Financial Accounting Assignment 1: Financial Reporting and News

This financial accounting assignment report comprises two main sections. The first part is a newsletter created by a training manager for staff at a large accounting firm, summarizing Australian and international financial news from December 2018 to March 2019, covering topics such as tax avoidance, the backpacker tax, coal exports, and global trade. The second part reviews a trainee accountant's financial statements, ensuring compliance with AASB 101 and providing recommendations for corrections, including modifications to the profit and loss statement format, expense classifications, presentation of non-controlling interests, and the use of non-current asset and liability terminology. The report highlights key aspects of financial reporting and the regulatory environment.

FINANCIAL
ACCOUNTING
ASSIGNMENT

1
By student name
Professor
University
Date: 25 April 2018.
1 | P a g e

2
Contents
Executive Summary.....................................................................................................................................3
Answer to Question No.1 (2 pages Newsletter)..........................................................................................4
Australian Financial News........................................................................................................................4
International finance News.....................................................................................................................5
Answer to Question No.2............................................................................................................................6
Conclusion...................................................................................................................................................7
References...................................................................................................................................................7
2 | P a g e

3
Executive Summary
This paper is intended to cover mainly two topics both of which are discussing about the regulatory
environment and financial reporting being currently in practice. The first topic is a newsletter, covering
the Australian Financial news and international financial news, drafted by a training manager for those
staffs who are actually working with a large accounting firm engaged in preparation of general purpose
financial reports for large companies listed with ASX. The second part of the project consists of a review
of the financial statement prepared by the trainee accountants to ensure its compliance with the
AASB101 along with the recommended suggestions for the necessary corrections expected.
3 | P a g e

4
Answer to Question No.1 (2 pages Newsletter)
Newsletter – Financial News Round Up
Australian Financial News
As per the news published in the Australian Broadcasting corporation dated 17th February, 2019 as
reported by business reporter Andrew Robertson the Accounting Professional and Ethics standard
Board which is paid for by the lobby Groups Chartered Accountants Australia and New Zealand, CPA
Australia and the institute of Public Accountants showed quite a negligent attitude by giving only 15
minutes to royal commission’s report on financial service sector and its consequential effect on
accountants too that cover the issue of conflicting pay that some of the accountants as well as financial
planners accept.
As per the news published in the Australian Broadcasting Corporation dated 17th January, 2019 as
reported by business reporter Sue Lannin A report commissioned by the Australian Tax Office has
found that wealthy people are funnelling money into private trusts
The reason behind making investment of several million dollars in the private trust by these wealthy
group of people is nothing but to avoid the payment of taxes and the consequent tax evasion
As per the news published in the Australian Broadcasting Corporation dated 4th December, 2018 as
reported by business reporter Marty McCarthy Coalition's backpacker tax could be killed by the courts
after challenge by international accounting firm
It is expected by an international tax accounting company that the controversial backpacker tax as
imposed by the coalition government shall be given an end by this February as was challenged by it. The
justification as given by the firm naming Taxback.com is that it shall provide immediate benefit to the
farm sector and the regional communities and shall act as a source of encouragement for more
backpackers.
As per the news published in the “The Guardian” dated 21st March, 2019, Australia's coal bonanza at
risk as Chinese import 'ban' spreads
The trade analysts of Australia has warned that due to Chinese diplomatic policy and strategy of
restructuring it can cause a substantial damage to the Australian coal export made to China thereby
drastically affect the coal trade.
As per the news published in the “The Guardian” dated 21st March, 2019, Wayne Swan: history tells us
flat wages growth is dangerous for Australia
The former treasurer said that if the policy of making rich people richer than ever keeps on going by
neglecting the genuine demand of the labourer’s or simply denying it can bring a disaster to the
Australian economy
4 | P a g e

5
International finance News
As per the news published in the newspaper the Business standard dated: 30th March, 2019
Trade ministry proposes delaying retaliatory tariffs on US goods by 30 days
Due to the significant announcement made earlier this month by the US President Donald Trump in
relation to giving an end to the preferential treatment to India in terms of foreign trade, the trade
relation between both of the countries are going to be highly affected.
As per the news published in the newspaper the Business standard dated: 29th March, 2019 UK
Parliament rejects Theresa May's Brexit deal for the third time
UK President had lost her confidence vote in the parliament in the matter of the Brexit deal proposed by
her due to which only two options remained left with it. The first being to crash out with the European
Union or being kept on waiting to leave the deal that it was trying since 2016.
As per the news published in the newspaper the Business standard dated: 22nd March, 2019 Oil prices
near 2019 highs amid supply cuts by OPEC,
Due to the supply cuts made by the OPEC the price of the crude oil reached almost the highest level for
the year 2019 as being reflected through the price of the same in terms of US Dollar.
As per the news published in the newspaper the Business standard dated: 20th March, 2019 Slowing
Dragon: Investors wary of China's economic slowdown
The newly trade giant of the world China has shown a remarkable slower growth shown through a
survey that caused a huge panic amongst its investors.
As per the news published in the newspaper the Business standard dated: 6th March, 2019 US trade
deficit surges to 10-year high in 2018 at $ 621 billion
It is due to the significant increase on both, i.e., import and export made by the US economy that has
caused a huge jump in its trade deficit seemed to be ten year high.
5 | P a g e

6
Answer to Question No.2
Review of the financial statement so as to ensure a compliance with AASB 101 and consequent
suggestion and recommendation
From the statement of profit or loss and other comprehensive income, statement financial position and
statement of changes in equity from the trial balance as presented by the Trainee Accountant the
necessary correction or the changes to the aforesaid statements are provided hereunder.
1. There is significant modification recommended in the format of the statement of the Profit and
Loss account along with the Statement of the financial position (Goldmann, 2016).
2. An entity classifying expenses by function shall disclose additional information on the nature of
expenses, including depreciation and amortization expense and employee benefits expense. 105 The
choice between the function of expense method and the nature of expense method depends on
historical and industry factors and the nature of the entity (Bumgarner & Vasarhelyi, 2018).
3. As per para 81B of AASB 101, An entity shall present the following items, in addition to the
profit or loss and other comprehensive income sections, as allocation of profit or loss and other
comprehensive income for the period: (a) profit or loss for the period attributable to: (i) non-controlling
interests, and (ii) owners of the parent. (b) Comprehensive income for the period attributable to: (i) non-
controlling interests, and (ii) owners of the parent. If an entity presents profit or loss in a separate
statement it shall present (a) in that statement. Hence in the given case as the Whirl Limited has not
expressed the profit and loss attributable to the non controlling interest (Choy, 2018).
4. As per para 55 of the AASB 101, An entity shall present additional line items (including by
disaggregating the line items listed in paragraph 54), headings and subtotals in the statement of
financial position when such presentation is relevant to an understanding of the entity’s financial
position.
5. As per Para 77 of the AASB 101 An entity shall disclose, either in the statement of financial
position or in the notes, further sub classifications of the line items presented, classified in a manner
appropriate to the entity’s operations. Hence . Hence in the given case the perception of the Whirl
Limited to represent only the minimum line items on the face of the financial statements and leaving the
sub- classification to the notes to accounts cannot be accepted (Dichev, 2017).
6 | P a g e

7
6. It did not use the terminology like Non -current liability and the Non – current assets in its
presentation of the financial position.
Conclusion
From the above, it is quite clear that the finance news not only covers those involving the legislative or
regulatory provisions but at the same time there may be lot of technical issues along with the political
aspects are too relevant while making the staff aware about the changes that takes place in the day to
day financial world of any county along with the parallel changes at the global level. Further AASB 101
covers various significant issues in relation to the disclosure of the Accounting policies.
References
Bumgarner, N., & Vasarhelyi, M. (2018). Continuous auditing—a new view. Continuous Auditing: Theory
and Application, 20(1), 7-51.
Choy, Y. K. (2018). Cost-benefit Analysis, Values, Wellbeing and Ethics: An Indigenous Worldview
Analysis. Ecological Economics, 3(1), 145. doi:https://doi.org/10.1016/j.ecolecon.2017.08.005
Dichev, I. (2017). On the conceptual foundations of financial reporting. Accounting and Business
Research, 47(6), 617-632. doi:https://doi.org/10.1080/00014788.2017.1299620
Goldmann, K. (2016). Financial Liquidity and Profitability Management in Practice of Polish Business.
Financial Environment and Business Development, 4(3), 103-112.
7 | P a g e

8
8 | P a g e