Accounting Theory and Current Issues - Presentation

ACCOUNTING THEORY
AND CURRENT ISSUES

INTRODUCTION:
 A detailed research by reviewing the literature has been conducted on
the adoption of IFRS (International financial reporting standard) by
Australia and other chosen country Italy for the past five years.
 Evaluating the usefulness of the regulations of financial reporting to the
listed entities.
 Key issues faced by the country along with the transitional issues are
critically evaluated.
 Description of benefits encountered by the reporting entities of these
countries are outlined .

IMPORTANCE OF PAT IN FINANCIAL
REPORTING
 It is claimed by the positive accounting theory that the aspects of actual
accounting behaviour is explained in a neutral manner and which is
value free.
 The literature review on PAT is focused on the management motives to
select the financial reporting when facing agency cost and information
asymmetry.
 Three hypothesis has been proposed under this theory which comprise
of Debt covenant hypothesis, Bonus scheme or plan hypothesis
and Political cost hypothesis.
 Hypothesis of political cost is the disclosure that is most widely used by
the entities (Briamonte et al. 2017).

IFRS IMPLEMENTATION IN ITALY AND
AUSTRALIA
 Australia has adopted the standard IFRS (International financial
reporting standard) in January 2005.
 Italy has adopted the standard IFRS (International financial reporting
standard) in January 2006.
 IFRS implementation was expected to lower the cost for users,
preparers and auditors and was expected to address the accounting
standards diversity so that the entities are offered with the impetus to
get involved in international transactions (De George et al. 2016).
 The reason IFRS was adopted by the companies in Italy as the
standard promised to offers a comprehensive, more accurate and
issuing the financial statements timely.