Corporate and Financial Accounting

Running head: CORPORATE AND FINANCIAL ACCOUNTING
Corporate and financial accounting
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1CORPORATE AND FINANCIAL ACCOUNTING
Table of Contents
i) Critical Analysis of the regulation of financial reporting and accounting...............................2
i) Analysis of participation of the Australian accounting standard board in setting global
accounting standard process............................................................................................................4
ii) Equity items..............................................................................................................................6
iii) Debt – equity analysis...............................................................................................................9
References......................................................................................................................................11

2CORPORATE AND FINANCIAL ACCOUNTING
i) Critical Analysis of the regulation of financial reporting and accounting
The requirement for regulation of the financial accounting reporting occurs due to
numerous reasons. The IASB (International Accounting Standards Board) in its Financial
Reporting framework states that the main purpose of financial reporting is to give financial
information about reporting firm, which is vital for existing investors and lenders for making
decisions about offering resources to enterprise (Nobes 2014). This has significant number of
users that ranges from investor’s group, employee’s group, public analyst as well as government
adviser group to vital stakeholders. Edwards (2013) opines that it is necessary for the users to
utilize financial information as well as interpret systematically for making financial decisions.
Besides this, it also helps the potential investors for making important decisions relating to
investment. In absence of financial reporting regulation, the financial report can be prepared in
varied way by aligning to its needs (Watson 2015). Therefore, users can interpret varied financial
reporting in various ways. The financial report might be changed based on the change in material
in organizations financial position. Moreover, the contained financial information might be
ambiguous for the users to understand in proper way. Another vital aspect of regulating financial
reporting is the accounting framework. This framework relates the fundamental system that
makes this standard consistent via stating that the accounting reports are mainly based on
guidelines. The accounting practice varies among the nations and the accounting regulation is
needed for eliminating differences between making standard practice and accounting practice
(Botzem 2012). There are several advantages of regulating financial accounting reporting, which
are as under-

3CORPORATE AND FINANCIAL ACCOUNTING
 Protecting investors- Regulation of financial accounting reporting would increase the
confidence of investors in regards to the investment to be done. This is because the
investors are mainly concerned in realizing the fact that their investment are ensured via
reviewing correct as well as authentic information.
 Guidance- This is considered as another benefit for regulating financial information that
is involved in financial reports. Owing to complexity of financial world, it has been
becoming highly complex in creating standardized format for the organization. However,
the report that has been prepared through regulations will help to create standardized
format.
 Credible commitments – Another benefit of regulation of financial accounting reporting
mainly comes from the facts that it generates proper information and most of which
outcomes from reliable information. There must be effective enforcement that is imposed
by the regulatory regimes in comparison with voluntary regimes, which aids to generate
reliable disclosures and credible information.
 Comparability- Regulation of the financial report offers benefit of information
standardization, which can be attained in effective way when such financial reporting is
made on obligatory basis (Aasb.gov.au 2018).
Financial reporting and voluntary disclosure are the two main channels, which can be
utilized by the managers for communicating private information that is taken into account by
changes in stock price and liquidity. The managers of the organization use voluntary disclosure
for communicating proper knowledge regarding firm’s performance to the investors and
supplementing reporting. As the managers private information manly forms the voluntary
disclosures basis, they apt to be highly informative about earnings. Despite of having some