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(Doc) Advanced Financial Accounting

   

Added on  2021-06-17

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Finance
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Running head: ADVANCED FINANCIAL ACCOUNTINGAdvanced Financial AccountingName of the Student:Name of the University:Author’s Note:Course ID:
(Doc) Advanced Financial Accounting_1

1ADVANCED FINANCIAL ACCOUNTINGTable of ContentsAnswer to Part A:.......................................................................................................................2Answer to Part B:.......................................................................................................................4Answer to Part C:.......................................................................................................................6Answer to Part D:.......................................................................................................................7Requirement (a):.....................................................................................................................7Requirement (b):....................................................................................................................8Requirement (c):.....................................................................................................................8References:...............................................................................................................................10
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2ADVANCED FINANCIAL ACCOUNTINGAnswer to Part A:Qualitative features are needed to be present in the financial statements of theorganisations in order to enhance the usefulness of overall financial information. Thesecharacteristics primarily constitute of fundamental qualitative features and enhancingqualitative features. The major components listed under fundamental qualitative featurescomprise of relevance and faithful representation. Similarly, certain components are inherentin enhancing qualitative features and they are comparability, verifiability, timeliness andunderstandability (Arnold and Kyle 2017). The given article sheds light on the opinions ofthe different individuals about enforcing the “International Financial Reporting Standards(IFRS)”. All the statements lay stress on the fact that certain components of the qualitativecharacteristics laid out in financial reporting are not inherent, as per the individualjudgements. They are summarised as follows:Geoff Roberts, the former chief of AXA Finance, has opined that no questions arereceived from the financial analysts and the fund managers for adjusting the financialstatements in order to have accurate financial picture of the organisations, which areconducted depending on the IFRS norms. Due to this, they have not encountered any issueswhile contrasting the financial statements of different organisations along with obtainingknowledge regarding their financial standing in the market. Hence, essential evidences areprovided through these aspects, which imply that financial statements prepared in accordancewith IFRS have understandability and comparability. Thus, these two qualitative featuresenable to enhance the value of financial information of the business organisations. However,it has been observed currently that the IFRS-developed financial statements do not providedetailed understanding and scope of comparison in them. Due to this, deficiency could beobserved in IFRS in terms of comparability and understandability (Beatty and Liao 2014).
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3ADVANCED FINANCIAL ACCOUNTINGAccording to the opinion of Terry Brown, the finance director of WesfarmersLimited, the financial statement notes of the organisations might be misinterpreted, if thefinancial analysts aim to explain them when they have no technical knowledge regarding theIFRS standard. Verifiability is another significant qualitative feature of financial reporting,which increases the financial reporting quality by providing scope to the users in applyingtheir financial observations and knowledge to obtain overview about the financial positions ofthe organisations. The assessment of the footnotes to the financial statements is a vital aspectin the context of the users to understand the financial performances of the businessorganisations. This denotes the ability of the users to evaluate the content described in thenotes through application of their observation and knowledge, as the financial statementsprepared under IFRS needs greater technical knowledge. Based on the above assessment,verifiability and understandability aspects of the qualitative features are not present in theIFRS reporting framework (Cascino et al. 2017). In accordance with the viewpoint of David Craig, the CFO of Commonwealth Bank,the investors do not pay adequate attention to IFRS-developed financial statements, as theyare of the notion that such statements might provide falsified information regarding thefinancial performances and financial positions of the corporate entities. It is necessary toensure relevancy and faithful representation of the financial information disclosed in theannual reports of the organisations in order to create positive effects, so that the investmentdecisions could be undertaken appropriately. If these features are not present, nounderstanding regarding the financial conditions of the organisations could be obtained. Atpresent, it has been identified that the organisations representing the financial information bypreparing the financial statements in accordance with IFRS standards seem to lack inrelevancy and faithful representation. Due to this reason, the investors do not consider theinformation represented in the financial statements (Ghanbari and Sarfia 2016).
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