Financial Accounting: Importance of Accounting Standards and Recommendations

This document discusses the importance of accounting standards in financial accounting and provides recommendations for effective financial management. It focuses on the case of West Ltd, a company dealing with frozen and canned fish. The document covers topics such as AASB standards, benefits of following accounting standards, and recommendations for the company. Suitable for students studying financial accounting.

Running head: FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
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Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
AASB Standards....................................................................................................................3
Benefits and significance of following the accounting standards..........................................4
Recommendations..................................................................................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................9

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Introduction
The aim of the assignment actually deals with chosen company which is West Ltd and
further to provide the assistance regarding generating the financial reports of the concern. The
marketing strategy of the West Ltd is effective and the company actually deals with the sales
of the frozen and canned fish produced. The products of the company are actually sold based
on the two brand names where the fish are caught in the southern Australia which are rather
used by the company for the marketing purpose. It is actually needed by the company to get
significant assistance regarding the preparation of the financial statement of the firm.
Discussion
In order to provide assistance to the chosen company which is West Ltd further
significant strategies are adopted by the company. The accounting standard which must be
implemented by the company is based on the concept of the International Accounting
Standards or rather the Generally Accepted Accounting Principle. This are the significant
changes which must be adopted by the company at the time of preparation of the financial
statement of the firm (Kieso, Weygandt and Warfield 2019).
If the goodwill of the company increases then it will definitely create a positive
impact on the financial statement of the company. The net asset position of the company in
that case will definitely increase, as there is an increase in the intangible assets of the firm.
Basically, there are actually some of the significant facts which the upper level management
of the company must take care of the certain situation along with the significant impact on the
business along with it (Libby 2017).
The members of the board are effective in adopting the selling strategies which are
involved in the business but they are not confident with the financial strategies and further in

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that case some of the significant steps must be adopted by the upper level management. The
board of members have developed and effective financial management team for the purpose
of the providing the assistance regarding the preparation of the financial reports of the firm.
For getting huge success it is important for the company to adopt the potential financial
strategies by analyzing the past performance of the company. Based on that the forecast of
the business is done accordingly along with the significant business prospects which is
actually the long run objective of the firm (Lara, Osma and Penalva 2016).
The income statement and balance sheet of the company must be audited on an
interval basis so that the financial statement of the company is prepared accordingly. The
current marketing strategy which is adopted by the company is regarding the advertisements
made and other marketing strategy which is adopted by the company based on the long run
objectives (McKinney 2015). The business objectives of the company is certainly based on
the parameters which is actually based on the financial objective of the firm.
AASB Standards
The chosen company in this case is the West ltd which actually needs to follow a
specific accounting standard. The appropriate accounting standard which must be followed
by the company is the rules and regulation enlisted in the Australian Accounting Standard
Board. The financial management team of the company actually prepares the financial
statement of the company based on certain rules and regulation (Newberry 2015).
The actual purpose to follow the specific rules and regulation due to the fact that the
financial statement of the company will be free from the material misstatement of the firm.
The glitches of the firm will be comparatively less if the management system of the company
actually follows the norms laid in the AASB. The financial reports must be prepared based on
the rules and regulation of the AASB. Both the private and the public sectors entities of the

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Australian economy follows the financial reporting standards. The functions and powers are
used in the Australian Securities and Investments Commission Act in order to make
transaction in the business.
The AASB 138 is actually related to some of the examples of the intangible assets of
the business and in case of further calculation there are some of the parameters which are
needed to be considered by the management. The parameters are needed to be identified, non-
monetary, lack of the physical substances and extensive control of the sales in the process of
the business. The intangible assets of the business are software, patent, license and copyright
which is actually immensely valuable assets for the business. Suppose in case of research and
development of the company it is actually needed to record the financial statement of the
company in terms of design value which is $3000000 and gain of $2000000 as goodwill must
be valued based on the fair value of the business.
Benefits and significance of following the accounting standards
The financial accounting standards actually provides the significance mechanism in
order to assist the resolution of the potential financial conflict of the business which is
actually based on the significant groups in the society (Cameran, Campa and Francis 2018).
The accounting standards of the company must be based on the credibility of the
shareholders, creditors and public of the firm. The financial standards of the firm is based on
the economic sustainability, analysis and evaluation of the financial reports of the company.
In order to make the financial statement of West limited effective it is further
important for the company to adopt the significance changes in the aspects of the firm
(AASB 2016). Following the standards will definitely create a positive impact while
preparing the financial statements of the company. The management of the company have the
accountability towards maintaining the financial reports of the company and the end of the

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year it is also needed to accumulate the financial matters for the purpose of preparing the
financial statements of the company at the end of the year.
At the same time, it is significantly important for West Ltd to implement the latest
technology which would further make the preparation of the financial statement of the
company much easier, cost effective and fast. At the time of audit and assurance there will be
high chance that the financial statement of the company will be free from the material
misstatement of the company (Duska, Duska and Kury 2018). If the financial management
team of the company is effective then in terms of the financial business prospects of the
company it will be easier for the company to accomplish the overall business prospects of the
firm. Accounting standards is the significant tool which is used by the company to enhance
the consistency in the maintenance of the data which is published by the enterprise. It is also
considered as the useful tool to enhance the corporate governance responsibility of the
company.
Company’s approach
The approach which is made by West ltd is actually based on the current aspects of
the firm and further the various significant strategies of the company must be adopted by the
company based on the long run aspects of the business (Clarke and Wilson 2018). The
marketing strategy of the company is basically effective and the reason behind that is the
concept of advertisements and the marketing strategy of the firm is further identified by the
company based on the long run objective of the firm.
The marketing team of the company is further depended on the various parameters,
which may be internal, or external business concepts. The policies and procedures of the
upper level management in that case must be effective enough to understand the
fundamentals of the current approaches along with the significant weakness in the business

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aspects of the company (Hoque 2018). Based on the environmental reputation the business of
West ltd is far ahead which actually indicated the reported profit made by the company in that
case. Before implementing the business strategies, it is significant for the firm to strength and
weakness actually based on the past financial records of the firm.
After the acquisition of the company which is fishy tales ltd by the West ltd along
with all the assets and liabilities of the business. The reason behind that the operations of
fishy tales was not effective enough along with the financial status of the company (Clarke
and Wilson 2018). This is the reason behind the implementation of the acquisition plan of the
West ltd. After such kind of business acquisition, it is important for the company to have an
effective business or financial management team which can manipulate the business
prospects of the firm.
Wets limited actually got a huge brand recognition and the potential weakness of the
firm is regarding the accounting prospects of the company. The members of the board are
quite concerned about such weakness in the accounting aspects of the company and
accordingly the company needs to have an effective financial management tea following the
norms which is laid on the Australian Accounting Standard Board (Smith 2017). It is needed
to provide the chairman a typical assistance at the time of preparation of the financial reports
of West ltd.
Recommendations
The significant recommendation which must be provided to the chairman in order to
provide significant assistance regarding the acceptance of the accounting standards which is
mentioned bellow:

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 It is needed to have a deep understanding of the rules and the strategies which is laid
on the rules of the company and significantly the business of the company must be
concentrated on the rules laid on the system (Kabir, Rahman and Su 2017).
 It is needed to have a proper maintenance of the books of records of the firm along
with that maintaining the transparency in the financial statement of the company.
 The data and information must be collected accordingly by managing the constraints
associated with the business. It is significantly important for the business of the
company to mitigate the significant risk which are associated with the business.
 The guidelines of the AASB must be followed of the company in order to make the
financial statement of the company much more effective (Handley, Evans and Wright
2019).
 The board must have a clear understanding regarding the rules and regulation laid in
the framework of the firm.
 The advertising strategy of the business must be diversified so that the reach of the
company is maximum in that case. If the reach of the company is effective then it will
automatically enhance the potential sales of the business. This is further needed at the
time of boosting the sales along with the overall financial performance of the
company in the long run (Kaplan and Atkinson 2015).
 The current approach of the firm should be regarding optimizing the financial aspects
of the business in order to accomplish the long run objective of the firm.
 The recent concerns of the chairman of the business must be maintained along with
the significant changes in the management system of the company which the firm
readily needs to implement in that case (Zietlow et al. 2018).

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Conclusion
From the above discussion it can be concluded that the chosen company which is the
West ltd needs to adopt some of the significant aspects of the business which is discussed in
the depicted study. It is needed to have a clear understanding regarding the application of the
AASB and the conceptual framework so that the chairman of the business can successfully
implement the norms laid on the conceptual framework. There are actually various sections in
the accounting standards and while preparing the financial statement of the firm it is needed
to go through all the sections so that the management system of the company can maintain
transparency in the business. Apart from that the significant changes which must be adopted
by the chairman of West ltd is further laid on the significant recommendations.

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References
AASB, C.A.S., 2016. Consolidated Financial Statements.
Cameran, M., Campa, D. and Francis, J.R., 2018. Audit effects of accounting firm
organization levels. Available at SSRN 3157562.
Clarke, E.A. and Wilson, M., 2018. Accounting: An Introduction to Principles and Practice
9ed. Cengage AU.
Coulton, J., Ribeiro, A., Shan, Y. and Taylor, S., 2016. The rise and rise of non-GAAP
disclosure.
Duska, R.F., Duska, B.S. and Kury, K.W., 2018. Accounting ethics. Wiley-Blackwell.
Handley, K., Evans, E. and Wright, S., 2019. Understanding participation in accounting
standard‐setting: the case of AASB ED 192 Revised Differential Reporting Framework.
Accounting & Finance.
Hoque, Z., 2018. Methodological issues in accounting research. Spiramus Press Ltd.
Kabir, H., Rahman, A. and Su, L., 2017. The Association between Goodwill Impairment Loss
and Goodwill Impairment Test-Related Disclosures in Australia. In 8th Conference on
Financial Markets and Corporate Governance (FMCG).
Kaplan, R.S. and Atkinson, A.A., 2015. Advanced management accounting. PHI Learning.

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Kieso, D.E., Weygandt, J.J. and Warfield, T.D., 2019. Intermediate accounting. John Wiley
& Sons.
Lara, J.M.G., Osma, B.G. and Penalva, F., 2016. Accounting conservatism and firm
investment efficiency. Journal of Accounting and Economics, 61(1), pp.221-238.
Libby, R., 2017. Accounting and human information processing. In The Routledge
Companion to Behavioural Accounting Research (pp. 42-54). Routledge.
McKinney, J.B., 2015. Effective financial management in public and nonprofit agencies.
ABC-CLIO.
Newberry, S., 2015. Public sector accounting: shifting concepts of accountability. Public
Money & Management, 35(5), pp.371-376.
Smith, M., 2017. Research methods in accounting. Sage.
Zietlow, J., Hankin, J.A., Seidner, A. and O'Brien, T., 2018. Financial management for
nonprofit organizations: policies and practices. John Wiley & Sons.