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Theoretical Principles for Accounting - Doc

   

Added on  2021-06-01

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I.IntroductionVinmart is the retail brand of the Vingroup Group. This system opened on November 20,2014. In which, Vinmart was built as a supermarket system located in the commercialcenters of Vin. Currently, it has the largest scale and coverage in Vietnam. This is theplace that provides all kinds of safe goods and food with good utility services for allfamilies. Vinmart works for the mission of improving the quality of life of Vietnamesepeople. P1: Analyse the regulatory framework and contexxt of financial reporting 1.The regulatory frameworkIn order to ensure that the financial statements of different businesses are preparedaccording to the same general regulations to facilitate the comparison. In addition, thelegal framework also helps the information in the financial statements have quality sothat it becomes a reliable document for stakeholders. There are three governing bodies:Land Law (Company Act), reporting standards, both national or internationalstandards (IASS & IFRSS) and IASB's conceptual framework for Financial Reporting.The Land Law (Company Act) states:- All registered companies are required to prepare statutory financial statements thatdetail business transactions for a specific period of time.- For unregistered companies that need to prepare a financial statement form to self-assess business transactions in a specific time period.Reporting standards (IASS & IFRSS):- Between the role of supervising the promulgation of IASS & IFRSS is theorganization Committee of International Accounting Standards - IASC Foundation.- International accounting standards (IASS) and general financial reporting standards(IFRSS) have the following principles:+ Include a unique identifier and title. For example: ISA 7 - cash flow statement, etc.+ Introduction and goal of the standard.+ Definition of term.+ Each standard gives guidance on the handling and recognition of a specific item inthe financial statements.+ Each standard must contain disclosure requirements and notes.
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IASB Conceptual Framework of Financial Reporting.- In the event that some items of account do not have specific instructions, theiraccounting principles will apply, those principles are called "Conceptual Framework".It is issued by the International Accounting Standards Board (IASB) for acceptedguidance, providing the basis for the accounting processing of business transactionsthat is:+ Theoretical principles for accounting of business transactions when preparingfinancial statements for a specific enterprise.+ Reference point for financial report makers and users. (Ganiyu, 2019)2.The context of Financial Reporting2.1. Company legislation:The Companies Act 2006 is the primary source of UK corporate law. This Actprovides comprehensive corporate law provisions for the UK and makes changes tomost aspects of corporate law. (legistation.gov.uk).2.2. Accounting Standard:International Financial Reporting Standard (IFRS): is the general rules that makefinancial reporting standard, transparent and can be used for comparison withcompanies in 120 countries around the world. The IFRS is issued by the InternationalAccounting Standards Board (IASB). The mandatory rules of IFRS are:- Report of financial position (or balance sheet): IFRS affects the manner of thecomponents of this report.Comprehensive income report: This report can be in the form of a report or separateinto a profit and loss report and a report on other income from assets and equipment.- Equity change report (or retained earnings report): This report summarizes therecords of earnings or profits over a specified period of time.- Cash Flow Statement: This report summarizes the company's financial transactionsover a specific period of time. Cash flows are split into activity, investment, andfinancing. (Plamer, 2020)Generally Accepted Accounting Principles (GAAP): are accounting rulesaccepted and used in the United States. GAAP is a combination of authoritative
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standards and the ways in which accounting information is recorded and reported. TheGAAP principles are:- Regular principles: Accountants must strictly comply with GAAP the establishedrules and regulations.Consistent principle: Standards must be applied consistently and throughout thefinancial reporting process.- Sincere Principle: Auditors complying with GAAP commits to accuracy and fairness.Methodology Principle: Consistent procedures are used in preparing all financialstatements.- Principle of no compensation: All positive or negative aspects must be fully reportedwithout prospect of debt compensation.- Precautions principle: Speculation does not affect financial report data.- Principle of continuity: Continuous assessment of the organization's assumed assets.- Periodic principle: Report on revenue by standard accounting period. (Fernando,2021)2.3. Corporate governance:- Corporate governance is responsible for the company's financial statements and thosethat make up a company's element. It is responsible for controlling and supportingmore accurate and reliable financial reporting. (Ermst & Young, 2017)Corporate governance is responsible for the company's accounts and the company'sfinancial statements. In particular, the internal governance mechanism of corporategovernance assists in preparing financial statements. This mechanism provides reliableinformation of the accounting system including a number of other mechanisms, thecontrol board, the audit committee consists of members of the control committee, theinternal audit. The external mechanism of corporate governance has the followingessential importance in terms of the credibility of the accounting system: financialreporting regulations, reporting regulations in the public governance domain. . andexternal audit. (Gad, 2016)- Accounting policies applied in controlling financial statements need to be approvedby the board of directors of the enterprise and the supervisory board. (Franczak, 2019)
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