Contemporary Issues In Accounting Businessâ€Myassignmenthelp.Com

Question: Discuss About The Contemporary Issues In Accounting Business? Answer: Introduction The accounting conceptual framework is developed and prepared by the IASB (International Accounting Standards Board) for the purpose of providing assistance to the businesses for preparing their general purpose financial statements. The main reason for the development of conceptual accounting framework is to aid the financial decision-making of the end-users of the financial reports (Hoffman, 2016). In this regard, the present report presents an evaluation of financial reports of Huon Aquaculture Group Pty Ltd and ARK Mines as per the conceptual framework and AASB standard requirements. Also, it discusses the prudence re-introduction in the conceptual framework accounting principles. Analyzing the Annual Reports of Huon Aquaculture Group and ARK Mines as per the Conceptual framework and AASB standards The conceptual framework examines the usefulness of general purpose financial statements prepared by business corporations in accordance with the qualitative characteristics that are, relevance, reliability, consistency and understandability (Hoffman, 2016). Huon Aquaculture Group, a fish farming company that follows AASB (Australian Accounting Standards Board) requirements and is listed on ASX. The AASB provides guidelines to business operating within Australia as per the conceptual accounting framework principles. The annual report of the company reflects that it has complied with all the conceptual framework principles and has thus provided all the necessary financial information to the end-users of the financial reports (Growing for the Future: Huon Aquaculture, 2015). The directors report has stated all the financial facts and figures related to its profitability by clearly reflected the earnings before tax, earnings per share, net income as per the reliability qualitative chara cteristic of conceptual framework (Knight, 2004). The remuneration report of the company has all also provided all the necessary information about the compensation structure offered to the key management personnel (KMP) of the company as per the relevance conceptual framework qualitative characteristic. The principles and rules adopted for the preparation of the financial reports are clearly stated in the notes to the financial statements section of the annual report as per the understandability principle of conceptual framework. The company also prepares its consolidated financial statements as per the Corporations Act 2001. The financial facts and figures are compared with that of the previous year for reflecting the percentage growth in the revenue of the company as per the comparability principle of conceptual framework (Growing for the Future: Huon Aquaculture, 2015). On the contrary, ARK Mines does not provide all the necessary financial information in its annual report in accordance with the conceptual framework and AASB standards. The company is involved in the gold production in Australia and is a small-sized company in comparison to the Huon Aquaculture. The directors and remuneration report of the company has not provided appropriate information about the financial figures relating to its business operations and compensation structure of KMP (ARK Mines: Annual Report, 2015). Non-compliance Reason with conceptual framework and AASB standards The comparison of Huon Aquaculture Group and ARK Mines annual reports reflects that there is wide difference in the financial reports prepared by both the companies. The Huon Aquaculture effectively follows all the AASB and conceptual framework standard requirements while ARK Mines has not complied with all the ASX listing requirements. The main reason for the non-compliance of ARK Mines with the AASB and conceptual framework standards is its small size nature. The ARK Mines is still in evolving phase and is planning to expand its business operations in other parts of the world. As such, it does not develop and publishes its consolidated financial statements because it does not have subsidiaries. There is different set of financial standards developed by the AASB for SMEs and thus it does not comply with all the AASB standard requirements (Ataman et al., 2014). Conceptual Framework Revision for including Prudence in Corporate Reporting The IASB has incorporated the concept of prudence in the conceptual framework recently after it has been removed in the year 2010. The main objective of the IASB behind the inclusion of the prudence principle in the accounting conceptual framework is to protect the stakeholders interest by providing them realistic and non-biased financial information. The prudence concept states that businesses need to reflect the expense and liabilities in its financial reports as soon as they incurred but should state the revenue realization only when it is actually realized. The prudence concept mainly aims to overcome any disparity in financial reporting so that financial information reflected to the creditors and investors is error-free and reliable. The concept is re-introduced in the conceptual framework in order to prevent the manipulation of accounts by the companys executives for their personal benefits such as that incurred in Enron and in other business scandals (Araujo and Gomes, 2015). Recommendations On the basis of above discussion, it can be stated that business corporations listed under ASX should effectively follow AASB and conceptual framework standard requirements. The company should comply with all the principles of conceptual framework in order to promote transparency in their business operations nada chive stakeholders trust. The Huon Aquaculture has achieved good brand recognition on a global level as it effectively follows all the conceptual framework principles. However, ARK Mines has to still achieve brand recognition by effectively complying with all the AASB and conceptual framework standard requirements. Businesses all over the world are also recommended to include the principle of prudence at the time of developing their financial statements to promote transparency and fairness in their business operations in the stakeholders minds (Araujo and Gomes, 2015). Conclusion It can be inferred from the overall discussion held in the report that there is wide difference between the financial reporting of both the corporations, that are, Huon Aquaculture and ARK Mines. The current accounting framework is proving to be effective in meeting the need of users of financial reports as analyzed form the annual report of both the corporations. Also, the principle of prudence needs to be included in the conceptual framework for overcoming any fraudulent activities in corporate reporting. References Araujo, V. and Gomes, A. 2015. Analysis of Opinions Issued in Comment Letters on the Term Prudence. Journal of Education and Research in Accounting 9(2), pp. 209-225. ARK Mines. 2015. Annual Report. Ataman, B. et al. 2014. Preparedness for and perception of IFRS for SMEs: evidence from Turkey. Accounting and Management Information Systems 13(3), pp. 492-519. Growing for the Future: Huon Aquaculture. 2015. Annual Report. [Online]. Available at: https://www.asx.com.au/asxpdf/20160929/pdf/43bk9v2hk1q4z0.pdf [Acessed on: 12 August, 2017]. Hoffman, C.W. 2016. Revising the Conceptual Framework of the International Standards: IASB Proposals Met with Support and Skepticism. World Journal of Business and Management 2 (1), pp. 1-32. Knight, J. 2004. Internationalization Remodeled: Definition, Approaches, and Rationales. Journal of Studies in International Education 8 (5), pp. 5-29.