AASB and IFRS standards for financial reporting
The basic aim behind this report is to develop the understanding about different standards that are used by listed companies for preparation of final accounts. Every country has its own rules and regulations and adopts several standards that should be followed by companies for the preparation of final accounts. In addition, every company listed in that country’s stock exchange is required to comply with the norms of that country. For this purpose, two companies named as Westfield and Stock land are chosen. In this report, it has been evaluated that the whether the accounts made by the chosen companies are in accordance with the AASB standards or not. Then, the comparison between the annual reports of these two companies has been made in order to find out any type of deviations. Then the reasons behind these deviations are evaluated, if any of the deviations are found from the comparison of two companies.
In Australia, the Australian Accounting Standard Board (AASB) aims at increasing accounting standards for regulating the accounting and financial reporting practices of organizations. Stockland and Westfield take IASB standards and IFRS requirements as base for the preparation of final accounts. The Australian Accounting standards Board developed the standards, which are taken into account by the organizations for formation of their financial statements. IFRS at the initial stage provides the conceptualized framework that requires adherence of companies at the time of reporting for the various fundamentals of the financial statements like expenses, assets, equity, income or liabilities (Bardach, and Patashnik, 2015).
On the basis of IFRS, the assets determined by the organization must be definite and the future economic profits occurring through utilization of the assets must be reported by the company in its annual report. At the same time, IFRS should be consistently considered by companies throughout the business operations over at the time of determining the assets. The Australian Accounting Standard boards (AASB) requires the assets to be counted in the balance sheet, while it is possible stay present in cash flows statement if any purchase of sale of the assets taken place in business. Assets are divided in the two parts such as noncurrent assets or current assets. Noncurrent assets are the assets within the company, which has the life of assets over one year like the equipments, plant or property. The example of current assets of companies involves cash equivalents, the market securities, cash and inventories (Fischhoff, 2012).
Compliance of Westfield and Stockland corporations with AASB and IFRS standards
These all assets are reported in key company on the basis of financial report requirements of the AASB and the principles of IFRS (Pike, et al., 2015). The value of liabilities and assets are shown in the balance sheet in annual report of both Westfield Corporation and Stockland Corporation. For recognizing the liabilities in the financial statements Westfield Corporation and Stockland Corporation assemble the IFRS and the AASB. For the formation of annual reports, both the companies have been recognized an agreement in the requirements of the AASB or the IASB. It means both the accounting standards of AASB and IASB have been followed by selected organization for financial reporting in the annual reports.
For financial reporting, Australian Accounting Standards Board accounting standards are influential and are the primary source of recognized accounting principles. Accounting standard refers the procedure about how to operate, acknowledge, present, disclose or measure the financial statements (International Ltd, 2016). The main motive of such standards is to serve financial information to lenders, contributors, investors, creditors or others, which are important stakeholders of company.
The Australian Accounting Standards Board is also known as Australian Government agency, which works to sustain or improve the financial reporting standards for the Australian economy that consists of individuals, the public or private sectors. The influence or role of the Australian Accounting Standards Board is to set principles for governing Australian securities market also (Australia et al., 2017). A conceptual framework is used by the Australian Accounting Standards for developing and analyzing accounting standards.
From the analysis of annual report of both the companies, it can be said that the annual reports of these companies are complied with AASB standards. For evidence of this fact the screenshot of income statement and balance sheet of the two companies.
The Australian Accounting Standards Board did revision to the AASB framework in December 2013 for the betterment of presentation and preparation of the financial statements that is incorporated of the “IASB Conceptual Framework for Financial Reporting” in the Chapter 1 or 3 which published in September 2010 (Geertz, 2016). On the basis of conceptual framework of IASB chapter 1 and Chapter 3 are amended in the IASB which are required in the framework of IASB, rather than changing the whole framework. Chapter 1 and 3 are considering as framework of appendix in IASB. This Exposure Draft included the International Accounting Standards Boards’ offers for the improvements in conceptual framework, which are planned to increase the financial reporting by giving a further clear, complete as well as the revised set of theories (Krakauer, 2011).
Comparison of the annual reports of Westfield and Stockland corporations
There are various types of Exposure Draft:
There are many parts, which exist, in the conceptual framework in addition to some parts in larger element. The parts deal with are measurements, disclosure or presentation, reporting entity, financial performance and de-recognition (include the exercise of other comprehensive income). Examples of few features of the presenting conceptual framework are as follows:
- Information required to assemble the aim of financial reporting comprises information that might be used to aid in the assessment of executives stewardship of the individuals resources.
- The role of prudence and substance above from in financial detailing
- The meaning of liabilities or assets, including the more extensive guidance to support that definition
- Whenever measurement insecurity of high level could compose financial information less appropriate
On the basis of the Exposure draft, it can be conveyed that the Australian Accounting Standards Board aims to ensure that its offered standards are appropriate for functioning of both not-for-profit and profit oriented business entities. Australian Accounting standards Board is supposed to observe the IPSASB Conceptual structure for General Purpose Financial Reporting by the Public Sector Entities (IPSASB Conceptual structure) that was issued in October 2014 (Bellandi, 2012). The purpose of IASB Exposure Draft is to ensure application of the recorded and framed AASB standards in the financial reporting practices of all organizations across Australia.
According to the AASB code 1054.7, an individual business entity will not be publish the financial statement while execute with the Australian Accounting standards unless they ensure the compliance of these statements with all requirements of AASB. On the other hand, according to the AASB code 1054.8, the individual business entity can release the comments on the legal foundation and any reporting framework, on which the financial statements are made as well as the financial statement making for the motivating.
From the analysis of financial notes that are available in the annual reports of the corporations, it can be observed that the both corporations are followed the AASB principles in order to present the final accounts of the company in the form of disclosure reports. The basic purpose of these standards is to simplify and improve the classifications and disclosures of the financial reports in order to show the positions of assets and liabilities of the company. These standards focus on the providing information to the different stakeholders of the business by using the principle of entity at the time of preparing final reports. This principle provides information about measurement, presentation and disclosure of the leases (Langdon, 2011). However, these standards do not have significant impact on the amounts that is disclosed in financial statements. Corporation Act 2001 (Cth), Australian Accounting Standards and other announcements that are made by the AASB standards are some of the acts that are required to be compiled by the company at the time of preparation of final accounts. Historical costs are used as base for the preparation of final accounts ignoring the different aspects related to investments. Preparation of final accounts involves various attributes of the management (Brigham, and Houston, 2013).
Reasons for deviations found in the comparison
After comparing the yearly reports of both the corporations, it can be analyzed that the Stockland Company is more fairly complied with the accounting standards laid down by the AASB than the Westfield Corporation. On the basis of the information given this report, it can be observed that the Westfield Corporation has more transparent compliance of the Australian Accounting Standard Board (AASB) Standards as compared to Stockland Corporation (Drury, 2012). There is a huge difference in the disclosure statements and notes provided after the financial statements in annual reports of the two companies chosen in this report. For example, in Annual report of Westfield Corporation, there are clearly mentioned Australian accounting Standards Board codes being followed by company such as AASB 2015-3, AASB 2014-9, AASB 2014-4, AASB 2015-1, AASB 2015-2, AASB 2014-9, and AASB 2014-3etc. On the other hand, in annual report of Stockland Corporation, there is no any presence of AASB codes being followed by company. The Westfield Corporation has complied in better way with the standards laid down by the AASB then the Stockland Corporation. But at the same time, both companies have followed and applied the Australian Accounting Standards Board (AASB) standards in formation of annual reports and their financial reporting practices (Gullifer, and Payne, 2011). For example, most of financial statements of both the companies are framed in accordance to the AASB standards.
It can be recommended to organizations that they should clearly disclose the detail of AASB standards compliance. It would be helpful to them to create confidence among key stakeholders of business. In this report, it can be concluded that the both companies Stockland Company and Westfield Company are used and applied the AASB standards. On the basis of this report, it can be observed that the Westfield Company is further transparent compliance of the AASB standards as compared Stockland Company. Stockland Company does not effectively use the AASB standers in its business, which gives negative impact on stakeholders and journal public.
Conclusion:
From the analysis of annual reports of Westfield Corporation and Stockland Corporation, it can be concluded that the both companies have followed the Australian Accounting Standard Board (AASB) standards. Both the companies have used AASB (The Australian Accounting Standard Board’s) standards for preparing their final accounts. The AASB standards are intended to ensure consistent quality and authenticity of the financial reporting of different companies. So, strict compliance of annual reports of companies can ensure the protection of interest of different stakeholders of company.
Along with this, role of the Australian Accounting Standards Board (AASB) is also to ensure proper governance of Australian securities exchange. The conceptual frameworks are used and revised by the AASB for improving financial reporting in the business entities. The AASB disclosure transparency is high for Westfield Corporation. For example, this company has clearly mentioned different standards being followed in financial notes section of the annual report. These are not available in the annual report of Stockland Corporation. But, overall, it can be concluded that the both Westfield Corporation and Stockland Corporation have applied the AASB standards for the formation of their financial reports and for formation of their annual reports.
References:
Annual Report of Stockland 2016. Annual Report of Stockland Corporation 2015-16. [Online]. Available through: <file:///C:/Users/sd/Downloads/Results%20FY16%20Appendix%204E%20and%20Financial%20Report.pdf>
Australia, C., Staff, N., and CAANZ, C., 2017. Financial Reporting Handbook 2017 Australia. USA: John Wiley & Sons Australia, Limited.
Bardach, E. and Patashnik, E., 2015. A Practical Guide for Policy Analysis: The Eightfold Path to More Effective Problem Solving. US: CQ Press.
Bellandi, F., 2012. Dual Reporting for Equity and Other Comprehensive Income under IFRSs and U.S. GAAP. UK: John Wiley & Sons.
Brigham, E., and Houston, J., 2013. Fundamentals of Financial Management. Boston: Cengage Learning.
Drury, C., 2012. Management and Cost Accounting. Boston: Cengage Learning.
Fischhoff, B., 2012. Communicating Risks and Benefits: An Evidence Based User’s Guide. US: Government Printing Office
Geertz, C., 2016. The Interpretation of Cultures (Text Only). UK: HarperCollins UK.
Gullifer, L., and Payne, J., 2011. Corporate Finance Law: Principles and Policy. London: Bloomsbury Publishing.
International Ltd, P., 2016. Wiley IFRS 2016: Interpretation and Application of International Financial Reporting Standards. US: John Wiley & Sons.
Krakauer, J., 2011. Into Thin Air: A Personal Account of the Everest Disaster. London: Pan Macmillan.
Langdon, K., Bonham, A., and Epstein, L., 2011. Interpreting Company Reports For Dummies. US: John Wiley & Sons.
Pike, R., Neale, B., and Linsley, P., 2015 Corporate Finance and Investment: Decisions and Strategies. London: Pearson Education Limited.
Stockland, 2016. Stockland Corporation Annual Financial Report. Available through: <https://www.annualreports.com/Company/stockland> [Accessed 2 August 2017].
Westfield, 2016. Westfield Corporation Annual Financial Report. Available through: <https://westfieldcorp.staging.carbonhouse.com/assets/doc/AR16-Westfield-Corp-Financials_D9-474c90164f.pdf> [Accessed 2 August 2017].
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
