Corporate Financial Accounting Report: Corporate Regulation & Equity

This report provides a comprehensive analysis of corporate financial accounting, focusing on corporate regulations, accounting standards, and owners' equity. The report begins with an executive summary, followed by an in-depth examination of corporate regulations governing accounting information disclosure in Australia, emphasizing the importance of regulations in ensuring accurate and reliable financial reporting. The report then delves into the Australian Accounting Standards Board's (AASB) participation in global accounting standard settings, its impact on International Financial Reporting Standards (IFRS), and its influence on constituent users. Finally, the report analyzes owners' equity for four listed companies in the energy sector on the Australian Stock Exchange, providing a comparative assessment of their financial performance over several years. The report highlights key financial metrics and trends, offering valuable insights into the financial health and performance of these companies.

CORPORATE FINANCIAL ACCOUNTING
CORPORATE REGULATION, ACCOUNTING STANDARDS AND OWNERS EQUITY
ANALYSIS
Course:
Professor’s Name
Institution
City
Date

CORPORATE FINANCIAL ACCOUNTING
Table of Content:
1. Titles and addresses…………………... ...Pg1
2. Table of Content……………………..… .Pg2
3.Executive Summary………………………Pg2
3. Corporate Regulation Report……...Pgs3,4,5
4. Accounting Setting Process…………..Pg6,7
5. Owners Equity Analysis…… .Pgs8,9,10,11
6. References…........................................Pg12,13
Executive Summary;
Query (i) entails analysis on how International Accounting Standard Board and
International Financial Reporting Standard Board is involved in reporting of financial and
accounting information to the users of this information who are investors, lenders, creditors, and
general public as a general purpose objective has improved and boosted the accounting business
sector, since it has given all relevant information for decision making.
The query (ii) involves analysis on accounting setting process tests and seek
confirmation on whether indeed the Australian Board Of Accounting participates in setting,
amending and improving international accounting standards like IFRS and its scope of users.
In query (iii) owners’ equity in finance perspective is the owners’ investment share in
the business less any draws or redemption done, while mathematically it means the amount of
owners’ equity fewer liabilities, likewise it is explained as the balance value claimed on business
asset since the responsibilities are higher for claim (Needles, Powers, and Crosson, 2013.P.36.)
(i)

CORPORATE FINANCIAL ACCOUNTING
The Report on Corporate Regulations Governing Accounting Information Disclosure in
Australia.
Financial information regulation is a restrictive supervision requirement that has
provided guidelines that restricts and protect the integrity disclosure of the financial information
adhere for the safety of the integrity of any information that may affect the users directly or
indirectly (Bamber, Jiang and Wang,2010.Pg.1160.) In any prospect operations and success,
knowledge is power hence before attending on any matter that is deemed of essence the fact
notion of information is whether the info is relevant to the case in the subject. Wrongful
disclosure of financial information is therefore, curbed by the outlined regulations that ensure
that every data is disclosed in a disciplined manner, i.e., in the correct way, at the proper time, to
the right people and finally the correct place.
I do not oppose disclosure of company information by the managers to the users;
however, the main point of concern is the effect of that disclosure. The accounting business
environment according to the below three concerned issues raised and discussed by Australian
accounting scholars, i.e., the question of the subjectivity of the information and disclosure, biases
in reporting and finally own self-personal, informational damage expect and require the high
level of confidentiality and integrity in operations(Nobes, 2014, Pg.17.)
It should be known that in a company the regulation in company act, as well as auditing
and accounting standards, except that all material relevant information is disclosed to only the
intended user confidently. Ideally, it should be known that whenever information is prepared,
scrutinized, shared and reveal the aspect of company interest safety should prevail to ensure that
no adverse repercussion will befall the company after disclosure of information (Kirkpatrick,
2009.Pg.21.)

CORPORATE FINANCIAL ACCOUNTING
The regulation on financial news is so sure that it ensures that only subjective matters of
relevance are disclosed and in this case is those which are material in context, and likewise it
provides that due diligence and competency is exercised while revealing information to the user.
Users of financial information determine what information they need and who is to disclose the
information. It is through this that the concern in question is raised, i.e., whether managers are to
be regulated on what to reveal (Chan and Watson, 2011.Pg.50.) Allow me to say that there is no
harm in reporting and disclosing any information as long as it is done in the right manner and to
the intended users.
Company managers are persons who oversee day to day operations of the business.
Therefore, they are expected to know all financial information that contributes to and boosts their
decision-making process. This, thus, mandates them to access only that information that
concerns his operation. However, since every user of information should access and utilize the
information for the benefit of the company thus the need to regulate on how the data is disclosed,
i.e., by who and to who.
The main concern is whether the manager should be allowed to disclose financial
information or regulates (Lai and Shan, 2013.Pg.33.) I wish to say that for purposes of company
interest, the manager should be restricted to reveal only that information that entails business
operation for instance on profitability, cash flows and liquidity so that he can share the info to the
employees and department for operational decision making.
A manager is however restricted by ethical principles only to disclose that information
that is deemed relevant to the user who in this case is the internal user. A manager is constrained
to withhold confidentiality and exercise due diligence while disclosing company information to

CORPORATE FINANCIAL ACCOUNTING
the user to safeguard the interest of the company hence he is only limited by the law to disclose
information to only internal users who in this case is the company.
The regulation bars him from disclosing financial information to external parties
because of fear of the unknown. It does this to prevent the company from potential self-damage
whereby the competitors may get the info and use it to exploit the market. This might also cost
the company on litigation grounds whereby information may link to the persons using the
company hence making the company lose. It is therefore straight that there is the need to regulate
the information disclosed by not only the manager but even other parties who disclose
information to their intended uses.
Conclusion;
It is therefore apparent that financial and accounting information should be regulated to
ensure that only personal, relevant information is reported by the legally allowed parties and of
course, the intended user to avoid blames and mitigate risks that might put the interest of the
company down. This should be done by outlining what material information is to reach the
intended user and who is to disclose the info and finally how is that info going to be revealed.
Professional ethics code of conduct and principles the likes of objectivity, subjection to
materiality, due diligence care, integrity, honesty, professional competency, confidentiality and
self-responsibility is of very importance since this is what is to guide and direct both the users
and the persons disclosing information on how they are to utilize and effect the info without
inflicting any damage to the company. Company interest should always come first while
revealing any information.
(ii)

CORPORATE FINANCIAL ACCOUNTING
Report on Australian Accounting Standard Board Participation In Global Accounting
Standard Settings And Its Impact On IFRS And Constituent Users Analysis.
Accounting standard setting is a process that indeed involves teamwork since one party
can’t do it alone in any case the parties involved in the background are not the final users of the
standards hence need to engage all concerned parties in context, and that is why AASB is always
dashed in.
Australia is a country which the Internal Accounting Setting Body has never left aside
especially when it comes to matters relating setting accounting international standards. It is
among the G4+1 country together with Canada, US and United Kingdom whose contribution and
research has never been neglected on matters accounting standard. The sole reason why they are
always involved in this setting process and especially Australia is because of their pre-eminent
advanced national standard-setting bodies of competent, sound minded, intellectual personnel
who have expertise in standard settings due to their upgraded forums and workshop meetings
where they exchange ideas as they brainstorm.
Australia influence in standard setting is highly contributed by its corresponding change
in economic scale mainly as a result of high profile body that has high level intellectual
experienced individuals who have mastered in different fields (Arnold, 2009.Pg.805.) AASB is
highly involved in the setting process since they are first consulted for input by International
Accounting Standard Board in return they identify the issue, i.e. AASB and research by
participating individuals and local Australian organization wherein return they get feedback and
call for discussion with IASB. Hence AASB contributes to its study for documentation to a point
whereby they concurrently reveal IASB research (Deegan, 2013.Pg.7.)

CORPORATE FINANCIAL ACCOUNTING
After that, the final standard or rather a pronouncement is made by AASB to IASB for
awareness and education enrichment awaiting post-implementation review. Generally AASB
task on accounting standard is accepting the strategic oversight directives then identify the issue
in query, do research and consider the problem of course engaging both IASB and other
Australian local organization as well as specialist, then provide documentation of the findings to
form standard reporting that is made aware to the user as IASB does the final review.AASB is
entirely considered in standard process setting (Durocher, Fortin and Côté, 2007.Pg.33.)
Countries that are members of IASB are seen not to use IFRS mainly because most of
IFRS is the adoption of GAAPS and local known accounting standards hence no need of using
IFRS because you will be having the application of similar regulation than the one you have
since this is an upgrade of GAAPS that was found earlier than IFRS. Likewise let it be known
that it is so expensive to shift from GAAPS or any other standard to IFRS especially on training
cost, system installation and maintenance cost. The other primary reason why it is not used is
that it is based on principle and not rules hence a loophole for controls and efficiency (Ahmed,
Neel and Wang, 2013.Pg. 1350.)
IFRS are somehow viewed by these countries that do not need them too far below the
level of the current present used standards hence find no reason of shifting. It is therefore clear
that member states of IASB do not trust and are not contempt with what IFRS offer considers
hence no reason for adopting it (Soderstrom and Sun,2007.Pg.700.) It does not mean that it is by
default that IFRS’s are adopted no, it is because does not meet the need of the users hence if it is
upgraded these people with other standards would opt to choose it. It is similarly expected if
there were any other regulations whose rules supersedes that of GAAPS.

CORPORATE FINANCIAL ACCOUNTING
(iii) Owners Equity Analysis.
Our question focuses on the analysis of owners’ equity for four listed companies in
Australia. In my illustration have chosen four companies in the energy sector that are listed on
the Australian Stock Exchange. These companies are; A-Cap Resources Limited, Abilene Oil
and Gas Limited, Oil Search Company Limited and finally Samson Oil & Gas Limited.
The first company to be subjected in equity analysis is A-Cap Resources Limited whose
annual general reporting analyzed is for the year 2017,2016,2015 and 2014.
A-Cap Resources Ltd Owners Equity;
2013 2014 2015 2016
“000” “000” “000” “000”
$ $ $ $
Share Capital 54783 60204 62818 66794
Retained Earning/Reserves (397) (462) 6978 6015
Less any drawings/losses (16267) (18301) (19950) (19627)
Owners’ Equity 38119 41441 49846 53182
Over the four years, the period in A-Cap Ltd Owners equity is seen to progressively
increase by averagely 8% for period 2013-2014, by 17% in the year 2014-2015 and 7% for
period 2015-2016. This increase is averagely contributed by return on equity which ideally is
seen to illustrate that progress there has been the steady increase in cash flow on the company
assets thus leading to the rise. However, the Roe position for the four years is only benchmarked
better in the year 2014-2015 since it is within the limit recommended (Hoskin, Fizzell and
Cherry,2014.Pg.35.)

CORPORATE FINANCIAL ACCOUNTING
The second company to be subjected to equity analysis is Abiline Oil, and Gas Limited
whose annual general reporting analyzed is for the year 2017, 2016, 2015 and 2014.
Abilene Oil and Gas Limited;
2014 2015 2016 2017
“000” “000” “000” “000”
$ $ $ $
Share Capital 62102 63221 64141 64101
Retained Earning/Reserves 9277 9462 9701 9431
Less any drawings/losses (62675) (65381) (69345) (72570)
Owners’ Equity 8704 7302 4497 962
Abiline Oil Ltd company owner’s equity has not been in a stable state due to the problem of cash
flows hence the cause of the decrease. Management performance over the time has led to owners
withdrawing their shares as a result of the losses Alibine has been making losses out of
mismanagement forcing some of the owners to feel that there is no value of their money hence
withdrawing their shares (Robb and Robinson, 2014.Pg.170.)
The third company to be subjected to equity analysis is Oil Search Company Limited
whose annual general reporting analyzed is for the year 2017, 2016, 2015 and 2014.
Oil Search Company Limited;
2013 2014 2015 2016
“000” “000” “000” “000”
$ $ $ $
Share Cap 3147 3147 3147 3147
Retained Earning/Reserves (149) (1889) (11.4) 614

CORPORATE FINANCIAL ACCOUNTING
Less any drawings/losses (0) (0) (0) (0)
Owners’ Equity 2998 1258 3135 3761
In this case, there is no consistency on the growth of shareholder equity over
the four year period this is as a result of lack of subscription of the initial share capital (Chandler,
Hikino, and Chandler, 2009.Pg.36.) The way the 2013 shares were subscribed at 3147000
averagely it has remained over the year. Hence there has been no new shareholder recruited nor
no new right issue done. The company is also seen to make the loss by the fact that the reserves
and retained earnings are affected to be a negative value (Christensen and Feltham, 2012.Pg.21.)
The fourth and last company to be subjected to equity analysis is Oil Search
Company Limited whose annual general reporting analyzed is for the year 2017, 2016, 2015 and
2014.
Samson Oil & Gas Limited -;
2014 2015 2016 2017
“000” “000” “000” “000”
$ $ $ $
Share Cap 98340 98296 99523 99643
Retained Earning/Reserves 6578 6273 6204 6720
Less any drawings/losses (53693) (88703) (100070) (102609)
Owners’ Equity 51225 15797 5657 3754
In this case of Samson Oil, the share capital is seen to grow progressively despite the fact there is
no reserves increase or retained earnings being reserved in high amount. However this change in
both share capital and reserves is profoundly affected by the high value of drawings and losses

CORPORATE FINANCIAL ACCOUNTING
done with its climax being the year 2016 and 2017 thus reducing the owner's equity drastically
(Dyrda and Pugsley, 2018. Pg.13.)

CORPORATE FINANCIAL ACCOUNTING
References;
Ahmed, A.S., Neel, M. and Wang, D., 2013. Does mandatory adoption of IFRS improve
accounting quality? Preliminary evidence. Contemporary Accounting Research, 30(4), pp.1344-
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Arnold, P.J., 2009. Global financial crisis: The challenge to accounting research. Accounting,
organizations and society,34(6-7), pp.803-809
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on voluntary corporate financial disclosure. The accounting review, 85(4), pp.1131-1162.
Chan, M.C. and Watson, J., 2011. Voluntary disclosure of segment information in a regulated
environment: Australian evidence. Eurasian Business Review, 1(1), pp.37-53.
Chandler, A.D., Hikino, T. and Chandler, A.D., 2009. Scale and scope: The dynamics of
industrial capitalism. Harvard University Press.
Christensen, P.O. and Feltham, G., 2012. Economics of Accounting: Information in
markets (Vol. 1). Springer.
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
Durocher, S., Fortin, A. and Côté, L., 2007. Users’ participation in the accounting standard-
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59.
Dyrda, S. and Pugsley, B.W., 2018. Taxes, private equity and evolution of income inequality in
the us. Working paper.
Hoskin, R.E., Fizzell, M.R. and Cherry, D.C., 2014. Financial Accounting: a user perspective.
Wiley Global Education.

CORPORATE FINANCIAL ACCOUNTING
Kirkpatrick, G., 2009. The corporate governance lessons from the financial crisis. OECD
Journal: Financial Market Trends,2009(1), pp.61-87.
Lai, C., Lu, M. and Shan, Y., 2013. Has Australian financial reporting become more
conservative over time?. Accounting & Finance, 53(3), pp.731-761.
Needles, B.E., Powers, M. and Crosson, S.V., 2013.Principles of accounting. Cengage Learning.
Nobes, C., 2014. International classification of financial reporting. Routledge.
Robb, A.M. and Robinson, D.T., 2014. The capital structure decisions of new firms. The Review
of Financial Studies,27(1), pp.153-179.
Soderstrom, N.S. and Sun, K.J., 2007. IFRS adoption and accounting quality: a
review. European Accounting Review,16(4), pp.675-702.