The quality of this essay will be assessed based on the following criteria:
- Identify the implementation of GAAP in Australia.
- Explain why GAAP is crucial for financial reporting and business practices.
- Provide one example to illustrate the implementation of GAAP in the financial reporting of an Australian company.
- Give one example when GAAP is not used by an Australian company and explain how this will impact on its performance from the perspective of investors.
- Use paragraphs from the annual report, Australian Conceptual Framework, AASB 101 Presentation of Financial Statements and AASB 15 Revenue from contracts with customers, or other relevant AASBs as guidelines to support your discussion if it is necessary.
- Demonstrate effective communication, logical presentation and integrated evaluation.
The objective of this essay is to understand the Australian Conceptual Framework in accounting standard-setting and business practices. You should use the Australian Conceptual Framework and relevant AASBs to support your comments.
GAAP is accepted by many entities and business practices, which have set out fundamental accounting rules and principles to record and report business transactions in their accounts. GAAP provides guidelines regarding issues such as how and when assets, liabilities, income, and expenses are recorded, what are the measurement and valuation methods used, and what are the requirements for disclosures of financial information. GAAP adopted in Australian regulatory framework complies with International Financial Reporting Standards (IFRS) and the Australian version of IFRS is prescribed by the Australian Accounting Standards Board (AASB). You can find Australian Conceptual Framework and a list of AASBs from the link of the website:
http://www.aasb.gov.au/Pronouncements/Conceptualframework.aspx and http://www.aasb.gov.au/Pronouncements/Current-standards.aspx.
It is a legal requirement for listed companies to comply with the AASB / GAAP (as per section 296 of the Corporation Act) in Australia.
However, from the survey conducted by Coulton, J et al. (2014), they found an increasing number of listed companies used non-GAAP in their earnings enouncement. More than 40% of the largest 500 listed companies on the Australian Stock Exchange (ASX) used at least one nonstandard metric in the earnings announcement. Refer to the source:
To complete this essay, you should find a 2017/2018 annual report of a listed company on the ASX. Reserve your chosen company on the discussion board. You can’t choose the company if it has been chosen by another student, so it is on a first come first serve basis.
You are required to answer the following questions:
- Discuss the identification and composition of incomes of the chosen company. Introduce the recognition and measurement requirements of incomes used by the chosen company with supported documents. (600 words)
- Explain what GAAP is and why GAAP is crucial for financial reporting and business practices in general. (600 words)
- Provide one example to illustrate the implementation of GAAP in the annual report of your chosen company, and explain with supporting references.
- Give one example when GAAP is not used by your chosen company and explain how this will impact on the financial position, performance, and valuation of the companies from the perspective of investors. (600 words)
- Give an example of a change of GAAP applied by your chosen company and explain the implication of this change on the company’s financial position and performance. (600 words)
• This is an individual assignment.
• Word limit should not be less 10% (2,700 words) or more than 10% (3,300 words) of word limit, excluding reference list. A loss of 10% of the total available marks will apply if you didn’t follow this instruction.
• Referencing: If there are any references used in the essay, the references should follow the Harvard Referencing Style.
• Submission: Please submit your essay online through the link for Turnitin assignment submission provided on the Blackboard site.
• You must use the electronic Assignment Cover Sheet provided, fill in details, and then make this sheet the first page of your assignment. Do not send it as a separate document.
• The file name should include (in order) initial, your surname, and your student number.
For example: ‘BParker1235456'.
• Your assignment must be submitted as a Word document. If you wish to submit in any other file format, please discuss this with your lecturer before the assignment submission date.