Corporate and Financial Accounting: A Study on AASB in IFRS Process and Debt to Equity Analysis of Listed Companies

Corporate and Financial Accounting
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Executive summery
In present competitive environment, accounting information plays important role for business
performance and economic outlooks. In present world, businesses are mostly dependent on
the financial information and build their strategic as per available information. The report
focused on the effectiveness of the AASB in the IFRS process, debt to equity analysis of
Woolworths limited, Wesfarmers Ltd, Myer Holdings Ltd and JB Hi Fi Ltd. The discussion
shows that regulation helps the business in preventing the potential failure of the market.
AASB provides additional guidelines or the supporting commentary which are not there in
the IASB. All of these help in the following AASB standard without contradicting the IFRS
standards. The position of debt and equity for the business shows that Wesfarmers Ltd
always remained on the less risky side of the industry by sacrificing growth opportunity to
some extent. JB Hi Fi Ltd’s unpredictable data could be a cause of concern for the wrong
strategy of the business.
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Table of Contents
Executive summery....................................................................................................................2
Introduction................................................................................................................................4
Corporate regulation...................................................................................................................4
The necessity of regulation in the financial reporting and accounting..................................4
Accounting standard setting.......................................................................................................5
The IFRS and the AASB’s taking part in this process of global accounting.........................5
Owner’s equity...........................................................................................................................8
Item of equity and the changing pattern of it.........................................................................8
Position of debt to equity analysis.........................................................................................9
Conclusion................................................................................................................................11
Reference..................................................................................................................................12
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Introduction
The accounting or the financial information has become highly important for the international
economic outlook. In the current world economic environment the businesses are relying
more and more on the financial system that is based on the capital market. Therefore the
timely, accurate and proper standard based financial information disclosure has become
highly important for the businesses. Considering this the current report would investigate the
requirement of regulation for the financial accounting and reporting process, the role of
AASB in the IFRS processes, the debt and equity position analysis of four listed public
company. This approach would provide a theoretical and practical overview of the corporate
and financial accounting process.
Corporate regulation
The necessity of regulation in the financial reporting and accounting
The necessity of regulation in the financial accounting and the reporting process has many
justifications but the free market approach state other way. As per this free market approach
the financial information is treated as like the economic assets. This information therefore
would have a natural demand and the supply side would be met by the companies. This
would lead to a natural process of exchange. Therefore this approach would produce the
appropriate amount of information for the different stakeholders and the irrelevant
information as per the demand supply point of view would not be produced (Botzem,
2012). Under this approach of accounting any financial information disclosure the manager
would have the voluntary right to disclose the information. As per this approach the manager
would have the motivation to disclose proper information to keep the company’s resource
base intact. The theoretical model of Agency theory would be useful for the better
understanding development
Agency theory- This theory state that different party based contractual relationship intersects
in the company’s activity. On the other hand stakeholders have their personal interest. The
economic perspective of the agency theory gives rise to the concept of agency and principle
(Ballwieser et al., 2012). The principles are the owner and they select the administrator or the
agent to manage the business on behalf of them. But at the time of operation different
psychological and economic goal are followed by the manager and that may in turn be in
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