Current Development in Accounting - ACC518

   

Added on  2020-03-07

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Running Head: CURRENT DEVELOPMENT IN ACCOUNTING AND THOUGHTCurrent Development in Accounting andThoughtSubject Code-Trimester No.- Student’s name- Word Count -2000 Name of the tutor -
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CURRENT DEVELOPMENT IN ACCOUNTING AND THOUGHTP a g e | 2Question 1:Relevance is that characteristic which makes the information relevant and helpful for the purpose of decision making. Relevance is a combination of the predictions related to the future and the past [ CITATION Bra13 \l 16393 ]. Faithful representation vouches for the accuracy with respect to the business. Apart from the financial statement, it extends its reflection on the financial position and another course of operations [ CITATION Bra141 \l 16393]. As per my level of understanding, faithful representation is more important. In order to make the financial information useful, only being relevant will not be sufficient enough. It should authentically represent the occurrences it implies to represent. The quality of faithful representation elevates the inner characteristics of completeness, error free and neutrality. The role of relevance is an important but faithful representation is the necessity. Faithful representation acts as a backbone to the financial information and result which can be cross verified at different areas. This confirms the authenticity and reliableness of an organization[ CITATION Cha171 \l 16393 ]. Suppose a difference has been found between the substance and legal form, it is the faithful representation which comes to the rescue. Relevance cannot solve this issue solely. With the help of faithful representation, the financial information should signify the financial substance. For example, if the company possess $ 125,640 inventory, it can be easily traced with the help of past trends and the requirements of future. But, if it is not fairly represented in the financial information, the decision making of users will stand misleading. Such is the role play of fair representation that it needs to be accurately mentioned and cross verified by other sources. The agenda of any information stands incomplete and incorrect if it has not been fairly represented even if confirms its relevancy. Practically, the companies are getting
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CURRENT DEVELOPMENT IN ACCOUNTING AND THOUGHTP a g e | 3trapped in fair representation due to which fraud and misleading decisions crop up in the corporate world [ CITATION ias17 \l 16393 ]. Fair representation also includes the required compliance of accounting policy, relevant disclosures, and reliable information. Its domain is relatively broader than relevance and without satisfying fair representation, it is highly difficult to survive for any organization. The framework of IAS, Presentation of Financial Statements itself includes the component of fair representation. The basic theme of any accounting standard is to disclose proper information with disclosures and depicts its true nature. The purpose of faithful representation is somewhat similar to the theme of any accounting standard. Fairness in the quality of information, proper disclosures and error free are its three distinctive features. The backbone of any accounting standard also stands on these three pillars. It is not required to beoutrightly discussed in fact it is an unsaid fact in some of the accounting standards [ CITATION ias17 \l 16393 ]. In this developing environment, the need for different kinds of disclosures has increased since the past decades. Stakeholders want both kinds of information to be it financial or non-financial information. It has been noticed that now the stakeholders are understanding the importance of non-financial information and its impact in the corporate world. The changes made in the accounting standards have been made in connection with the diversifying needs of the corporate environment. For example, related party disclosures were not exhaustive enough as it is in today’s times. But today, due to the need for transparency, the list of details required for the related parties had been made exhaustive. Apart from the name and the nature of transaction of related parties, the outstanding amount, the relation of such parties and other parameters are required to be disclosed. The importance of faithful representation is so high that the auditors
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