MA620 Master of Professional Accounting | Melbourne Institute

Added on - 30 Oct 2019

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Running head: REPORT OF ACCOUNTING PRACTICESName of the Student:Name of the University:Author’s Note:
REPORT OF ACCOUNTING PRACTICESEXECUTIVE SUMMARYThis report analyses how there is a shift in focus of accounting systems in Australian companiesfrom creation of value for shareholders and customers to sustainability reports, creation of valuefor stakeholders and effective risk management. A literature review is done and practicalexamples from annual reports of existing companies of Australia are provided.
REPORT OF ACCOUNTING PRACTICESContents1. INTRODUCTION.......................................................................................................................22. LITERATURE REVIEW............................................................................................................23. CHANGES IN FOCUS OF MANAGEMENT ACCOUNTING FUNCTION...........................44. PRACTICAL EXAMPLES FROM ANNUAL REPORTS OF COMPANIES CURRENTLYOPERATING IN AUSTRALI.........................................................................................................5CONCLUSION................................................................................................................................65. APPENDICES.............................................................................................................................76. REFERENCE LISTS...................................................................................................................8
REPORT OF ACCOUNTING PRACTICES1. INTRODUCTIONIn the 21stcentury, management accounting practices in Australia shifted from creatingvalue for customers and shareholders and organizational innovation to creation of value forstakeholder, management of risks and sustainability reporting. There are multiple risks which areinvolved in the business processes of a company. Risk can pose serious threats to the resourcesof practices. Unlike early 1980s and 1990s management accounting practices in Australiafocused on risk management by either minimizing the risk or eliminating risks. Managementaccounting practices in Australia aim to create value for stakeholders by shifting focus fromprofitability during a shorter span of time to aiming to accomplish prosperity in the long run.Management accounting practices in Australia do not focus only on creating profit forshareholders but also focuses on corporate governance and corporate social responsibility so thatfirms can return value to stakeholders of business and thus can achieve long term sustainability.Management accounting practices have introduced models like Stakeholder Value Model (STV)and Corporate Social Responsibility (CSR) models in Australia. Organizations and firms are nomore viewed as microscopic organizations in Australia with the advent of globalization andmanagement accounting practices have changed from 1990s and 2000 and have adopted acontemporary approach (Birt et al., 2014).Discussion2. LITERATURE REVIEWIn early 1980s and 1990s management accounting practices ignored the consequencesthat business have on society and environment. Social accounting practices have emerged in
REPORT OF ACCOUNTING PRACTICESAustralia and firms no longer focus on only economic performance (Cantrell, Kyriazis & Noble,2015).Management accountants must provide information on development of stakeholders. Thusin Australia, management accounting practices has incorporated Stakeholder Value Model whereappropriate management practices and strategies are followed and there is core commitment tohumanistic values in organization. A flexible and supportive organization structure and an openmodel of communication help management accounting practices to create value for stakeholdersin AustraliaThe economic approach of corporate governance focuses on enhancing thecompetitive position of the firm which helps manager to achieve short term success. Howeverthe implementation of the STV model in management accounting practices focuses on bothperformance which is good financially and enhances the commitment of an enterprise towardsfair accounting practices and equity (Tucker & Schaltegger, 2016).The firms in Australiaincorporates STV model in accounting practices by identifying its primary stakeholders andaddressing their issues and concerns immediately, secondary stakeholders are addressedethically. In modern days management accounting practices in firms in Australia focuses onallocating resources efficiently and achieves better control by providing information aboutsociety and environment (Kang & Gray, 2013)..The accounting system in Australia focuses on Sustainability accounting practices inmodern days. Sustainability reporting comprises of multiple arenas like non-financial reporting,corporate social responsibility, environmental and social accounting practices. Sustainabilityreport provides information about integrated report which reveals how value is created by a firmon short, medium and long term. The information about sustainability is disclosed to public byAustralian firms. Thus analysts and investors in Australia focus on long-term performance of afirm and addresses sustainability issues like greenhouse gas emission and corporate
REPORT OF ACCOUNTING PRACTICESresponsibility (Higgins, Milne & Van Gramberg, 2015).Reports of sustainability are jointlyformed by members of Boards of Australian firms and investment analysts. Earlier only publiccompanies in Australia focused on sustainability reporting but in modern days sustainabilityreports are also prepared and disclosed by private enterprises in Australia. Global ReportingInitiative (GRI) helps in comparing the sustainability reports of companies belonging to aspecific industry in Australia. Climate change plays a vital role in sustainability reporting inAustralia. Companies ensure to be neutral to carbon and focus on development of productswhich are less carbon intensive. The investment value of a firm is impacted by this sustainabilityreport. Top 100 public companies in Australia have 48 % sustainability reporting and 47%sustainability reporting is provided by top 100 private companies in Australia. The trend onpublishing stand-alone sustainability reports is popular among companies in Australia which isseparate from the annual reports of the company (Bachoo, Tan & Wilson, 2013).The regulations of accounting systems in Australia manage risk faced by organizations byproviding reliable and timely information. The accounting practices have become technical andcomplicated. A risk management framework is adopted by Australian firms in modern days foreffective control and mitigation of risks faced by business processes of Australian enterprises.Key organization risks can be risk of governance, risk of business continuity and risk insuccession planning, risks imposed by stakeholders and technology and other financial risks.Risks can also be imposed to firms in Australia by regulatory changes and human resources andthe system of operation of firms. The accounting practices to handle risks hugely depend on thesize and the practices of operation followed by an Australian firm. It is of paramount importanceto monitor the policies and practices of risk management of an enterprise to align the riskmanagement process with the accounting practices of an enterprise in Australia
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