This assignment discusses the accounting regulation and reporting requirements for the formation of a company in Australia and its listing on the Australian Stock Exchange.
Contribute Materials
Your contribution can guide someone’s learning journey. Share your
documents today.
FINANCIAL ACCOUNTING PROCESS ASSIGNMENT
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
1 By student name Professor University Date: 25 April 2018. 1|P a g e
2 Contents Background and Abstract............................................................................................................................3 Discussion and Analysis...............................................................................................................................3 Key Audit Assertions................................................................................................................................3 Substantive Audit Procedures.................................................................................................................3 Communication of Key Audit Matters in the Auditor’s Report................................................................4 References...................................................................................................................................................5 2|P a g e
3 Background and Abstract In the given case, Xiaojing Wu is an entrepreneur from China who immigrated to Australia and set up a partnership business with two other partners in South Australia but later decided to dissolve and restructure the same as a company. The below section highlights the accounting regulation and the reporting requirements w.r.t. formation of company in Australia and further listing of the same on Australian Stock Exchange. Discussion and Analysis A partnership is a group of persons or entities who are doing the business together and sharing the profits or losses in the ratio of capital contribution or pre agreed ratio. It has unlimited liability for each partner and each one of them is personally liable to make good the losses of the third party(Choy, 2018). Whereas this shortcoming is overcome by the proprietary company where the individual and the company have separate and distinct identity and no owner, shareholder or employee assumes the full liability of the company’s debts. As per the Australian Law, the proprietorship company has limited liability of members based on ownership or unlimited by the share capital(Alexander, 2016). Therefore, shareholder’s own assets are not under threat in this type of business. Some of the disadvantages include many rules and regulations framed by ASIC needs to be followed, the shareholders are not able to take decision on behalf of the company, there is a difference in the control and ownership of the company and the cost of establishment of the company is generally higher than sole trader or partnership form of business. The proprietorship company can be seteitherbyselforthrougha serviceproviderusingASICform 201,availableonASICsitewith applicable fees. Then the name of the company should be chosen and ACNnumberneedstobetaken (Dichev, 2017). Post this, the rules orconstitutionofthecompany needstobeformed,the shareholder and directors (at least 1) needs to be chosen, the share structuring needs to be done, the Australianstateinwhichthe registration needs to be done has to be selected. One registered office and principal place of business is selected,thecompanystands registered(Heminway, 2017). 3|P a g e
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
4 The rights and obligations of directors include being honest and careful in dealing with company or on its behalf, understanding the legal obligations and making necessary compliance, being informed of company’s financial position and performance and payment of debt on time, get professional advice in case of any doubts and working in the interest of the company and directors(Werner, 2017). The funding options include raising funds from the existing shareholders or employees of company or any of its subsidiaries or from general public if it does not requires any disclosure document. In case the company needs to be listed on ASX, it has to follow the listing requirements. The main advantage of the public company is the unlimited number of shareholders, the ability to take decision is in the hands of the investors, visibility of the company, the multiple fund raising options that opens up for the company(Trieu, 2017).It also gives the benefit of share transfer amongst the owners which is not available in the case of proprietorship company. The disadvantages are following the rules and regulations of Corporation Act, compulsory audit, the enhanced disclosure requirements in the annual report and the set up costs is also high as compared to Proprietorship Company. When the company is listed on the Australian Stock exchange a lot of funding options are made available to the company like that of issue of shares and debentures to the public, thereby raising money through equity and debt respectively. This helps the company in raising large amounts of capital in quick time but at the same time, it also entails a higher regulatory and fund raising costs(Linden & Freeman, 2017). The reporting requirements as per ASX include providing reports to the shareholders, holding the annual general meeting, making the constitution of the company available to its shareholders and maintaining the share register. 4|P a g e
5 References Alexander, F. (2016). The Changing Face of Accountability.The Journal of Higher Education, 71(4), 411- 431. Choy, Y. K. (2018). Cost-benefit Analysis, Values, Wellbeing and Ethics: An Indigenous Worldview Analysis.Ecological Economics, 145. doi:https://doi.org/10.1016/j.ecolecon.2017.08.005 Dichev, I. (2017). On the conceptual foundations of financial reporting.Accounting and Business Research, 47(6), 617-632. Retrieved from https://doi.org/10.1080/00014788.2017.1299620 Heminway, J. (2017). Shareholder Wealth Maximization as a Function of Statutes, Decisional Law, and Organic Documents.SSRN, 1-35. Linden, B., & Freeman, R. (2017). Profit and Other Values: Thick Evaluation in Decision Making.Business Ethics Quarterly, 27(3), 353-379. doi:https://doi.org/10.1017/beq.2017.1 Trieu, V. (2017). Getting value from Business Intelligence systems: A review and research agenda. Decision Support Systems, 93, 111-124. Werner, M. (2017). Financial process mining - Accounting data structure dependent control flow inference.International Journal of Accounting Information Systems, 25, 57-80. 5|P a g e