Financial Accounting International GAAP

Question: Discuss about the Financial Accounting for International GAAP. Answer: Introduction Financial accounting is one of the most important subjects that help in keeping records of all financial activities of an organization as well as it also helps in preparing the requisite financial report at the time of the requirements. It helps in preparing the financial statements of the company, which provides the essential information about the financial condition of the company as well as help in assessing the financial performance of the company. The financial performance of the company can be assessed by the financial statement of the company (Beyersdorff, 2014). The financial statements of the company mainly consist of the balance sheet of the company, income statement of the company or profit and loss statement of the company as well as the cash flow statement of the company. In the financial statement there are elements which are very important for the investors, who desire to invest in the company. These are the important material of the financial statement. On the other h and there are some materials of the financial statement, which are not so important and have minimal influence for the decision making of the investors are immaterial element of the financial statement. The material things should be disclose in the financial statement as well as the immaterial things may not be disclosed in the financial statement (BOYMAL, 2007). The Australian Accounting Standard Board (AASB) as well as the International Accounting Standard Board is consistently battling with the conception of the materiality. AASB has brought out several amendments in order to define the materiality fact. In this specific report an Australian company named CSR Ltd, which is enlisted with ASX has been taken and the report will analyze the materiality fact in the financial statement of the company. Concept of Materiality The concept of the materiality signifies the omission or the misinterpretation of the financial statements that are undertaken by the users on the basis of the IASB framework of the financial statements. It is related to the significance of the transactions, errors and the balances that are signified for the formation of the financial framework for the creation of proper financial information for the organisation or the company. Materiality also shows the true and the fair view of the financial statements that are contained for the proper enhancement of the issues raised due to the implementation of the prospects of the materiality (BROWN, 2006). Thus the threshold or the cut off is created by the financial relevant information that helps in making proper decisions by the users. It also depends on the size and the other circumstances of the company. It also accounts various principles that are created by the various concepts that are as follows:- Relevance: - It influences the users to take the economic decisions that are related to the development of the perspectives of the company and also helps in fulfilling the individual relevant needs (Zyla, 2012). Reliability: - Creating the omission of the financial statements that are important for the development of the studies that are related to the correct decision taking on the financial statements and also affects the reliability of information. Completeness: -The information that are contained in the financial statements that helps in the completion of the material prospects that are required for the presentation of the true and the fair value for the mitigation of the affairs of the company (Collings, 2015). The materiality also results in the representation of the values that are created for the providing the change of the opinions that are created for the proper enhancement of the material issues and thus it also helps in the concentration of the financial information that helps in the financial statement and thus it also helps in including the financial statements. The financial information is created for the development of the reasonable and thus the material to small company. Large material expenses and thus it also helps in concepts that are required for the creation of the materials that also helps in the creation of the concepts and thus it also helps in the enhancement of the strategies. Thus the creations of the small immaterial also helps in the creation of the financial statement of the users and thus it also helps in the materiality concept and thus it creates the development of the financial statements that helps in the proper maintenance ("Comment: Australia's Adoption of IFRSs-A Clarification from the AASB", 2009). In the case of the company, the materiality of the amounts is seen in the non-materialistic services that help in the creation of the services which is enacted by the Corporations Act 2001 (Young, 2011). Thus the accounting standards are also created for the development of the process and also helps in the creation of the performance and thus it also helps in the development of the services and thus it also helps in the enhancement of the services for the development of the remuneration. The boards present position that there is not any usual measurement of the materiality can be made to take into the account the entire consideration, which enter into experienced individual judgement. Thus example of the CSR limited also helps in the proper enhancement of the financial statements that help in the growth of the company CSR Limited and it also helps in the creation of the number of the services and thus it results in the creation of profits of the shares (Ferguson Leech, 2007). It att ributes the enhancement of the proper shareholders which helps in the creation of the number of the shares and helps in satisfying the trust and also helps in weighting the average shares. Problems of materiality in context of AASB/IASB standards and framework The problems that are related to the AASB framework in the context of the financial accounting for the existing conceptual framework in the organisation of the CSR limited are as follows:- Some of the areas are not covered in respect materiality of the conceptual framework for example: - guidance related to the measurement and presentation of the related disclosure that are related for reporting the entity of the organisation (Stevenson, 2012). The aspects of the materiality failed to respond to the existing framework that indeed fails to reflect the current thinking of the IASB/AASB standards. For example, the framework that is created represents the sets of the assets and the liabilities if the recognised one is probable for the case of the continuation of the flow of the economic resources. The problems also address the financial statement related problems. The equity instruments are not clearly mentioned with the equity claims that lies against the entity of the organisation which shows the affecting of the future cash flow of the investors. Existing IFRS and the IASB standards cannot be applied for the creation of distinction between the financial liabilities and the equity instruments. Thus it creates a complex environment for the proper application of the issues that are related for understanding the opportunities of the financial statements (First-time adoption of Australian accounting standards, 2009). The inconsistency created helps in the creation of the problems thus due to this misinterpretation of the financial statements takes place that helps in the creation of the problems regarding the accounting of the statements (Spiceland, 2009). The conceptual framework of the company also is created for the proper consideration of the values of the financial states. If the conceptual framework is negotiated, then the framing of the residential interest are created for the definitions and thus the interpretations are caused by the disturbances of the financial statement. The IASB problems include the unfocused areas of the financial statements. Thus it also helps in the focusing of the problems regarding the creation of the framework that are required for the achievement of the discussion on the financial reports that are satisfied for the continuation of the reports (Shang, 2015). The problems are also indicated in the income and the expenses that define the existing framework for the process of differentiation of the drafting changes. The problems also include the IASB committee interpretation that commits the interpretation of the entity enforceability. Furthermore, the entity that is created for the proper participation of the specific market but with the improper maintenance, the operational wastes and the generation of the wastes takes place. The economic issues are created for the proper enhancement of the issues that are related to the contractual obligations. Hence it creates barriers for the purpose of the IASB proposes for the lease payments. The exercise prices also help in purchasing the option that creates significant economic issues (Godfrey, 2010). The problems also include the cost basis financial statements by the users which cost based measurements. These provide the irrelevant current financial statements that also create barriers for the formation of the proper financial statements for the company CSR Limited. The problems indicated helps in focusing on the comments that are related to the proper continuation of the practices for the framework and thus the standards are revised for the proper enhancement of the issues. It also helps the organisation CSR Limited to mitigate the issues related o the growth of the economic standards and thus it also helps in the proper development of the exposure draft for covering all the issues and the problems related to the growth of the company CSR limited. Issues of the materiality There are different issues related to the materiality in the financial information of the financial statement of the company. There are different types of confusion arisen for the materiality concepts. Which information can be omitted and misstatement of the information cannot influence the decision of the investors. The omission as well as misstatements is important if it influence the decision of the investors or the users of the financial statement then the information is becoming material (Guthrie Pang, 2013). The accounting principle provides the guideline for the materiality and as per the guideline the financial statement of the company must be assessed the materiality and the misstatement. The important information of the financial activities means transaction should be there in the financial statement in actual form as it influences the decision of the users of the financial statement and this information of the financial statement is called materiality. The information, wh ich is material, must be included in the financial statement of the company. Moreover, this information must be disclosed to the users of the financial statements as per the Guideline of AASB. On the other hand the information which are not so important or immaterial and cannot influence the decision of the users of the financial statement can be omitted from the financial statement and if any misstatement occurs it cannot influence the decision of the users of the financial statements. There are issue in choosing the data which is immaterial for the users of financial statement and the important data which are material. The significance and the importance of information are affected by its materiality and nature (Guthrie Pang, 2013). In some of the cases, only the nature of the information is sufficient to determine the significance and the importance of the information. The structure which is used for preparing and presenting a financial statement of a company which is cited in t he Australian Accounting Standards is known as framework. The Australian Accounting Standards Board (AASB) is applying the policy of the Financial Reporting Council for adopting the guiding principles of the International Accounting Standards Board (IASB) for applying the application at the time of reporting which is started on or after the date of 1st January 2005 (Ramos, 2006). The AASB Standards of the Australian Accounting Standards Board (AASB) is replaced with the Australian Standards which is equivalent to the standards of the International Accounting Standards Board (IASB). This framework is applicable at the time of financial reporting of a company which is started on or after the date of 1st January 2005. The main issues which are set out by this framework are the objective of the financial reports, the qualitative characteristics of financial reports, the assumptions of the financial reports, the criteria which are recognised as the elements of the financial statements an d the elements which are utilized in a financial report of a company (Grseth-Nesbakk Mellemvik, 2011). In the existing conceptual framework, it gives a clear description about the concept of the materiality. Accordingly, the International Accounting Standards Board (IASB) does not recommend or suggested to make any changes or improvements in the guiding principles of the conceptual framework on the topic of materiality. Though, the International Accounting Standards Board (IASB) considers the guiding principles and the education material for developing the materiality keeping it outside the project of Conceptual Framework. Relationship between the materiality employed The measurement of the auditors of the materiality is a subject of professional judgement and it also enhanced by the perceptions of the auditors of their required of the users of their financial report. The perceived requires of the users are measured in the discussion of the materiality in the FASB or Financial Accounting Standards Board report of the concepts of financial accounting system (HERBOHN, 2006). A qualitative accounting information that defines the materiality since the magnitude of a misstatement or the omission of the accounting statement that in the surrounding parts makes this probable which the judgement of an individual relying on the reports or the statement need to have been modified or also influenced by the misstatement or the omission. This type of analysis recognizes that the judgements of the materiality are made in light the entire surrounding parts and also the necessarily it involve both qualitative and the quantitative considerations. In the time of aud iting the financial reports or the financial statements the judgement of the auditors since to matters which are very useful materialise depend on the measurement of requires of the users considered as a group (International Financial Reporting Standards IFRS 2015 (Red Book), 2015). The auditor need not measure the possible effect of omission or the misstatement on the specific person that who are probably used it. In addition, the proper needs of this statement or the report should vary worldwide. The evaluation of a misstatement may to influence the economic decisions of the users. However, be material, incorporates the consideration of the main characteristics of the users or the individuals. The materiality is a persistent conception, which connects to the qualitative features, especially significance as well as reliability. Materiality as well as relevance is both described in terms of the matters that influence or create difference to the users of the financial statement or th e decision makers, however, both the term can be distinct (International financial reporting standards. Red book. 2 vols, 2014). The financial information is created for the development of the reasonable and thus the material to small company. A decision not to reveal certain information or data can be made by the company, which financial statement use to be prepared as the investor or the users of the financial statement do not have any need for that types information from the financial statement t of the company. On the other hand the information which are not so important or immaterial and cannot influence the decision of the users of the financial statement can be omitted from the financial statement and if any misstatement occurs it cannot influence the decision of the users of the financial statements (Iyer Whitecotton, 2007). The information is so minimal or so trivial that it cannot influence the decision of the users of the financial statement. The boards present position that there is not any usual measurement of the materiality can be made to take into the account the entire consideration, which enter into experienced individual judgement. The quantitative materiality terms may be provided by the board in particular measurement in the futures as in the previous as accurate. The degree of materiality of an omission as well as misstatements of the accounting information which is insignificant in the decision makers of the users of the financial statements can be omitted. Conclusion According to the AASB and the IASB the data or information is materials, which are important for the investors in order to make any decision of the investment. The information is material because in the case of the omission or misstatement of the information the decisions of the investors may change. The information largely influences the economic decision of the investors. The investor use to take the information from the financial statements of the company. In the financial statement of the undertaken company, CSR Ltd it is found that the companys economic performance is good over the times (Moroney Trotman, 2015). The company has accomplished significant growth from the year of 2014 to 2015. In the cash flow statement of the company, it is observed that the company has the loan and receivable advance is very minute only 0.5 and it can be omitted from the cash flow statement and it cannot change the decision of the investors or shareholders of the company. 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