Corporate Accounting: Financial Reporting Regulation, AASB's Participation in Setting Global Standards, and Equity Analysis of ASX-listed Companies

CORPORATE ACCOUNTING 1
CORPORATE ACCOUNTING
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CORPORATE ACCOUNTING 2
Executive Summary
As per research, it has been found out that financial accounting and reporting should be
regulated. Managers must not be let to disclose financial accounting voluntarily. It has also been
established from research that there are a number of ways in which the Australian Accounting
Standards Board (AASB) participates in setting the global standards of accounting (Vernimmen
et al 2014, pp. 25). These have been discussed in detail in the sections below.
For the purpose of this task, four public limited companies which are listed on the
Australian Securities Exchange (ASX) that are in the same industry have been identified and
researched. These companies are Acacia Coal Limited, Aura Energy Limited, Amour Energy
Limited and A-Cap Resources Limited. The research findings indicate that the four firms have a
favorable debt and equity position since they have used more of equity financing in funding most
of their business operations. Furthermore, there are various changes in their items of equity such
as issued/contributed capital, reserves and accumulated losses. However, it has been noted that
for the Financial Years 2014 all through 2017, the four firms have been making operational
losses, which have consequentially translated into increasingly huge accumulated losses
(Vernimmen et al 2014, pp. 23). The analysis has been provided in the various sections below.

CORPORATE ACCOUNTING 3
TABLE OF CONTENTS
CONTENT PAGE
Introduction....................................................................................................................................................4
Corporate governance....................................................................................................................................4
i. Whether Financial Accounting and Reporting Should be Regulated....................................4
Setting of accounting standards....................................................................................................................6
i. How AASB participates in setting of Global standards of accounting..................................6
ii. The reasons why the IFRS Established by IASB Are not mandatory for its member countries......7
Owners’ equity...............................................................................................................................................7
i. Items of Equity..................................................................................................................................7
 Issued Capital............................................................................8
 Reserves.................................................................................8
 Retained earnings and Accumulated losses.........................................8
ii. Changes in items of equity and reasons for changes.........................................................9
iii. Comparative analysis of the debt and equity position of the four firms................................10
Conclusion...................................................................................................................................................12
References....................................................................................................................................................13

CORPORATE ACCOUNTING 4
Introduction
The main purpose of this paper is do carry out a research and discuss if the financial
accounting and reporting should be regulated or a manager should be allowed to disclose
financial accounting information voluntarily (Vernimmen et al 2014, pp. 22). The paper also
gives an explanation on how the Australian Accounting Standards Board (AASB) participates in
the setting process of global accounting standards and why the IFRS set by IASB is not regarded
mandatory for IASB member countries. This paper also chooses four public limited companies
that are listed on the Australian Securities Exchange and discusses their annual financial reports
for the last four years with regard to items of equity as well as debt and equity positions
(Vernimmen et al 2014, pp. 22).
A. Corporate Regulation
i. Whether Financial Accounting and Reporting Should be Regulated
After conducting research, it has been established that financial accounting and reporting
should be regulated. Managers must not be let to disclose financial accounting voluntarily. This
proposition is supported by a number of arguments, as found in the research (Zeff 2012, pp.
807). In the absence of financial accounting reporting regulation, optimal levels of disclosure
would not be generated in the financial markets as a result of the interplaying forces. Financial
instrument providers are faced with stiff competition in the capital and financial markets which
are mainly populated by numerous investors with various interests and objectives (Whittington
2008, pp. 495). Firms whose main concern is to maximize their shareholder value often establish
attractive incentives and consider it necessary make disclosures of all information which is
available to them, for purposes of obtaining higher prices than those of their competitors. This is