Analysis of Financial Principles and Theory

Running Head: FINANCIAL PRINCIPLES AND THEORY
FINANCIAL PRINCIPLES AND THEORY
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1FINANCIAL PRINCIPLES AND THEORY
Executive Summary
The aim of this report is to do analysis on the financial principles and theory. Under
this assignment discussion will be on compliance and applicability status of the accounting
standard for the company Premier Investment Limited. It is Australia based company in the
specialty retail fashion chains across many countries. Hence, under this assignment, research
will be done on the accounting standards, general purpose financial reporting, corporate
reporting practices as well as current accounting issues in order to determine whether the
financial statements of the company are faithfully represented or not. Therefore, it being
analyzed that apart from the emerging accounting issues all over the world, the company tries
for complying with the guidelines of the ASIC and AASB standard. However, accounting
issues should be minimized as far as possible for more clarity in financial statement
presentation and serving the interests of the stakeholders.

2FINANCIAL PRINCIPLES AND THEORY
Table of Contents
Introduction................................................................................................................................3
Methodology..............................................................................................................................3
Findings......................................................................................................................................4
Accounting Standards............................................................................................................4
Current Issues in Accounting.................................................................................................6
Objectives of General Purpose Financial Reporting..............................................................8
Social and Economic Role Played by General Purpose Financial Reporting......................11
Interpretation, Application and Evaluation of Accounting Standards.................................12
Research Findings on Corporate Reporting Practices and Current Accounting Issues.......19
Implications of Findings..........................................................................................................20
Conclusion and Recommendations..........................................................................................21
Reference..................................................................................................................................22
Appendix..................................................................................................................................28

3FINANCIAL PRINCIPLES AND THEORY
Introduction
The aim of this report is to do the analysis on to do the analysis of on the compliance
and applicability status of the accounting standards of ASX listed company. For this, analysis
will be done on Premier Investments Limited. This Australian public company operates in
various retail fashion chains in the New Zealand, the United Kingdom, Malaysia, Australia
and Hong Kong. This company operates through the segments of retail and investments. The
company generally offers women’s wear, casual wear as well as non-apparel products
(premierinvestments.com, 2019). Therefore, under this analysis will be done on the
objectives of the general purpose accounting standards. Moreover, social and economic role
played by the general-purpose financial accounting will be discussed. Further, discussion will
be done on the interpretation, application and evaluation of the accounting standard. In
addition, relationship and the impact of the applicable accounting standards in the context of
the financial accounting theories, regulations, concept as well as other topics will be
discussed in detail (premierinvestments.com, 2019).
Methodology
The methodology that is adopted for the analysis on the compliance and applicability
status of the accounting standard is done by the method of qualitative method. For the
analysis the company that is chosen for the analysis from ASX 200 listed company is Premier
Investment Limited. Thorough analysis is done of the company regarding compliance and
applicability of the accounting standard. Questionnaire has been selected for the emerging
accounting issues from the group of stakeholders and company’s management
(premierinvestments.com, 2019).

4FINANCIAL PRINCIPLES AND THEORY
Findings
Accounting Standards
Accounting standard stands for the written documents and the policies, which
provides the principles for the recognition, presentation, treatments, measurements as well as
disclosures of the accounting transaction in financial statements. The accounting standards
are introduced with the aim of standardizing the accounting practices as it helps in the
comparison of the financial statement for the different organizations that fall in the same
industry for which the accounting standards are applicable (Brown, Preiato & Tarca, 2014).
Therefore, the government agency, Australian Accounting Standards Board is responsible for
the development as well as maintaining the applicable financial reporting standards to the
private as well as public sector entities of Australian economy. Conceptual framework is used
by the AASB for the development and evaluation of the accounting standards. The Australian
Securities and Investments Commission Act 2001 set the functions and the power of AASB
(Henderson et al., 2015). ASIC is the independent body of Australia that is the regulator of
the corporate of Australia. The role of ASIC is for enforcing and regulating the company as
well as the laws of the financial services for protecting the Australian investors, creditors and
the consumers. The responsibility areas of ASIC include corporate governance, securities and
derivatives, insurance, consumer protection and financial literacy (Lovell, 2014). The act of
ASIC requires the following aspects:
 Maintaining, facilitating as well as improving the financial system and entities.
 Promoting the confidence as well as informed participation by the consumers as well
as investors in financial system.
 Administering effectively law with the minimal procedural requirements.
 Enforcing and give effect to law.

5FINANCIAL PRINCIPLES AND THEORY
 Making information about the entities as well as other bodies for availability to the
public as early as possible.
 Taking the necessary action for enforcing and giving effect to the law.
ASIC provides the access to the legislation that is applicable regarding the requirements,
regulatory documents and professional standards. They regulates whether the entities are
complying with the requirements of the financial reporting. The active monitoring of the
compliance of the entities with the requirements does contribute directly to the confidence of
the investor and integrity of the market (Brusca & Martínez 2016). It helps in ensuring that
the issued financial reports are relevant as well as reliable and ultimately helps the users for
making better-informed decisions in market place. In case of non-compliance with the
accounting standards, ASIC seeks for to get revised financial statements, either by the
negotiation with the involved company or if necessary using the power for enforcing the law
(Bazley, Hancock Robinson, 2014).
The accounting standard that is used by the entities for the preparation of the financial
reports under Corporations Law is made by AASB. The reporting entities must have to
comply with the Australian Accounting Standards as well as interpretations issued by
Australian Accounting Standards board and its applicability with the Corporations Act 2001
requirements (Pacter, 2014). The reporting entity is the entity, under which is it is reasonable
to expect that the existence of the users that rely on the general purpose financial statements
of the entity for the information which will be useful for making as well as evaluating the
decisions about resource allocations. The reporting entity may be single or the group that
comprises of parent as well as its subsidiaries (Budding, Grossi Tagesson 2014).
AASB is the agency of government of Australia. The standards of AASB are defined
as Australian Accounting Standards that includes Australian similar to the International