Accounting management assignment analysis : Essay on Australian public companies

Accounting management assignment analysis : Essay on Australian public companies

Part A

EssayIntroduction

This essay gives the brief overview about accounting regulatory system of the Australia for public companies of Australia by reference to four accounting values such as Professionalism vs. Statutory control, Uniformity vs. Flexibility, Conservatism vs. optimism and Secrecy vs. transparency. In general, accounting regulation is significant because investors shall offer funds for the investment, if financial statements made by the companies are accurate. In fact, it is very clear that in Australia and other countries there is constant move towards harmonizing the requirements of the financial reporting for the private and public sector. It has been analyzed that Gray accounting value Uniformity vs. Flexibility shows the preference for the enforcement of regular practices of accounting among companies. In accordance with Gray accounting value, PSASB works closely with AASB on development of projects applicable to the business entities in relation with private and public sectors and make sure that accounting standards are formed by both boards and comprising similar requirements.Accounting Values

Gray suggested the classification of four values of the accounting, derived from the review of the accounting practice and literature

Professionalism vs. Statutory Control: This value shows the preference for the individual professional evaluation and maintenance of the professional regulation as contrary in compliance with referred statutory control and legal requirements (Chanchani &Willett, 2004). Gray intended this value as the considerable dimension of the accounting value because generally accountants perceived to accept independent beliefs and attitudes and to apply their professional judgments to the lesser or greater extent throughout the world.

Uniformity vs. Flexibility:  This value shows the preference for enforcement of regular practices of accounting among companies and constant implementation of practices over the time, as against to flexibility in relation with perceived situations of the individual companies (Doupnik, Timothy & Tsakumis, 2005). This is the considerable dimension of accounting values because beliefs about consistency, comparability and uniformity are the basic characteristics of the principles of the accounting worldwide. This value may be open to distinct interpretations varying from significantly inters temporal uniformity and intercompany to the consistency throughout companies over the time and concern for the comparability among companies for significant flexibility of the practices of the accounting to match with the situations of the individual companies.

Conservatism versus optimism: This value shows the preference for the cautious technique to the measurement which enables the individual to deal with uncertainty of upcoming events as against to more optimistic approach (Gray, 1980). This is the relevant dimension of accounting value because conservatism considered as ancient and most persistent principle of the valuation of the accounting.Secrecy versus transparency: This value shows the preference for the disclosure and confidentiality of the information in relation to business to those, which are closely indulged with its financing and management as against to more open, publicly and transparent accountable approach. Secrecy is closely associated with conservatism. In general, both values refers the cautious approach for financial reporting, but secrecy associates with societal values, accounting and culture to disclosure aspect whereas conservatism associates to measurement aspect.

In Australia and in several countries, there is consistent move in regards to harmonizing the requirements of the financial reporting for the private and public sectors. This is an outcome of moves to need business enterprises and government agencies to accept same structure of management and requirements of reporting to those implemented by their counterparts of private sector. In general, regulation deals with the private interest of the politically efficient groups. According to Gray, accounting regulation system of the Australia shows high degree of range on the individualism, low degree of the range on uncertainty avoidance and power distance.

 The ultimate purpose for the formation of the accounting standards in the Australia must be of great quality standards of accounting which facilitate business of Australia by generating to least capital cost and making companies of Australia to fight on equal overseas while maintaining the confidence of the investor (IAS Plus guide, 2008).  In Australia, the PSASB, ASCPA, AASB, ICAA and Groups of 100 carried out the internationalization of the requirements of the financial reporting. It has been examined that AASC must be formed for replacing the current AASB. The role of AASC must approve and prepare standards of accounting for both public and private sector entities needed for preparing financial statement in relation with standards of accounting.

The body must not only form for legislation, but must have authority of the body corporate for enabling it more effectively and exploit publication incomes and to indulge staff on the contractual foundation and to conduct the business in the flexible and efficient manner (Walker, 2007). As with current AASB, new AASC must be entirely independent in terms of finding out the particular matter of standards it publishes. This is mandatory for maintaining the accounting standards credibility and for averting the standards development (Leuz, Pfaff & Hopwood, 2004). In Australia, in several other countries, there is constant shift towards harmonizing the requirements of financial reporting for private and public sectors. This is an outcome of moves for requiring business enterprises and government agencies for adopting same structures of management and requirements of reporting to those implemented by their counterparts of private sector. In relation with these shifts, suggestions have been made from period to period and to Government for the formation of the Act of financial reporting throughout the state and federal obligations of financial reporting and recently applying to public sector and private sector entities and could be eliminated with legislative regime (Wagenhofer, 2004). In, fact accounting standards issued by PSASB or AASB are relevant to specific business entities and may be changed throughout distinct legislatives. In compliance with distinct requirements of legislative, it results in enhanced financial distortions and costs in the financial information accessible to market that in return may lead to inefficient classification of the scarce resources (Leuz, Pfaff & Hopwood, 2004). In respect to agreement with State, Territory and accounting bodies, the AASC must have accountability for creating standards of accounting in regards to non corporate, non-profit entity and public sector like Interests of public sector must be showed on FRC. AASC members must not essentially from public sector but at least few members on AASC must have specific expertise in accordance to public sector (Holmes, 2010). It must be on government how to determine the lawful impact of the standards of the accounting formed by AASC in regards to entities of public sector and covering under their accountability.  The FRC must refer the desirability for retaining particular consultative composition for AASC in concern to issues of public sector.The main objective of the PSASB is to enhance the excellence of the financial reporting by public sector in Australia. In following this objective, PSASB forms statements of the accounting concept and accounting standards of Australia (Holmes, 2010).  The PSASB operates closely with AASB on formation of projects applicable to the entities in private and public sectors and views to make sure that the accounting standards formed by both boards containing same requirements. In general, PSASB involves 9 members, 4 selected by ASCPA, 4 selected by ICAA and Australian representative on Global Federation of the Accountants. The representative of the global committee is the ex officio member of PSASB. Members cannot be remunerated, but cost related with attending meeting can be funded with the help of AARF. In this concern, it is imagined that there could be considerable presence of public sector on FRC that could settle the specifications of funding compositions. The AASC must be formed under the legislation and have powers of the body corporate.  The role of AASC must issue and approve standards of accounting for public and private entities needed for preparing financial statements in relation with the accounting standards.

Conclusion

At last, it can be concluded that the main purpose of the PSASB is to improve the value of the financial reporting by public sector in Australia. It is also evaluated that there is another body called AASC which approves and issues accounting standards for both private and public entities and prepare financial statements in relation with Gray’s accounting values. At last it can be said that both the bodies such as AASC and PSASB reflects the feature of the Gray accounting value completely such as professionalism. For e.g. The PSASB operates closely with AASB on formation of projects applicable to the entities in private and public sectors.

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