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In: Economics

Developed economies all have their own regulatory environment for accounting and financial reporting. This assignment allows...

Developed economies all have their own regulatory environment for accounting and financial reporting. This assignment allows you to explore two different regulatory environments of your choice, and to evaluate the theories of regulation that best describe those environments. This assignment is in two parts, which you will combine into a single report. Each will involve a review of the relevant literature to establish the dominant views involved in each environment. Your conclusion at the end of the report will identify the most important findings for each review. Part A Select any two of the following countries: Australia United Kingdom India Singapore.

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Expert Solution

1. Financial Reporting - Australia:

Australia has a differential disclosure regime under which financial reporting requirements are set according to the type of entity, principally on the basis of the level of public interest in the entity. The types of entities can be classified as:

  1. disclosing entities (mainly listed corporations and registered managed investment schemes/prescribed interest undertakings) that have listed securities or have issued shares and other securities as a result of the circulation of a prospectus;
  2. unlisted public companies and large proprietary companies (that is, a proprietary company that meets at least two of the following criteria: gross operating revenue of $10 million or more, gross assets of $5 million or more and 50 or more employees); and
  3. small proprietary companies.

Under the Corporations Law, all disclosing entities, companies and registered managed investment schemes are required to maintain records which accurately record their financial transactions and which would enable the preparation of financial statements and the audit of those financial statements.

Annual financial statements must be prepared by all entities except small proprietary companies. The annual financial statements consist of a balance sheet, a profit and loss statement and a cash flow statement. The matters to be disclosed in the financial statements are contained in accounting standards, which are made by the Australian Accounting Standards Board (AASB) and which have the force of law under the Corporations Law. The Corporations Law also provides that consolidated financial statements must be prepared where the preparation of such statements is required by an accounting standard. This normally occurs in circumstances where an entity controls one or more other entities. Annual financial statements must be circulated to members of the entity (for consideration at the annual general meeting of the disclosing entity or company) and must be lodged with the Australian Securities and Investments Commission (ASIC).

In addition to meeting annual disclosure requirements, disclosing entities are required to prepare half-yearly financial statements. These are generally an abridged version of the annual financial statements. Half-yearly financial statements must be lodged with ASIC but do not have to be circulated to members.

Both the annual and half-yearly financial statements must be:

  1. accompanied by a directors’ report about the operations of the entity;
  2. accompanied by a directors’ declaration as to whether the accounts comply with the requirements of the accounting standards and give a true and fair view of the entity’s financial position and whether the entity is solvent; and
  3. audited (audited or reviewed in the case of half-yearly financial statements) by a registered company auditor who is independent of the entity.

Three important elements underpin Australia’s financial reporting framework:

  1. accounting standards that must be used by all entities that are required to prepare financial statements;
  2. auditing standards that must be used for the purpose of auditing financial statements; and
  3. appropriate levels of surveillance and enforcement to ensure that entities prepare their financial statements in accordance with the requirements of the Corporations Law and applicable accounting standards, and that those financial statements are audited in accordance with auditing standards issued by the accounting profession.

2. Financial Reporting - United Kingdom

Delivery of statutory financial statements prepared in accordance with current UK GAAP, FRS 102, FRS 101 or IFRSs (as endorsed by the EU) for single entities or consolidated groups.

  • Abridged and FRSSE accounts
  • LLPs, Partnership accounts and sole traders
  • Trusts and other accounting structures
  • Charity accounts and other SORPS
  • Academy accounts
  • Pro forma accounts to assist with management reporting

Migration and translation

Ensuring accurate migration or translation between the following GAAPs:

  • UK GAAP, FRS 101, FRS 102, IFRS, US GAAP.

Consolidation

Preparation of the consolidated results of your business from subsidiary company information to support preparation of statutory financial statements.

Audit liaison

A tailored approach for your needs, from simply answering queries relating directly to our statutory financial statement preparation work, to being an integral part of your relationship with your auditors.

iXBRL

Converting your statutory financial statements into InLine eXtensible Business Reporting Language (iXBRL) format for submission to HMRC in close collaboration with our iXBRL team.


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