ASIC Ltd and Standards Requirements, Recommendation on ASIC Accounting Disclosures - Case Study Example

Financial Report Disclosures’ Lecture: Student Name: Student ID: Unit: Date: Table of contents Table of contents 1 Executive summary 2 Introduction 3 Accounting Disclosures 4 ASIC Ltd and Standards requirements 8 Recommendation on ASIC Accounting disclosures 9 Appendix1 11 ASIC consolidated statement of financial position 11 Appendix 2 12 ASIC Ltd statement of comprehensive income 12 Reference List 13 Executive summary ASIC Limited is an Australian based company invested under Australian Stock Exchange. The ASIC Limited is the parent company with subsidiaries that are operating under their policies. According to the Australian Accounting Standards board (AASB) requirement, the company is should prepare its books of account inclusively with its subsidiaries and disclose all the material facts in the report (Doug, 2007). The company consolidated financial statements shows the trend of the company’s performances in a certain accounting period. Australian Accounting Standards also involves the requirements that identify certain accounting disclosures on different Australian Companies. These requirements are positioned under the Australian Accounting Standards that incorporates IFRSs and Australian Accounting Standards Board AASB. In most cases, these requirements restrict to the non-profit companies and public sectors by including additional Accounting disclosures that address domestic and regulatory financial issues (Australia,2012). The guidance instituted by the International financial reporting standards (IFRS) implies that companies must attributively follow the requirements of standards. AASB considers the requirements of International Public Sector Accounting Standards (IPSASs) which is issued by the International Public Sector Accounting Standards Board (IPSASB) in developing requirements for companies’ disclosures. International Financial Reporting Standards (FASB) also accredits the accounting measures that ensure that the accounting policies are disclosure consistently. The disclosure measures ASIC is described accordingly below. Introduction Australia Accounting standard broad (AASB) is an Australian government agency which can be used as a tool to develop and maintains financial reporting standards. Australian Accounting Standards Board stipulates the accounting policies that companies should follow to disclose their financial statements. The AASB 107 and the IAS 7 enhance reflective requirement that ensures disclosure of reconciliation of the net operating cash flow to earnings. This separate respective disclosure standards harmonizes the disclosure requirements on both accounting jurisdictions. AASB 101 Presentation of Financial Statements as reconsidered incorporates IAS 1 Presentation of Financial accounting Statements as provided and regulated by the International Accounting Standards Board (IASB) (Australia, 2012). IAS Paragraph1 was adjusted s and added to this Standard by the prefix Aus in accordance with the compliance of the IASB and the IFRS. ASIC limited annual report shows the company’s representation of their financial statements and the policies provided by the AASB applied in forming the financial transactions. The Australian financial reporting requires companies to comply with the AASB requirements. AASB 7 introduces the amendments that ensure full disclosure of the material aspects in financial statements. Accounting Disclosures AASB 101 provides the mode of adoption of the international presentation of financial statement in financial reporting.  An initiative of the Australian Accounting Standards Board (AASB) that allows none publicly accountable reporting entities in preparation of non complex financial statements by giving essential exemptions from the disclosure that are enclosed in the existing AASB standards. Australian Corporations Act of 2001 gives the strategic procedures of preparation of financial statements (Doug, 2007). ASIC Limited applies these strategic guidelines of the act in the interpretation of the disclosure requirements stipulated by Australian Accounting Standards. The principal disclosure ensures that the financial statement presented according to requirement of AASB 7. The standards enhance the reflection of the company’s fair view of the financial conditions. Disclosure of accounting strategies is principally of handy to users when the desired policies are selected from alternatives acceptable by Australian Accounting Standards. AASB 101 defines the disclosure of the measures used for different classes of revenues, assets financial and the company’s going concern measures (Australia, 2012). ASIC Limited management facilitates the use of AASB 131 in disclosing its group financial statements and the subsidiaries. AASB defines the presentation of company’s liquidity state in meeting financial obligations. Conversely, the recognizing measures and interpretation of the requirements of AASB determines the company’s comprehensive income statement and statement of financial position. Management decision of disclosure of accounting policy depend on management effectiveness and assistance to users of the financial statements to understand how conditions, transactions, other financial events are reflected in presented in statement financial performance and financial position. The ASIC Limited management has well established policies in compliance with IFRS and AASB standard to ensure that subsidiaries financial reporting are considered valuable on dispensation of International Accounting standards. According to ASIC annual report, preparation, and presentation fair values of financial instruments such as revenue income, goodwill, company’s off-balance sheet arrangements and the going concern principles. Regarding disclosure different accounting policies, estimates some of the substantially uncertain and material accounting policies which may attributively cause impact on reliance of the financial statements. The International standards and accounting policies enhancement provides well based financial statements by replacing estimation and poor judgment on the financial information that presented in annual reports (Australia, 2012). AASB stipulates the disclosures of significant accounting policies that identify the accounting principles and methods that will fundamentally affect the company’s financial position, and results in different financial management. The Australian Accounting Standard Board endows conciliating provisions that require the company to establish firm measures to be followed in accounting for the business transactions and reporting. The significant accounting policy of disclosure presents the bearing information that develops apparent review of company financial condition (ASIC Ltd, 2012). Policies limit the changes of risk that can occur due to use estimates by the company management. This relief ensures that the non-reporting entity takes in account all evenhanded procedures to ensure that the relevancy of financial reports by complying with all recognition and measurement requirements. The assumptions and additional basis of estimation uncertainty disclosed under AASB 101 discloses relative to estimates that requires managerial assortment in subjective judgments that affects the company’s possible future declaration of the uncertainties simultaneously increases judgments complexity and the potential for a consequential material amendment to the company’s carrying amounts of the increasing assets and liabilities. The ASIC Limited management is structured to limit financial estimation that will inhibit its risk of exploitation of disclosure rules in financial statement. The material aspects of financial statement are fairly attributed to increase rate of user’s reliability of the company’s financial statements. Disclosures of matters in financial statement are considered as the elementary component interpreting the adopted accounting policies (ASIC Ltd, 2012). ASIC financial position is used by potential investors in making viability of company investment decision. This will be reflecting the significant in adopting all the requirement of the accounting standards. The state of ASIC financial performances identify the effectiveness of measures set by Australian Accounting Standards gives the users reliable evidence on the accounting information. The significant accounting strategies instituted by both IFRS and ISA present a wide range of general description which contrast with the pervasive management strategies basing on the principle estimation (Australia, 20012). The nature and extent to which the company’s information provided differ according to the nature of the disclosures describes the managerial decision on financial statements. According to the above disclosure criterion, not only the definitions are different, but also the intentions of using the two accounting disclosure policies are substantially different. ASIC Limited management present the financial statement in accordance’s with the supports of the user’s comprehensive understanding to achieve acquaintance in the statement and promote practicable financial solutions. FASB and IAS provide corrective consideration in disclosing the accounting policies which ASIC Limited need to embark on their requirement to enhance consistency in application of accounting disclosure policies. The management accounting has established clear understanding of the accounting estimates that has enhanced ASIC Limited reporting (ASIC Ltd, 2012). The important policies of disclosure are the fundamental components in note of ASIC management's analysis. ASIC Limited financial impairs policies interpreted by the AASB 101 Financial position should imply to the precisions, and certainties that can is caused by rapid changes in the company’s financial condition. ASIC Limited management reporting techniques on the risk of changes in materiality of the accounting statements due to fair value based on the estimation disclosures of accounting statements. AASB 128 disclosures in paragraph 125 stipulate the treatment of the assets and the provision of uncertainties due to changing nature of their carrying amounts. ( ASIC Ltd, 2012). These fundamental accounting treatments include judgments on whether company assets, revenue and obligations are appropriately for in the financial year. Assets and company obligation are measured at their fair values which thy do change in subsequent years and hence give rise to the assumption of estimation uncertainties at the end of the accounting period. ASIC Ltd and Standards requirements The company recognizes revenue of products using their attached selling prices. Significantly, decisive accounting estimation should meet the requirement of FASB and AASB in accounting for the current company financial affairs. ASIC Ltd management is based on establishment of major accounting elements that are observed in order to account subsidiaries transaction. The ASIC Limited current accounting outline describes a well based observes accounting policies and procedures according to the requirement of AASB 101. The company reflected an increasing trend of company’s financial performances this denotes that the company’s management disclosures are presented according to the requirement of AASB. The company management accounting department perilously complies with the requirement of Australian Accounting Standard Board and IFRS. The current accounting policies are compliably used in valuing the company’s assets, financial obligations, liquidity and providing foe provision on the anticipated amount to be consumed as part amortization of goodwill depreciation and doubtful debtors. Management accounting department discloses the estimation based on the past financial period on the amount set aside for the doubtful debtors The company reveals statements the accounting measures and polices they are used in each and every business transaction. This has no any relationship in the current financial treatment since debtors can increase or decrease during the financial year (Australia, 2012). The company accounts for treasury shares according to the requirement of IFRS where the shares are held differently from the life business returns and the results of the holdings are to be recognized as income in the disclosed financial information. This transaction was not accounted for since ASIC limited includes the held amount in the cash earning. Recommendation on ASIC Accounting disclosures ASIC Limited discloses their financial issues according to the requirement of IAS and IFRS standards. The management accounting expertise should control the company’s financial transaction by following the stipulation laid down under the Corporation Act 2001 which exhaustively gives need of disclosures in judging the going concern of the company. The company’s provision regarding to the principle of going concern is impaired, this call for the management to abide by the AASB and IFRSs in disclosing their companies financial details. Also the fair value of the net assets is not shown as either revalued downwards or upwards. This disclosure must be observed to enhance accounting for the net fair value of company’s assets. This discrepancy of the accounting disclosures should be enhanced to endorse the requirements if the Australian Accounting Standard Board AASB 101. Furthermore, the accounting department should show the sequence of accounting transactions and indicates how the resultant estimates were achieved. ASIC Limited accounts for the company investment according to the requirement of IAS and IFRS presentation disclosures (Doug, 2007). The company provides a basis of identifying the returns from investment where the dividends earned for the subsidiaries are mutually recognized in the ASIC Limited financial statement. According to AASB 101 the subsidiaries are consolidated and charged in the parent entity. The provisions provided by the act regarding to the future company’s subsidiaries performances under the balanced sheet adjustments s should comply with disclosures of the ASIC Ltd. Appendix1 ASIC consolidated statement of financial position Appendix 2 ASIC Ltd statement of comprehensive income Reference List Australia, I., 2012. Chartered Accountants Financial Reporting Handbook. John Wiley & Sons.pp.42-24. ASIC Ltd (2012) ASIC Ltd Annual report 2012 Retrieved on 29th April 2013 Mills, D., 2006. Introductory Accounting Incorporating Accounting Principles and Practice. UNSW Press.pp 34-39 Doug, N., 2007. The international handbook of financial reporting. Cengage Learning. p.32. Ron Dagwell, 2007. Corporate Accounting in Austalia. UNSW Press. p.639. Read More