Advanced Financial Accounting - Sample Assignment
Added on 2021-05-31
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Running head: ADVANCED FINANCIAL ACCOUNTINGAdvanced Financial AccountingName of the StudentName of the UniversityAuthor’s Note
1ADVANCED FINANCIAL ACCOUNTINGPart AThe given situation indicates towards the fact that the business organizations have spendmillions of dollars for the adoption of IFRS standards so that the financial reporting can beimproved, but these financial statements have majorly failed in providing the users with thecorrect financial pictures of the business entities and the absence of the major qualitativecharacteristics can be held responsible for this failure. The following discussion analyzes theprovided statements so that the missing qualitative characteristics can be identified:The former Finance Head of AXA, Geoff Roberts has mentioned that there has not beany questions from the financial analysts and the fund managers related to the quality of thenotes to the financial statements developed as per IFRS for analyzing the financial situations ofthe business entities. This aspect indicates towards the fact that the fund managers as well as theanalysts can understand the financial performance and standing of the companies from the IFRSfinancial reports and they become able to compare the results of the financial statements with theother companies. Thus, both understandability and comparability characteristics are there in theIFRS financial statements. However, the current financial reporting framework under IFRS ismajorly failing in providing both the understandability and comparability to the users (Brochet,Jagolinzer and Riedl 2013).The Finance Director of Wesfarmers, Terry Brown has mentioned in his statement that inthe absence of effective technical knowledge in accounting, the financial analyst can misinterpretthe financial conditions of the business entities from the analysis of the notes to the financialstatements of IFRS adopted financial reports. In case, there is the presence of verifiabilityqualitative characteristic of financial reporting, the users become able in the application of their
2ADVANCED FINANCIAL ACCOUNTINGknowledge as well as observation for judging the financial performance and financial standingsof the companies. This aspect makes verifiability as major characteristic. However, from thestatement of Terry Brown, it can be observed that the present financial reporting frameworkunder IFRS is barring to obtain insight about the company’s financial position in the absence oftechnical knowledge that indicates the absence of verifiability qualitative characteristic (Houqe,Easton and Zijl 2014).Chief Financial Officer of Commonwealth Bank, David Craig has mentioned one crucialaspect that the financial statements developed as per the standards of IFRS are obscuring thefinancial position to the investors of the companies and for this reason; investors are ignoring thefinancial statements developed as per IFRS. This aspect indicates towards the missing of bothrelevance and faithful representation qualitative characteristics as the financial statements fail toprovide the correct pictures of the financial performance and financial position of the companiesin the absence of these two characteristics. Hence, the present financial reporting frameworkpursuant to IFRS lacks these two qualitative characteristics. In this context, it needs to bementioned that the lack of these qualitative characteristics is a major barrier in achieving thecentral objectives of financial reporting (Ahmed, Neel and Wang 2013). Part BDifferent theories of regulation play major part on the evaluation of various regulationsand situations related to the implementation of the regulations. The detailed discussion is shownbelow:
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