Financial Accounting Disclosure and Australian Accounting Standards Board Involvement in Global Standards

INDIVIDUAL ASSIGNMENT
WORD COUNT 1993

Contents
EXECUTIVE SUMMARY...........................................................................................................2
Introduction....................................................................................................................................2
Decision whether to allow manager to disclose financial accounting information voluntary 2
Australian accounting standards board involvement in global accounting standards.....................4
Case study companies....................................................................................................................5
Comparative analysis of the debt and equity position...............................................................8
Conclusion.....................................................................................................................................10
Reference.......................................................................................................................................11

EXECUTIVE SUMMARY
This assignment discusses whether financial accounting and reporting should be left for
managers to decide whether to disclose or not to disclose it also explains how the Australian
accounting standard board takes part in global accounting standard. It further explains why it is
not mandatory for countries from where members of international accounting and standard board
(IASB) to apply IFRS. In this assignment also Adalta Limited, Actinogen Medical Limited,
Acrux Limited and Aft Pharmaceuticals Limited (Asx, 2018) has been chosen as case study of
equity items and lastly an analysis of the debt equity ratio done on the four companies.
Introduction
There has been a debate om Financial reporting, on whether to be left to the managers to decide
on whether to disclose financial information or not, this assignment explains areas to consider if
such a decision has to be made. It also explains how Australian accounting board gets involved
in global accounting standard setting. And finally, an analysis of equity items in the financial
statement of four companies that are listed in Australia stock exchange are explained.
Decision whether to allow manager to disclose financial accounting information voluntary
accounting standards are all inclusive
Before an accounting standard is set, procedures to be followed. This ensures that all the relevant
bodies are consulted and their views incorporated in it, so by making it compulsory for managers
to disclose financial information it is the best decision because it is required by other users of the
financial statements this includes the investors, government and other interested parties. (Ifrs,
2017)
Information prepared by on the financial statement is mostly for the stakeholders and any
potential investors. The shareholders are able to see whether wealth is being generated for them
and if they can be able to get back their investment in form of dividends, without being directly
involved in the running of the company so the directors should always disclose all the required
information in the annual financial report.

When left for managers to decide what to disclose and what to leave they would only disclose
what favors them and thus portraying a picture that does not reflect the state of the company.
(Kieso, D.E., 2010)
These regulations are set in a way to encourage transparency when preparing the financial
statement. But if that choice is left to the directors they may disclose only the information that
portrays that the business is doing well and in real sense there are other issues that maybe
affecting the business negatively.
When right procedures are followed in preparing the financial report it eases the
understandability and it is easy to interpret for all the stakeholders. Otherwise the managers may
prepare something that cannot be understood by anyone but them. (Van Greuning, H., 2011)
When this information is set it saves the company a lot of other unnecessary expenses that may
result in legal expenses through wrong decision made by investors upon relying on information
provided by the managers that may be incorrect.
On other hand this information is available to everyone that includes a company’s competitor
and they use this information to create even a stiffer competition for the market share. So, to
protect a company from such unnecessary competition it would be good to withhold such
information.
When such information is released if the company did not do well financially it directly affects
the share price in the stock market thus causes a series of negative effect on the company which
could have been avoided if the information was not disclosed. Also, the share price would
remain stable instead of declining which is often the case.
To prepare such documents it is an expensive exercise, so if a company was not doing well
financially and it goes ahead to prepare such documents, cost would be incurred which would
otherwise have been used to improve the business.
Therefore, I can conclude that if the manger has the best interest of other users in mind on
making the decision on whether to disclose financial information they can choose not to disclose
otherwise they should follow the regulation already set and disclose all the necessary financial
information.