Free Essay in Accounting: Basis of Preparation of the General Purpose Financial Reports

The general reports have been aligned to all requirement of corporate Act 2001 and measurement and recognition of all applicable Australian Accounting Standard board to special reporting rather than general reporting, which create vacuum and selective application of AASB inter alia. This implies that the principles applicable are clearly applicable in favour of the equity owners only. There is a disclaimer that the report are usable only by sole member.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Order now

The directors contravene the principle of prudence over materiality, where they prepare financial reports on selective bases of preparation of special financial reports and measuring and recognition of transaction which is only in the best interest of the sole. The interest of the other financially linked stakeholders are unfairly and deliberately ignored

This group is a listed company and the reports are supposed to be designed for general usage, there no selective application of AASB as well as 2001 Corporate Act.

Do you agree with the directors opinion that this company is non reporting entity?

I disagree with the directors opinion; that ACN holding is not a reporting entity.

ACN holding is a large proprietary company that is not a disclosing entity according to paragraph 10 of the Statement of Accounting Concepts, Definition of the Reporting Entity, Prepared by the Public Sector Accounting Standards Board of Australian Accounting Research Foundation and by the Accounting Standards Review Board. However, in paragraph 12, identifies that the mere classification as a sole propriety company is not adequate. If there exist some users, deemed to depend on general purpose financial reports of the company the entity is deemed to be a reporting entity inter alia. Cite Paragraph 13 of AASB Definition of the Reporting Entity, It is a concept which is tied to the objective of general purpose financial reporting and, as noted in paragraph 12, is a concept which requires all entities with users dependent on general purpose financial reports for information to prepare such reports. It is explicit that ACN Holding is listed company and has tonnes of users, such as the shareholders of target companies, suppliers, customers, potential investors, current investors, government, foreign investors, who significantly depend on its annual financial reports to make financial decisions, therefore the management are obliged to provision of general purpose financial reports per se.

The tax law suit pending hearing alleging that MNC such as ACN holdings are not paying their fair value of tax in Australia, which interpret that the comprehensive income are understated, which is a shadow of the allowance allowed by the inadequacy of the AASB, Definition of the Reporting Entity, provisions.

Reasons allowing directors to deem the Holding as a non-reporting entity:

The provisions of the Statement of Accounting Concepts, Definition of the Reporting Entity, Prepared by the Public Sector Accounting Standards Board of Australian Accounting Research Foundation and by the Accounting Standards Review Board, doesnt provide definite clear legally enforceable guidelines. The matter is left to argument. Directors are agents to Equity owners, its best serves the interest of the principle to classify the Holding as a non-reporting entity, based on the operations of the agency principles. Therefore it is both their duty as well as absolutely prudent action.

The provisions always require the entity in question first to assess the implication of adoption any accounting policy before adopting it. The directors in the year 2014 annual reports disclosed that they are in the process of assessing adoption and application of new amendments of accounting policies, which ,explicitly, they have a system in place and premature adoptions cannot be just effected without full and detailed assessment. Show of interest and will to reconsider the bases of preparation of financial reports from special report format to general purpose.

Significance of NAH consolidating NCAPL, yet without any equity Interests:

The 2014 report note 20, states that the company has no legal ownership over NCAPL, but has constitutionally derived power from the companys memorandum of association and article of association to appoint and remove directors as well as operational control over the NCAPL Company.

The availed reports have a disclaimer, that they are prepared and addressable for use only to sole members, therefore, they are a special report. In the general reporting of financial reports it is not prudent to prepare consolidated financial statement reports without acquisition of prescribed share interest.

Sole member, needs to assess the implication of a potential merger or acquisition, hence the consolidated report is an appropriate presentation of such financial report.

Do you agree with Equity Appropriation of Reserve of $1.357B?

I agree.

This is a provision figure in a special report, of course it is justified by such a reason. However, if the effects of AASB were applied to the letter the figure could be lesser. This appropriation is erroneous since, it has abscond AASB directive, as at 1st January 2014, all for profit entities shall base all their financial statement on all AASB amendment and Corporate Act 2001, which has not been followed inter alia.