Corporate Accounting: Financial Reporting Regulation, AASB Participation in Setting Global Standards, and Equity Analysis

Running head: 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. These have
been discussed in detail in the sections below (Weaver, 2012).
For purposes 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. The
analysis has been provided in the various sections below (Weaver, 2012).

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...................................................................................................................................................13
References....................................................................................................................................................14

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 (Botzem, 2015). 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 (Berk &
DeMarzo, 2017).
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. 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 (Botzem, 2015). 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. 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 (Ferran, Ho, & Oxford University Press,