Usefulness of Financial Reports
BFA201 ESSAY PART B: THE RESEARCH ESSAY A THEORETICAL DISCUSION
Usefulness is the basic objective of financial accounting, according to the AASB s Statement of Accounting Concepts and Conceptual Framework. This essay discusses the theoretical principles and accounting rules underpinning financial reporting practices within the IFRS environment. Following the implementation of the International Financial Reporting Standards in 2005, many additional disclosure requirements were imposed on organisations which have proven to be costly and of little benefit to some organisations. Australia s new differential reporting framework is aimed at relieving these organisations of some of the disclosure requirements whilst remaining consistent with the basic objective. The purpose of this essay is to evaluate the objective of financial reports from a users and preparers perspective with particular reference to Australia s new differential financial reporting framework. Findings are that the qualitative characteristics that have evolved over time play an important role in determining the meaning of usefulness and that the differential financial reporting framework will have both positive and negative impacts on users and preparers of financial reports.
BFA201 ESSAY PART B: THE RESEARCH ESSAY A THEORETICAL DISCUSION
Financial accounting is the process of summarising the transactions that occur within an entity and presenting them in the form of financial reports. In preparing the reports, organisations are subject to various regulators, in particular the Australian Accounting Standards Board (AASB). The AASB has developed a set of accounting standards that are consistent with those developed by the international regulator - International Accounting Standards Board (IASB), with minor differences for use in the Australian context (Leo 2011). It has also developed Statements of Accounting Concepts (SAC) that defines a reporting entity and outlines the objective of general
Usefulness is the basic objective of financial accounting, according to the AASB s Statement of Accounting Concepts and Conceptual Framework. This essay discusses the theoretical principles and accounting rules underpinning financial reporting practices within the IFRS environment. Following the implementation of the International Financial Reporting Standards in 2005, many additional disclosure requirements were imposed on organisations which have proven to be costly and of little benefit to some organisations. Australia s new differential reporting framework is aimed at relieving these organisations of some of the disclosure requirements whilst remaining consistent with the basic objective. The purpose of this essay is to evaluate the objective of financial reports from a users and preparers perspective with particular reference to Australia s new differential financial reporting framework. Findings are that the qualitative characteristics that have evolved over time play an important role in determining the meaning of usefulness and that the differential financial reporting framework will have both positive and negative impacts on users and preparers of financial reports.
BFA201 ESSAY PART B: THE RESEARCH ESSAY A THEORETICAL DISCUSION
Financial accounting is the process of summarising the transactions that occur within an entity and presenting them in the form of financial reports. In preparing the reports, organisations are subject to various regulators, in particular the Australian Accounting Standards Board (AASB). The AASB has developed a set of accounting standards that are consistent with those developed by the international regulator - International Accounting Standards Board (IASB), with minor differences for use in the Australian context (Leo 2011). It has also developed Statements of Accounting Concepts (SAC) that defines a reporting entity and outlines the objective of general