Understanding Of Accounting Standards †MyAssignmenthelp.com

Questions: 1. Demonstrate an understanding of accounting standards and be aware of the authoritative influences that underpin accounting and reporting in the international and Australian regulatory environment? 2. Explain the issues surrounding contemporary accounting controversies, in this case on fair value accounting in diverse contexts using social, ethical, economic, regulatory and global perspectives? Answers: 1.International accounting standards board uses conceptual framework for the financial reporting. As per the AASB conceptual framework the users of theaccounting information are as follows: Investors: Investor plays a major role in deciding a financial statement of the entity.Accounting information prepared by the management needs to be correct as it is used by the users. The investor uses financial statement for taking the investment decisions. If he finds that theaccounting information is good and it can give him a good return then he should invest in the securities of the company. The conceptual framework of AASB states the management of the company has to prepare correct financial statement to assist the investors in taking investment decisions. Employees: Employees is an integral part of the organization and their decisions affects the functioning of the company. They use the accounting information to determine the growth made by the company. They took decisions regarding raise in their salary, bonus from the top level management after checking the accounting information. Lenders and suppliers: The Company has to purchase material and it cannot purchase whole material on cash as so much cash is not available to the company. The companys accounting information is checked by the lenders and creditors to check the credit worthiness of the company. Lenders give loan to the company and they want an assurance that their money is safe and they will receive a good amount of interest if they give loan to the company. If they found that the accounting information provided by the company is good and as per the conceptual framework then they easily give loan to the company. Customers: The whole business is done for attracting the customer, so they can purchase the goods and services of the company. The future of the company depends upon the customers as they check the financial information to determine that the product produced by the company is harmful or not. The annual report contains all the information about the business of the company. The customer check that information to satisfy himself that the product produced by the company is safe. Government Agencies: Government affects the functioning of the business as they assess the financial information to check the financial performance of the company is good. If the companys financial performance is good then it levies taxes on that income and if the financial performance of the company is not good then it provides subsidies to the business to help them in succeeding in the future. Public and society: Public and society is the surrounding where the company operates its business. The public uses the financial information to determine that the business of the company does not affects the functioning in an adverse way. They check the accounting information to determine whether the company took decisions towards the welfare of the society. The information about the welfare of the society can be checked from the CSR report of the company as it contains all the information about the functions of the company towards the welfare of the society. Yes the identification of particular users within the conceptual framework has implications for the future of accounting information. The companys overall objective is the maximization of the wealth of the shareholders and investors plays an major role. The future planning needs to be done by taking in considerations the requirements of the investors as they are the one who invested money in the company. Investors are providers of risk capital to the entity. The company has to prepare its financial statements as per the guidelines of the IASB and AASB conceptual framework. The company has to prepare its financial statements on the basis of fair value. The accounting regarding the preparation of the financial statements needs to be done as per the fair value accounting. The complete description about the accounting as per the fair value is given in accounting standard and the company needs to follow the guidelines of the accounting standard in order to do the fair value accounting as the investor wants to know the fair value of the business and he took decision after checking the fair value of the business. Historical cost accounting is an accounting concept and it also used by the company to determine the historical cost of the company. The users check the historical information also to take their decisions. 2. Advantages for accounting that could result from the development of conceptual frameworks are as follows: Consistent financial statement: The management has the responsibility for the preparation of the financial statement and their assumptions on the preparation of the financial statement affect the content. The conceptual framework clarifies all the doubts regarding the preparation of the financial statement and the guidelines are used for the preparation of the financial statement. Assist the auditor: The auditor has to examine that the accounting information prepared by the management as per the applicable reporting framework. The applicable reporting framework gives an assurance that the accounting information of the company is correct. In such case, the auditor does not to have to conduct detailed checking. Achieve economic development: The Company can achieve economic development in accounting by using the guidelines of the conceptual framework. Can achieve overall enhanced communication: Communication plays a major role in achieving the objectives as the company seeks an effective communication in the preparation of the accounting information. Records kept in a systematic manner: The records of the business need to be kept in a systematic manner as they can be needed in the near future for something. The conceptual framework helps in preparing the financial statement and also helps in financial reporting. The conceptual framework provides guidance in the preparation of the financial statement. The knowledge about the core financial accounting is highly problematic. The accountants do not know about the core financial accounting concept and because of that they prepare wrong financial statement. The accounting assumptions taken by them are wrong that ultimately affects the business of the company. The AASB issues Conceptual framework that is used by the accountants to prepare the accounting information of the company. The most who gains from the development of the financial statement is the accountant as they gain professional knowledge about the preparation of financial statement. The accounting institute of Australia conduct the course for increasing the knowledge of the people about the core accounting. Many people start that course to gain the knowledge about the concept of core accounting. This also helps them in making correct assumptions when they are preparing the financial information of the company. The accountants now days has the knowledge and they prepare the financial statements that remains consistent over a period of time. The views of the Hines in that article are to give knowledge about the concepts of core accounting and how to resolve the problems underlying with it. The core accounting problems are solved after the development of the conceptual framework. The advantages stated in the part a about the accounting matches with the views of Hines. The conceptual framework assists the accountants in gaining knowledge about the fundamental concepts of the financial accounting. The main advantages identified in the part a is the consistency in the financial statement, assist the auditor in their audit as it reduces the work of the auditor. No one has complete knowledge about the concepts of the accounting but the introduction of conceptual framework provides a way to reduce these problems. References Hines, R (1989), Financial accounting knowledge, conceptual framework projects and the social construction of the Accounting profession.Accounting, Auditing and Accountability Journal,2(2), pp. 72-92. Deegan, C., 2013.Financial accounting theory. McGraw-Hill Education Australia. Schroeder, R.G., Clark, M.W. and Cathey, J.M., 2011.Financial accounting theory and analysis: text and cases. John Wiley and Sons. Deegan, C., 2012.Australian financial accounting. McGraw-Hill Education Australia. Weygandt, J.J., Kimmel, P.D., KIESO, D. and Elias, R.Z., 2010. Accounting principles.Issues in Accounting Education,25(1), pp.179-180. Laux, C. and Leuz, C., 2010. Did fair-value accounting contribute to the financial crisis?.Journal of economic perspectives,24(1), pp.93-118. Dechow, P.M., Myers, L.A. and Shakespeare, C., 2010. Fair value accounting and gains from asset securitizations: A convenient earnings management tool with compensation side-benefits.Journal of accounting and economics,49(1-2), pp.2-25. Power, M., 2010. Fair value accounting, financial economics and the transformation of reliability.Accounting and Business Research,40(3), pp.197-210. Taplin, R., Yuan, W. and Brown, A., 2014. The use of fair value and historical cost accounting for investment properties in China.Australasian Accounting Business Finance Journal,8(1), p.101. Jaijairam, P., 2013. Fair value accounting vs. historical cost accounting.The Review of Business Information Systems (Online),17(1), p.1.