanding of the accounting requirements for a corporate group and familiarity with the theory underlying the methods used to account for intercompany investments...
Words: 3537 - Pages: 15
...THEORETICAL STRUCTURE OF FINANCIAL ACCOUNTING Overview The primary function of financial accounting is to provide useful financial information to users external to the business enterprise. The focus of financial accounting is on the information needs of investors and creditors. These users make critical resource allocation decisions that affect the nation’s economy. The primary means of conveying financial information to investors, creditors, and other external users is through financial statements and related notes. In this chapter you explore important topics such as the FASB’s conceptual framework that serve as a foundation for a more detailed study of financial statements, the way the elements of these statements are measured, and the concepts underlying these measurements and related disclosures. Learning Objectives LO1–1 Describe the function and primary focus of financial accounting. LO1–2 Explain the difference between cash and accrual accounting. LO1–3 Define generally accepted accounting principles (GAAP) and discuss the historical development of accounting standards, including convergence between U.S. and international standards. LO1–4 Explain why the establishment of accounting standards is characterized as a political process. LO1–5 Explain factors that encourage high-quality financial reporting. LO1–6 Explain the purpose of the conceptual framework. LO1–7 Identify the objective and qualitative characteristics of financial reporting information...
Words: 7130 - Pages: 29
