Contemporary Accounting Theory for Pengurusan -myassignmenthelp

Question: Discuss about theContemporary Accounting Theory for Pengurusan. Answer: Introduction The presence of a strong regulatory environment in the financial reporting is essential to ensure that needs of the users of the financial statements are adequately met. The regulatory framework overviews and monitors the procedures used by business entities for developing their general purpose financial reports. It is required to be implemented by the business entities for ensuring that the information given in the relevant economic area is reliable and have consistency with the requirement of the financial reporting standards (Boelens, 2004). There are large numbers of companies that are established in home country as well as in other countries, which make highly important for these companies to adhere with all the regulatory requirement of financial accounting and prepare their financial statements that can be accepted at international level with any major discrepancies. Regulatory framework also increases the confidence in the financial reporting process and also regulates the be havior of companies towards their investors. The regulation capture theory states that regulations are manipulated in order to fit the requirement of those who are impacted by those regulations (Evans, 2012). The report, in this regard, provides a discussion of the regulatory framework in developed countries like Australia and Singapore. Report also includes discussion on the regulatory capture theory and characteristics that show that regulatory environment might have been captured. Literature review of regulatory environment for financial reporting in Australia and Singapore The major issues or problems find in each of countrys regulatory framework of financial reporting As reported by the Financial Reporting Council established under the Australian Government there are many fundamental issues in the regularity environment of financial reporting. It has been found that there are range of different thresholds in different entity types that have inconsistent reporting and audit requirements. The differences in these thresholds and reporting requirements is not due to the different risk characteristics or any other factors that best describes the reasons of this issue. There are many differences for the audit requirement under different class of entities (Wirth Mattessich, 2006). There are some entities that requires audit to be performed by the registered company auditors while there are some companies that requires audit to be performed by only the member of Chartered accountants ANZ, CPA or IPA (Nobes, 2011). The regulatory framework of financial reporting developed by the respective bodies in Australia has many persuade problems that make it diffic ult for the different entities to choose which reporting standard is applicable on them or which standards are not applicable on them (Zeff, 1993).There is major issue related with the reporting requirements for different type of entities. Entities that are listed, not listed, government companies and other entities that defined as the reporting entities are required to lodge the financial reports on the public records (Wirth and Mattessich, 2006). All the reporting entities provide general purpose financial report with application of all the standards while there are some reporting entities that applies only the full recognition and measurement requirements with minimum disclosure. Entities that are not reporting entities have been provided relief from providing general purpose financial statements with full disclosure and they can submit special purpose financial reports (Haswell, S McKinnon, 2003). The Singapore Financial Reporting Standards (SFRS) framework was first introduced in year 2012 by the Accounting Standard Council (ASC). The MFRS is fully compatible with the international financial reporting standard (IFRS) but there are certain issues that provide relief to certain category of entities. There is no certain reporting standards developed by the ASC but there are separate standards for each category of entities. There has been major issue that gives rise to conflict with the treatment of the Islamic Banking and Finance in relation to measurement, recognition and disclosures (Saudagaran, S. Diga, 2002). The main problem is that Islamic banking regulations are based on Syariah that does have compatibility with the SFRS framework. As reported by the Hanefah and Singh (2012), there are no major issues found in the Singapore reporting framework. Author has claimed that Singapore is on the right track with no consistent issues with the regulatory framework and over the tim e Singapore Accounting Body will built more strong financial reporting framework (International Monetary Fund, 2004). Working of Regulatory Environment in each of the selected Countries Both the selected countries have their own regulatory body that governs the practices of financial reporting in their respective countries. In Australia, Australian Accounting Standard Board (AASB) governs the regulatory environment of financial reporting and provides the standards that meet the compatibility with IFRS accounting standards. While in Singapore there is Accounting Standard Council that develops and governs the accounting reporting requirements. AASB has provided fully compatible accounting regulatory framework and accounting standards that fully compatible with the requirement of the IFRS but there are some inconsistency in regards to favor provided to some special class of entities in relation disclosing requirements and preparation of financial statements (Tanaka, 2007). So it is important that AASB must review their accounting framework legislation and make the required changes so that all these inconsistency can be removed. In Singapore there is no combined account ing framework for all the entities but they have separate legislation for different class of entities. It is suggested that all the legislation must be combined to form the proper framework that is fully compatible with the IFRS (Financial Reporting Council, 2014). Progress of both countries in adoption IFRS framework As reported by the AASB, Australia has adopted the IFRS from 1 January, 2005 and it was decided by the FRC Board in year 2002. The AASB framework of financial reporting has made the required changes in order to comply with the IFRS but there is some inconsistency with the IFRS that requires review and certain changes in upcoming years. In Singapore there is no proper accounting framework and it is developing phase to adopt the IFRS in the existing accounting regulatory framework (Cortese, Corinne Irvine, Helen, 2010). Regulatory Capture Theory and Characteristics Indicating that Regulatory Environment is Captured The theory of regulatory capture was given by George Stigler, an economist, to describe the impact of the regulatory bodies on the industries that they are regulating. The theory has stated that regulatory capture occurs when a regulatory agency that was established to promote public interest act to provide benefit to the industry that it is regulatory in contrast to maximize public interest. The public interest agencies that are controlled by the industry for which they were established to regulate are known as captured agencies. The theory has regarded the regulatory agencies to be dominated by the producers that acts in accordance to their needs and requirements (Gaffikin, 2005). Thus, they are utility maximizes, that is, they aims to maximize their profit by marinating their political power. Thus, they seek to act in a direction that promotes the welfare of the groups who are positively impacted by their regulatory decisions. As such, regulatory agencies are captured by the inter ests of the specific groups that are regulated by them and as such they aim to maximize their wealth (Evans, 2012). The characteristics indicating that a regulatory environment is captured are subsidies realized by specific industry groups, restricting the entry of the new firms, suppressing the substitute and competitive products, encouragement of complementary products and fixation of price (Godfrey Smith, 2005). The theory of regulatory capture can be effectively understood in the context of the public choice theory asp per which the actions of the government bodies are influenced by maximizing their own welfare. Thus, the regulatory goals established by the captured agencies are developed to maximize their own wealth or income and thus they serve private interests in comparison to the public interests. As such, the theory can be used for examining the behavior of the regulatory agencies in different environment and thus predicting whether it is being captured or not (Conceptual Framework for Financial Reporting, 2014). Analysis of Australia and Singapore environment using Capture Theory The Australian Financial Reporting Council decision to comply with the International Financial Reporting Standards (IFRS) is to improve consistency of Australian accounting standards in the year 2005. The decisions has largely shocked the business community as the council has declared to comply with IFRS standards at a time when Australia has developed most efficient financial reporting system. Thus, it has been cited that the change proposed by ASIC is under the political initiatives for serving the interests of the various political bodies and therefore the Australian regulatory bodies are regarded as being captured (Jones Higgins, 2006). The political bodies include the different agencies that are benefitted from the proposed changes in the Australian financial reporting framework. The AASB mainly aims to comply with the IFRS as per the European Union (EU) goals adopting international accounting standards. As such, Australia is aiming to secure its competitive position in the int ernational market by adopting IFRS (Sacer, 2011). The adoption of such a change seeks to provide maximum benefit to the foreign investors as they can easily compare the performance of the companies on the basis of IFRS standards. As such, it would helps in seeking foreign investment and promoting the growth of the Australian business companies. In addition to this, the industrial sector in Australia would realize the cost benefit involved in reconciling of financial statements between various reporting regimes (Zarb, Pagiavlas, 2003). Therefore, it can be said that Australian financial reporting environment is being captured by the regulatory bodies that aims to secure the competitiveness of the Australian business companies. However, the regulatory bodies are not placing emphasis on the negative implication such as loss of competitive advantage of Australia due to its efficient financial reporting framework (Lonergan, 2003). On the other hand, the financial reporting framework in Singapore is regarded to be less captured as it is mainly aiming to serve public interest rather than private interest of the associated party groups. The Accounting Standards Council (ASC) is largely held responsible for developing accounting standards in the country. It is developed as per the public interest in accordance with the Singapore corporate governance and financial reporting framework. The ASC has adopted Singapore Financial Reporting Standards, the financial Reporting Standards (FRS) and a spate set of financial reporting standards for small business entities of SRRS (Embong Rad, 2013). In addition to this, ASC has also developed accounting standards for charities, co-operative societies. Thus, ASC is acting in the interest of promoting public welfare rather than seeking to cause benefit to Singapore business companies for maximizing its own personal motive of wealth or income. Therefore, it can be said that Singa pore financial regulatory environment is less captured in comparison to the Australian financial reporting environment (Martnez-Ferrero, 2014). Conclusion Thus, it can be stated form the overall discussion held in the report that there are wide differences between the financial reporting system of Australia and Singapore. The Australian Reporting Council is emphasizing on complete compliance with IFRS standards for promoting the global competitiveness of Australia. This is largely directed by the political influence of the EU and thus AASB is seeking to gain benefits of IFRS through its compliance in the Australian financial reporting system. Therefore, there is a presence of regulatory capture in the Australian financial reporting environment because the regulatory bodies in Australia are seeking for their own benefits through promoting the growth of the Australian business companies. They are not emphasizing on ensuring the presence of accountability and reliability within the financial reporting framework and only on boosting the growth of the Australian companies on an international level. This is not a good sign for Australian rep orting environment as it will tend to weaken the financial reporting framework within the country in the long-term. On the other hand, the financial reporting framework within Singapore is more transparent and accountable as compared to that in Australia. The Accounting Standards Council (ASC) in Australia has developed Singapore Financial reporting Standards as per IFRS but is not emphasizing on its adoption for realizing benefits through improving the competitiveness of Singapore companies at international level. There is also separate set of standards for small entities as per their regulatory environment and therefore there is presence of more reliability and transparency within the business operations of Singapore companies. As such, it can be stated that financial reporting environment in Singapore is less regulatory captured as the regulatory bodies are emphasizing to promote public rather than private welfare. References Boelens, S. (2004). Quality of Financial Reporting: measuring qualitative characteristics. Institute for Management Research. Conceptual Framework for Financial Reporting. (2014). Retrieved 9 April, 2018, from https://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf Cortese, Corinne Irvine, Helen J. 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