Qualitative Characteristics of Advance Financial Accounting
Added on 2021-05-30
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Advance financial accounting
TABLE OF CONTENTSTask A..............................................................................................................................................3Task B..............................................................................................................................................4Task C..............................................................................................................................................6Task D..............................................................................................................................................7Part A...........................................................................................................................................7Part B...........................................................................................................................................7Part C...........................................................................................................................................7References........................................................................................................................................9
TASK A The qualitative characteristics will help in providing assistance when financial users are requiredto make a choice among regulation policies, made by auditors, financial users or standard setters(Zhang and Andrew, 2014). The qualitative characteristics of financial statement can integratemeaningfulness and usefulness in decisions; on the other hand, they are not able to identifyfinancial reporting quality on their own. The qualitative characteristics of financial statementsare understood ability, relevance, reliability and comparatively (Ioannou and Serafeim, 2017).Previously, reliability was replaced by faithful representations, due to its inability of commonunderstanding. Further, qualitative characteristics are such aspects that aid interpretation processand utilization of accounting information in a valuable and effective way. However, IFRS are notswiftly can be complied by US companies due to change in interpretation aspects for theinformation users. Due to this factors, IFRS are criticized by US financial experts.In this aspect, some of the drawbacks of IFRS discovered by critics related to interpreting issuesof IFRS in the US regarding fair valuation. In addition to this; various challenges are faced bycompanies such as training of staff and readers mindset. However, by considering the survey, themainstream of respondents have thought that the advantages of IFRS exceed the disadvantagesof it; which lead to the support for IAS/IFRS adoption in the country (Ioannou and Serafeim,2017). Although; still there are various contradictory interpretations for example in IAS 19. Thisaccounting standard is addressing the accounting for curtailment, amendment, or settlement thatarises at the time of accounting. However, the use of actuarial assumptions is different in USGAAP and IFRS. This creates confusion for readers in case there is a change in the standardwhich will lead to misinterpreting issues of financial information.These improving qualitative characteristics help in differentiating among the useful and non-useful information; also they aid in improving value in financial statement decisions ofaccounting information while making sure they are reliable and faithfully represented (Nobesand Stadler, 2015). By taking this into account, IASB works with US standard setter for the longhaul to take all the requirements into consideration.
There are analysis on the basis of past measurement costs; recognition and recoverable amountof impairment losses, which are not able to keep with capacity changes in US GAAP.Accounting information based on financial statement are assessed as relevant and faithfullyrepresented if they make significant and useful changes in the decision-making process offinancial statement users. The accounting information is said to be faithfully represented when itplaces everyday phenomenal of the economy that is expected to represent. Such qualitativecharacteristics put usefulness and betterment at a place in financial statements (Chen and et al.,2018). The entire concept of financial accounting is to integrate and establish positive accountinginformation, and these qualitative characteristics must be included to make it highly useful forfinancial users. Fair value is assessed to add the broad scale of transparency in the financialstatement, resulting in greater relevance and reliability in accounting data with the highercapability to represent fair value. To resolve the issues, IFRIC has been established. It is the interpretative authority of the IASB,which have a responsibility to develop, maintains and resolve issues with IFRS. This body isdesigned to improvise financial reporting characteristics to ensure the quality of financialinformation provided. TASK BThe public theory states that retains that regulators strive to look for market solutions that areeffective on an economic basis while ensuring the higher accessibility of some goods andservices. It refers to an economic concept that is strongly related to the welfare of economy; itoffers justifications by considering theoretical aspects (Berry, 2015). It has been argued by thetheory that, regulations support general well-being instead of the interest of disciplinedstakeholder. On the basis of core assumptions the theory is related regarding the regulator nature,with the complete information which can ensure effective enforcement. Furthermore, regulatorsare encouraged by the social interest, and the market intervenes to enhance social results. Underthis theory, the firm’s regulation or other actors of the economy can make a contribution towardsthe promotion of social interest. The public interest theory asserts that regulation must increasesocial welfare and further that regulation is the consequence of cost-effective analysis to identifywhether the cost to develop the market operations compensates the amount of maximized social
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