Financial Accounting Reporting And Analysis -Myassignmenthelp.Com

Question: Discuss About The Financial Accounting Reporting And Analysis? Answer: Introduction There have been several modifications that have been done in the reporting requirements of the listed companies for improving the transparency and authentication of the information that is given to the shareholders. Continuous disclosure is an important management of the Australian stock exchange disclosure framework. It is done to ensure that price sensitive information in relation to the stocks that are traded on the stock exchange, should reach the shareholders. Before this was made mandatory, the information would reach the shareholders in quarterly, semi-annual reports, and the companies would convey the information through periodic fillings to the exchange and the regulating people(Dichev, 2017). If there is a time lag in the correct information reaching the shareholders, they may suffer huge losses because of the same. In the world where money is invested every second, information is considered the most important factor. The sale prices can alter every second, and this it is i mportant that correct information reaches at the correct time, so that shareholders can manage their funds without incurring losses. In cases where companies default in the same, they are voluntary suspended from the stock exchange and also loses there credibility in the market. It is done to take care of insider trading and prevent people from dealing in fraudulent activities on basis of any price sensitive information that they may have from unwanted sources. So the need of continuous disclosure is very important for reporting entities(Fay Negangard, 2017). In this essay the various aspects of continuous reporting for disclosure requirements and its effectiveness is discussed briefly. Literature Review In this case study, we see how the shareholders of the Bellamy Australia suffered because they were not given correct and accurate information about the financials of the company. The shares were suspended on the Australian Stock Exchange in relation to the ban that occurred on the supply of the milk products, because of this the share price dropped from as high as $16.50 about 12 months ago to just $6.68 on Friday, before there was a halt on the trading of the shares. It was mentioned that there was a halt on the trading of shares because the company wanted to fulfil its requirement of continuous disclosure and for the same the company went for voluntary suspension, but that had affected many small shareholders who invested in the company(Fay Negangard, 2017). So why is it that important to meet these requirements of continuous disclosers and how does it support the investors and the companies. In countries like Australia, America and Europe, the government requires that the companies must provide some information to the shareholders on continuous basis if it alters the price and value of its securities and derivatives. Section 674 requires companies in Australia to inform the shareholders through the stock exchange about the various price sensitive information which may not be generally available to them(Given, 2016). This is done to prevent insider trading. It is very important that information must reach promptly, thus the need of continuous disclosure is there. The information that is provided must have certain qualities like it should be factual, should be accurate, reach timely and should never be disclosed to private parties, this might lead to insider trading. All this information must reach the stock exchange and should be made public for the need of the shareholders(Guragai, et al., 2017). The information that companies need to provide the shareholders are any sig nificant changes related to the assets, operations, financial position, any mergers, disinvestments or acquisitions etc. Any such information that might affect the position of the investors must be made available to them through appropriate channels. This is how this system works. With the help of this information the shareholders can judge the credibility of the company and can decide whether they want to invest in the shares of the company or not. This will help them from any unwanted losses and help them in taking effective decisions. In the given case of Bellamys correct information was not provided to the shareholder and that had affected their credit position and they had to incur huge losses. The company also suffered and lost their position in the market, owing to their poor stand on the situation that led to voluntary suspension of trading of funds and brought the company and the shareholders to a vulnerable position(Prasad Chand, 2017). The Australian Stock exchange has provided a list of guidelines that the company needs to follow to make sure that they fulfil the needs of continuous reporting of disclosure requirements. In any case if they default then they would be penalized and would not be allowed to trade their stocks in public. There is an option of carve out as per which there are certain situations in which the companies do not need to follow this policy of continuous disclosures of reporting entities, this includes- breach of law in disclosing the information, an incomplete negotiation or proposal, a trade secret or if the information has been created for internal management if the entity. There should be reasonable reason for withholding the information and if found guilty there is a serious breach of law and criminal proceedings can be initiated against the company. As per rules, the company might need to pay a civil penalty proceeding with a maximum amount of $1 million, along with criminal proceedings and other suits can also be initiated(Sweeting, 2017). Thus, it is important that companies around the world, where this law prevails must follow the requirements closely and comply accordingly with all the stated rules and guidance. Now the thought of the hour is how effective are these policies and how helpful have they been to the companies and the shareholders. This can be deciphered from the various civil and criminal proceedings that have been initiated against the companies in lieu of the non-compliance with the stated laws. But there are still incidences happening with respect to insider trading and price sensitive information is still being used for personal benefits by private parties. It is very important that more strict rules must be formed to prevent companies and dealers in indulging in these kinds of activities. This is very important with respect to the financial wellbeing of the country(Maynard, 2017). Conclusion Based on the above analysis and the case study, it can be said that it is very important that companies should follow this policy of continuous disclosure and provide correct and accurate information on a timely basis. This must be in practice more than on paper and strict actions must be taken against companies who indulgences in any defaults. This must be done to ensure the security of the shareholders, like in the case of Bellamy the shareholders suffered huge losses, because they were not provided with correct information at the time required. It is also necessary that timely audit of the companies listed on the stock exchange must be done and proper audit reports must be provided to the stock exchange(Han, et al., 2017). It is the duty of the stock exchange to do proper screening before listing the company and defaulters must be banned from trading their securities. This will help in improving vigilance and marketing the financial situation of the companies in question more secu re. Also the carve out option that is provided to the companies must be more strict, so that companies do not use the same as a veil to avoid complying with the disclosure requirements that they need to comply with(Chariri, 2017). Refrences Abbott, M. Kantor, A., 2017. Fair Value Measurement and Mandated Accounting Changes: The Case of the Victorian Rail Track Corporation. Australian accounting Review. Alexander, F., 2016. The Changing Face of Accountability. The Journal of Higher Education, 71(4), pp. 411-431. Birt, J., Muthusamy, K. Bir, P., 2017. "XBRL and the qualitative characteristics of useful financial information". Accounting Research Journal, 30(1), pp. 107-126. Burke, J. Clark, C., 2016. The business case for integrated reporting: Insights from leading practitioners, regulators, and academics. Business Horizons, 59(3), pp. 273-283. Chariri, A., 2017. FINANCIAL REPORTING PRACTICE AS A RITUAL: UNDERSTANDING ACCOUNTING WITHIN INSTITUTIONAL FRAMEWORK. Journal of Economics, Business and Accountancy, 14(1). Chiapello, E., 2017. Critical accounting research and neoliberalism. Critical Perspectives on Accounting, Volume 43, pp. 47-64. Crosby, N. Henneberry, J., 2016. Financialisation, the valuation of investment property and the urban built environment in the UK. Urban Studies, 53(7). Dichev, I., 2017. On the conceptual foundations of financial reporting. Accounting and Business Research, 47(6), pp. 617-632. Fay, R. Negangard, E., 2017. Manual journal entry testing : Data analytics and the risk of fraud. Journal of Accounting Education, Volume 38, pp. 37-49. Given, L., 2016. 100 questions (and answers) about qualitative research. s.l.:Sage. Guragai, B., Hunt, N., Neri, M. Taylor, E., 2017. Accounting Information Systems and Ethics Research: Review, Synthesis, and the Future. Journal of Information Systems: Summer 2017, 31(2), pp. 65-81. Han, B., Subrahmanyam, A. Zhou, Y., 2017. The term structure of credit spreads, firm fundamentals, and expected stock returns. Journal of Financial Economics, 24(1), pp. 147-171. Maynard, J., 2017. Financial accounting reporting and analysis. second ed. United Kingdom: Oxford University Press. Prasad, P. Chand, P., 2017. The Changing Face of the Auditor's Report: Implications for Suppliers and Users of Financial Statements. Australian Accounting Review. Sweeting, P., 2017. Financial Enterprise Risk Management. Second ed. UK: Cambridge University Press. Financial Accounting Reporting And Analysis -Myassignmenthelp.Com Question: Discuss About The Accounting Financial Reporting And Analysis? Answer: Introduction Transfer pricing is a concept that is very much existent in this modern world. It refers to the total value that is attached to the prices of goods and services between related parties. It is the total price that is charged in a transaction. It has many positive aspects as it helps the companies in avoiding double taxation and relieves them of the unnecessary tax burden. But in the process of doing so, it has often led to the unlawful use of the law, by companies to curb the genuine payment of taxes, that they were to pay. In this modern era and globalized situation, this concept of transfer pricing holds utmost importance given that the companies indulge in cross trading and consumers are attracted towards policies that help them in payment of fewer taxes. In this assignment, the dark side of transfer pricing will be discussed as stated by the authors (Sikka Willmott, 2010). It emphasizes the importance of cost allocation between the nations and how cross-country trade is being aff ected by the modern means of tax cutting that is covered under the veil of lawful tax avoidance. This forms the core of this article and throws lights on the different aspects of transfer pricing that includes the darker side which is not very popular in terms of disclosure. Analysis 1.The core argument of this article that the authors want to present is that the concept of transfer pricing is always taken in good light, considering that it makes it easier for the companies to indulge in cross country trade and avoids the pressure of double taxation, but there is a darker side to the same. This is very apparent from the way companies are making use of the law to avoid taxation and the pressure is then given on the consumers indirectly, who end up paying more prices for goods because of the complex taxation policy (Burke Clark, 2016). This article highlights certain incidences where it can be clearly seen how companies are making use of this policy to avoid paying taxes. For examples, countries like China and Russia, that enjoys huge international trade owing to their great products at cheaper prices, make use of this transfer pricing policy to sell products to the international trader at lower prices, that causes these countries huge loss of revenues in the form of taxes. As per reports the Chinese exports are underpriced and the imports are overpriced, this is causing huge loss of revenue. Even in Russia, where there is no strict guidance and rules and in absence of direct foreign investments, the government must resort to other methods like subsidies and no taxation zone, to promote trade and to recover from the losses that occur because of the taxation policy that governs international trade. Not just developing countries, even developed nations are getting affected because of these policies, countries like the USA are also losing on revenue (Crosby Henneberry, 2016). Transfer pricing not only refers to the transaction of goods and services but also refers to the transfer of wealth that occurs between nations when they indulge in international trade. The aim of every nation is to improve its economic condition by developing its GDP and for the same they try to indulge in such activities as activities as per which they end up paying les s or no amount of taxes. But this in turns affects the profitability of other countries, as they lose on taxes, that it there primary source of revenue (Dichev, 2017). On the forefront, it may look that the transfer pricing policy is helping the countries in avoiding double taxation, but it is also helping the companies in tax avoidance as they transfer all their transactions to such area in which they do not have to pay any taxes. Tax havens are an aspect of transfer pricing schemes, where certain areas are such that where the companies do not need to pay any taxes if they have transactions in that zones. Many companies try to make use of the same and try not to pay taxes (Han, Subrahmanyam, Zhou, 2017). The prevalence of such schemes is very difficult to be judged as they are very carefully and tactfully hidden and accessed only when there are some major fallouts, or whistleblowing. It also leads to compliance issues in many multinational corporations, and the same effects the ov erall operations of the companies. It also affects the cross-country trading and international mergers that occurs with a viewpoint to provide better services and resources to the public. Thus, we see that not just in promoting international trade, the concept of transfer pricing also plays an important role in promoting the incidences of tax avoidances. Many companies try to avail the same, make misappropriate use of it and this leads to loss of revenue. Because of the same many countries do not encourage international trade, and the end users are the most affected party in the whole scene (Sikka Willmott, 2010). 2.This article, in general, reflects the conventional techniques of management accounting, that cover different methods like decision making, future-focused, timeliness. In this article, the authors have provided a brief view on how the various aspects of transfer pricing are affecting the overall cost and revenues that the companies are earning owing to the aspects of the tax havens that are prevalent in case of transfer pricing concepts (Fay Negangard, 2017). Transfer pricing is a method that helps in determining the overall cost that the countries pay in case of international and cross-border transaction lieu of the goods and services that they exchange. This helps in generating more revenue, thus helps in effective cost management which is an important aspect of the conventional management accounting. This article also reflects how companies are taking decisions on having transactions and shifting all their operations to tax-free zone, so they end up paying less amount of taxes (Abbott Kantor, 2017). This is an aspect of decision making that reflects the conventional method of management accounting. This article also focuses on the future focused aspect of the transfer pricing policies, where companies tend to go for such deals, in which they will have to pay no taxes in times to come. And, the future aspect is there in the fact that so many companies have to lose on their profits and have to lower their rates, and the government is also losing so many amounts of income owing to these transfer pricing policies and how the same will affect the times to come (Alexander, 2016). This is different from what is provided in the textbook because in the textbook the focus is more on the contemporary aspects of management accounting which focuses on performance evaluation and management. Performance management covers the aspect of modern management method, that includes, communication of business strategy, tracking the performance, evaluating the rewards and recognition and the overall guide for the future development of the company. The measures are very simple and are mostly controlled with the help of system software and tools. This is an important aspect of the contemporary method of management accounting that includes, use of balanced scorecards, use of performance trackers, inventory regulators (Chiapello, 2017). It makes the work easy and more accurate and there is less human intervention in this. This is how the contemporary method of management functions. But the same is not applied in this article of transfer pricing and focuses mainly on the conventiona l method of accounting. There is no use of modern methods of performance trackers that can help in regulating the overall work done by the companies in dealing with tax avoidance and reduction of the overall revenues for the countries (Prasad Chand, 2017). The major characteristics of effective performance measurement control include emphasizing the overall positives, it must be reported in a timely manner, there must be proper benchmarking and it must be limited to the performance measure. All this is not present in this article on transfer pricing that reflects the dark scenario of the countries and the international trade under the realms of transfer pricing and its policies (Maynard, 2017). This is how this system works and same has been explained in this article, covering the different aspects on how the countries are suffering owing to the decision-making capabilities of the nations on declaring regions as tax haven and no proper scrutiny being done later to find how the companies are taking undue advantage of the same (Guragai, Hunt, Neri, Taylor, 2017). The bigger picture appears all rosy, but the darker side is still prevalent which is not there in open and requires a lot scrutiny to be assessed. This is how the conventional and the contemporary methods of management accounting are different from each other in terms of the overall performance management and the same is reflected in the article stated above. Conclusion Based on the above analysis it can be said that there must be a more simplified way by which governments can track the overall performance of these companies that are indulging in international trade and the overall effect that it is having on the revenue of the countries in question. The outer picture might appear rosy but there is a dark side to it and it is the need of the hour that same must be brought out in open and the end user should not be affected because of the same. The conventional and the contemporary methods of performance management must go hand in hand and should reflect the true position by using the modern tools in synchronization with the techniques of the contemporary method of management accounting (Chariri, 2017). In this way, the companies will not be able to take undue advantage of the laws and by-laws on transfer pricing and correct revenue will be reflected. This is the long run will help in promoting international trade and help in curbing tax evasion. Str ict punishments must be there for companies that are found defaulting in this zone and a proper performance tracker must be developed to look at the companies that function in this respect. This is how the concept of performance management can be synced with this aspect of transfer pricing (Sweeting, 2017). Experts must be appointed to look over the minute details under the broad picture of transfer pricing and how changes can be initiated that will discourage the companies from indulging in any form of tax avoidance. References Abbott, M., Kantor, A. (2017). Fair Value Measurement and Mandated Accounting Changes: The Case of the Victorian Rail Track Corporation. Australian accounting Review. Alexander, F. (2016). The Changing Face of Accountability. The Journal of Higher Education, 71(4), 411-431. Burke, J., Clark, C. (2016). The business case for integrated reporting: Insights from leading practitioners, regulators, and academics. Business Horizons, 59(3), 273-283. Chariri, A. (2017). FINANCIAL REPORTING PRACTICE AS A RITUAL: UNDERSTANDING ACCOUNTING WITHIN INSTITUTIONAL FRAMEWORK. Journal of Economics, Business and Accountancy, 14(1). Chiapello, E. (2017). Critical accounting research and neoliberalism. Critical Perspectives on Accounting, 43, 47-64. Crosby, N., Henneberry, J. (2016). Financialisation, the valuation of investment property and the urban built environment in the UK. Urban Studies, 53(7). Dichev, I. (2017). On the conceptual foundations of financial reporting. Accounting and Business Research, 47(6), 617-632. Fay, R., Negangard, E. (2017). Manual journal entry testing : Data analytics and the risk of fraud. Journal of Accounting Education, 38, 37-49. Guragai, B., Hunt, N., Neri, M., Taylor, E. (2017). Accounting Information Systems and Ethics Research: Review, Synthesis, and the Future. Journal of Information Systems: Summer 2017, 31(2), 65-81. Han, B., Subrahmanyam, A., Zhou, Y. (2017). The term structure of credit spreads, firm fundamentals, and expected stock returns. Journal of Financial Economics, 24(1), 147-171. Maynard, J. (2017). Financial accounting reporting and analysis (second ed.). United Kingdom: Oxford University Press. Prasad, P., Chand, P. (2017). The Changing Face of the Auditor's Report: Implications for Suppliers and Users of Financial Statements. Australian Accounting Review. Sikka, P., Willmott, H. (2010). The dark side of transfer pricing: Its role in tax avoidance and wealth. Critical Perspectives on Accounting, 342-356. Sweeting, P. (2017). Financial Enterprise Risk Management (Second ed.). UK: Cambridge University Press.