Objective: The objective of this essay is to provide an understanding of the implementation of General Accepted Accounting Principles (GAAP) in financial reporting and business practices in Australia.
Assessment criteria: The quality of this essay will be assessed based on the following criteria: o Identify the implementation of GAAP in Australia. o Explain why GAAP is crucial for financial reporting and business practices. o Provide one example to illustrate the implementation of GAAP in the financial reporting of an Australian company. o 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. o Use paragraphs from the Australian Conceptual Framework, AASB 101 Presentation of Financial Statements and AASB 15 Revenue from contracts with customers as guidelines to support your discussion if it is necessary. o Demonstrate effective communication, logical presentation and integrated evaluation.
Content: 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/Conceptual-f… andhttp://www.aasb.gov.au/Pronouncements/Current-stan… . 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 non-standard metric in the earnings announcement. Refer to the source: 6http://newsroom.unsw.edu.au/news/business-law/comp… To complete this essay, you should find a 2015/2016 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 others based on first come first serve.
You are required to answer following 4 questions: 1. Discuss how to identify an income of a company. Introduce what are the recognition and measurement requirements of incomes used by the chosen company. (150 words) 2. Explain why GAAP is crucial for financial reporting and business practices in general. (250 words) 3. Provide one example to illustrate the implementation of GAAP in the financial reporting of your chosen company, and explain. (250 words) 4. Give one example when GAAP is not used by your chosen company. Explain how this will impact on the performance and valuation of the companies from the perspective of investors. (350 words) Reference: If there are any references used in the essay, the references should follow Harvard Referencing Style.