Financial Reporting Changes and Developments Analysis: April-July 2017

This report analyzes the changes and developments in the financial reporting environment from April 1, 2017, to July 31, 2017. The key areas discussed include significant shifts in auditing practices, with a focus on internal auditing and its impact on efficiency and reliability. The report also examines the increasing use of digital reporting and its implications for investors, as well as the specialization of investors in their areas of interest. Furthermore, it addresses the changes in the length and content of financial reports, technical changes like consolidation and equity methods, and the impact of regulations by the Australian Securities and Investments Commission (ASIC). Political influences and the implementation of Key Audit Matters (KAMs) are also discussed. The report highlights the need for companies to adapt to these changes and ensure the quality and accuracy of financial reports.

Running Head: FINANCIAL REPORTING 1
Financial Reporting
(Name)
(Institutional Affiliation)

FINANCIAL REPORTING 2
Changes and Developments in the Financial Reporting Environment for the Period from 1
April 2017 to 31 July 2017.
There have been several listed changes that have occurred in the financial reporting
sector for the past period. Many reflections have been outlined in regard to the financial
environment and some of the changes include the listed below.
Auditing
Auditing has greatly changed and submitted to a lot of new changes as compared to
before.Currently, alot of stress has been put on internal auditing rather than financial reporting.
The manner in which such controls have been prepared and recorded has helped in efficiency of
internal controls. These new changes have made work easier and reliable by information
users.However, there are some difficulties of implementation of this change in the financial
environment but many auditors try to make it cost effective and more profitable. (Eckerson,
2009)
Digital reporting
Over the past years, many investors of various business sectors relied mostly on financial
statements purely.However, this has been changing gradually over time and currently, digital
reporting of financial positions of companies is being used. Many financial environments have
implemented it and access to information by various company investors is done now in a digital
way. It is argued that financial statements given to investors to read are not automatically
understood by all. (Eckerson, 2009). The statements contain detailed data which may be of no
importance to an investor and thus digital reporting puts a person in position of identifying key
information they require rather than going through the whole financial statement from the
beginning to the end.
Specialization of investors
Investors have specialized in their key area of interest and study only. This development
is being used since many think that, studying a whole financial statement would be a waste of
resources as well as time. Specialization in their professionalism has been effective and now the
majority concentrates only in their fields of interest. Investors get to identify good quality of
standards they should provide in a given business entity. (Few, 2011)
Length of financial reports
There has been a progressive change in the size of financial reports printed and issued out
by companies. Some time back, the statements were lengthy in nature and this was not effective
for users. It is agreed by the majority that, not all financial statement users read the whole large
documents to a level of understanding. Even the size would discourage an investor from going
through the whole statement up to the end. Arguments on whether to include some information

FINANCIAL REPORTING 3
in disclosures have been the key point of discussion. Many investors have suggested that
disclosures should not be overloaded since this action will discourages investors from reading
such lengthy documents. The volume of financial statements has been reduced currently to
simpler ones. This is because not all data outlined in the disclosures is necessary to investors.
(IAS 27, 2011)
Technical changes
A lot of technical changes in the financial reporting environment have occurred recently
in which users of financial information need to be updated upon. Consolidation and equity
method is among the technical changes that have occurred. Amendments to the equity method
have been implemented successfully. These amendments mainly affected consolidation to
accounting determinations .Such changes helps in getting to know which entity should replace
another. The consolidation procedures are being used currently by all non-private business
entities.However, this change has its own impact on companies since a revaluation of variable
costs must be done. Companies will have to be in a position to manage their time well since it is
much involving mostly in cases where variables are plenty. (Few, 2011)
Regulations
The Australian Securities and Investments Commission have come up with several
reviews on financial reporting statements. The regulations came up after the commission noted
that some companies are using wrong criteria in revaluation of their assets. It outlined the limits
to which directors should perform their work and this include;
 Production of adequate financial data by the management to users of such information
 Directors to make sure that business sectors use efficient methods and data. This helps
them to justify contents in the statements submitted. Such implementations will lead to
production of quality financial reports.
 Ensuring that companies employ adequate knowledge and techniques in tackling difficult
tasks. This will enable quality results in working out of critical areas that require more
skills.
Current regulations by ASIC to management
The ASIC gave out regulation in preparing of financial reports by internal auditors and
the management of a particular company. It outlines specific roles for the management and
auditors where it stated that, it is the role of the management to come up with enough data
supporting reports made. Monitoring of these new changes should be keenly followed by the
management and made aware to their investors. Investors have the right to know such changes
included in the reports in order to plan well on the quality of services they should offer. Some of
the change and development that will be applied as from 1 April July to 31 July is
KAMs.These are vital sectors that the auditor need to consider and dedicate more time in

FINANCIAL REPORTING 4
making audit reports. The ASIC sees KAMs as important areas that auditors need to include also
because they enable auditors in production of high quality financial reports. The data must be
included in statements for easier retrieval by accounting information users. (Few, 2011)
Political Influence
There have been a lot of political changes affecting the financial reporting environment
arising from legality of some government systems. Areas of much interest to the government
have enforced more disclosures as compared to sectors where they have less interest. This affects
the manner in which financial reports are prepared and recorded. It has been noted that, some
government based sectors employ schanges in financial reports in order to benefit them
personally. Consequences have come out of such actions and they directly affect the quality and
accuracy of reports produced by both the management and internal auditors. Balancing of
government interests and company’s interests becomes a major blow to auditors. (Eckerson,
2009)

FINANCIAL REPORTING 5
Bibliography
Eckerson, Wayne W (2009). Performance Dashboards: Measuring, Monitoring, and Managing
Your Business. John Wiley & Sons. ISBN 978-0-471-77863-9.
Few, Stephen (2011). Information Dashboard Design. O'Reilly. ISBN 978-0-596-10016-2.
"IAS 27 — Separate Financial Statements (2011)". www.iasplus.com. IAS Plus (This material is
provided by Deloitte Touche Tohmatsu Limited (“DTTL”), or a member firm of DTTL, or one of
their related entities. This material is provided “AS IS” and without warranty of any kind,
express or implied. Without limiting the foregoing, neither Deloitte Touche Tohmatsu Limited
(“DTTL”), nor any member firm of DTTL (a “DTTL Member Firm”), nor any of their related
entities (collectively, the “Deloitte Network”) warrants that this material will be error-free or
will meet any particular criteria of performance or quality, and each entity of the Deloitte
Network expressly disclaims all implied warranties, including without limitation warranties of
merchantability, title, fitness for a particular purpose, non-infringement, compatibility, and
accuracy.). Retrieved 2013-11-29.
"IFRS 10 — Consolidated Financial Statements". www.iasplus.com. IAS Plus (This material is
provided by Deloitte Touche Tohmatsu Limited (“DTTL”), or a member firm of DTTL, or one of
their related entities. This material is provided “AS IS” and without warranty of any kind,
express or implied. Without limiting the foregoing, neither Deloitte Touche Tohmatsu Limited
(“DTTL”), nor any member firm of DTTL (a “DTTL Member Firm”), nor any of their related
entities (collectively, the “Deloitte Network”) warrants that this material will be error-free or
will meet any particular criteria of performance or quality, and each entity of the Deloitte
Network expressly disclaims all implied warranties, including without limitation warranties of
merchantability, title, fitness for a particular purpose, non-infringement, compatibility, and
accuracy.). Retrieved 2013-11-29.
“Presentation of Financial Statements” Standard IAS 1, International Accounting Standards
Board. Accessed 24 June 2014.
"The Framework for the Preparation and Presentation of Financial Statements" International
Accounting Standards Board. Accessed 24 June 2014.