Analysis of Accounting Issues in ASIC's Regulatory Capture: Finance

This report examines the accounting issues raised in the article "Banking royal commissioner Kenneth Hayne gets to heart of ASIC's regulatory capture." It identifies key problems such as unforeseen expenses, cash flow management, and ethical dilemmas that impact the Australian Securities and Investments Commission (ASIC). The report supports these issues with arguments, emphasizing their direct impact on a company's financial condition, brand value, and customer relations. It also relates the issues to accounting theories, including positive and normative theories, to provide a framework for understanding and addressing these challenges. The conclusion summarizes the discussed accounting issues and their relation to the accounting theories to offer a comprehensive overview of the article's key points and implications.

Accounting

Table of Contents
INTRODUCTION...........................................................................................................................2
1. Accounting issues addressed in the article..............................................................................2
2. Support for the argument regarding the agree/disagree with the issues stated.......................3
3.Article relation to accounting theories.....................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
In this report the Article “Banking royal commissioner Kenneth Hayne gets to heart of
ASIC's regulatory capture” will be discussed and the accounting issues addressed in the case Wil
also be explained briefly. Furthermore, It will also include some accounting theories which are
related to the article.
1. Accounting issues addressed in the article
Unforeseen expenses
It can be considered to be accounting issue for the ASIC as CBA took the action against
the company and discussed their penalty of $3, 00, 000 donation as company did not expect
about these expenses and also not categorised into the budget and unforeseen situations might
threaten the financial resources of the company which leads to disruption sin the effective flow
of the organisation.
Cash flow-
Managing the cash flows and to stay on the top of cash flow it is required by the
organisation to analyse all their bills carefully and many business fails because of cash flow
problems. A large amount of outflow might cause great damage to the ASIC.
Ethical issue of accounting
It means by advertising the misleading and misguiding activities hurt the ethical
dilemmas of the people which might resulting in the great loss to the company in way of losing
their customers and disloyal image of ASIC in the market.
2. Support for the argument regarding the agree/disagree with the issues stated
The issue explained in the article are completely agreed as these all are the issues which
have complete and direct effect on the financial condition of the business. In addition to this the
customers sentiments also hurt in the firm of ethical dilemma. The company brand value, imago
and goodwill directly get affected because of this article as they can improve their image by
satisfying the customers needs and wants(Smith, Clarke and Rogers, 2017.).
All the issues might have severe damage in the condition of the company as all the issues
are somewhere the wastage of their resources. It can be completely agreed that manufacturing
cash flow is the crucial part of the organisation and large outflow might affect the company's

financial position and imbalance in the cash flow may also dis-manage the other related
activities.
Unforeseen expenses is something which have great impact on the organisation in long
run as they did not have prepared for their expenses too well and will result in high imbalance of
all other activities. A company makes the reserves for unforeseen expenses but expense with
such large amount can cause damage to the company's financial health and effect the operational
activities of the business.
Financial resources being the most important and crucial resource of the organisation
need to manage effectively and efficiently. Optimizing the existing credit to mange the small
term expenses but also monitoring the long term profitability to ensure that cost changes does not
threaten the overall liquidity of the business.
3.Article relation to accounting theories.
There are different types of accounting theories classified as positive theory and
normative theory of accounting where positive theory says than company tries to predict that
how they will account for the transaction and events in future or predicting the actions as choice
of their accounting policies by firm. This means ASIC needs to apply the positive theory so that
they can predict before that action should be taken as their choice foe accounting related to the
expenses(Banking royal commissioner Kenneth Hayne gets to heart of ASIC's regulatory
capture, 2019).
Normative theory is more of the deductive process as it is based on the observation.This
theory helps in decision-making and it also provides the prescription regarding how company
will make decision in context with the problem they face. In the situation of filling high penalty
what should be there decision and what they need to do is completely based on the concept of
normative theories as these provides prescriptive function or some decision rules so that it can
help the company' to maximise their satisfaction in long run.
CONCLUSION
From the above report it can be concluded that there are many issued of accounting and
some of them are discussed above which are addressed into the article. Report also covers the
discussion of the argument supporting the issues. In addition to this some accounting theories are
explained which relates to the article given.

REFERENCES
Smith, D. K., Clarke, T. and Rogers, J., 2017. Banking and the limits of
professionalism. UNSWLJ, 40. p.411.
Online
Banking royal commissioner Kenneth Hayne gets to heart of ASIC's regulatory capture.
2019[Online] Available through:<https://www.afr.com/chanticleer/banking-royal-
commissioner-kenneth-hayne-gets-to-heart-of-asics-regulatory-capture-20180913-h15bdi>
The Top Accounting Challenges Small Businesses Face. 2019[Online] Available
through:<https://www.business.com/articles/small-business-accounting-challenges/>