Organizations Transport Sector In Australia-Myassignmenthelp.Com

Question: Discuss About The Organizations From Transport Sector In Australia? Answer: Introduction: The accounting regulating body is prescribed by the accounting standard for ensuring the involvement of standardized regulating body. Accounting standards enable better understanding of the accounting treatment. It is essential for organizations to make their accounting disclosures by aligning with accounting standards. Prudence is embedded in accounting standard itself and in the application of standard, prudence is exercised by prepares of financial statements. It has been widely agreed upon that there exists advantage of exercising prudence in the application of standards. The present study comprehends the overall operational procedures of two ASX listed companies that is K S Corporation and Transurban Group. K S Corporation is a company that is engaged in logistics, transport and contract management and Transurban Group deals with the development and management of roads networks in Australia and North America. It is the accounting regulating body that prescribes the accounting standard for ensuring that organizations adopts the standardized accounting practices and for the key changes, there is development. It is essential for organizations to consider overall manner of disclosure and principles for understanding the accounting treatments that is done based on accounting standards (Ahmedet al. 2013). It is required by financial report of companies to involve the attribute of prudence. However, sometimes accountant for the preparer of financial statements manipulate it because of their own personal gains. Analyzing the conceptual framework of K S Corporation and Transurban Group: Conceptual framework of preparing the financial statement has went some changes and has been revised in year 2016. When making judgment under uncertainty conditions, prudence is considered as the best attribute and for achieving neutrality in the financial statements, it is considered the best. It requires that the liabilities and assets of organizations should not be overstated and understated. There are several items that the conceptual framework requires to be recognized. The financial report of K S Corporation has not been impacted by the amendments that have been made to the revised conceptual framework and their application has left the reports indifferent. The above figure shows the basis of preparation of financial report of organization. Report complies with the Australian Accounting standards and Corporation Act, 2001. Historical cost forms the basis of preparation of financial statement. Furthermore, financial report also complies with the International financial reporting standard issued by International accounting standard board and Australian accounting standard. The annual report of K S for period ending 30th June, 2016 have not been adopted the recently amended and issued Interpretational and Australian accounting standard. Consolidated financial statements of the group comprise of subsidiaries of K S Corporation limited and the group itself. New principal standard AASB 9 has replaced AASB 139 and the replacement and amendment does not seem to have any impact on financial statement of organization. The preparation of financial statements is the responsibility of directors of company that helps in giving true a fairer view of financial statements that is prepared in accordance with the Corporation Act 2001 and Australian Accounting standard. Preparation and presentation of financial statements comply with the international Financial Reporting standard (Penman and Zhu 2014). The above figure depicts the director report of K S Corporation for year 2015. The report mainly states and presents the authenticity and financial report viability for financial year 2015. It is states by the directors of organization that report has been prepared in accordance with the guidelines that is set out in the ASIC RG247. The financial report has been so designed to provide shareholders with consider and clear overview of the financial position, business operations. The principal activities during the financial year course included contract management. Logistics, transport and fuel distribution (Bauer et al. 2014). Organization has been subjected to few fraudulent misappropriations that has been disclosed to ASX. There are many components in the director report that has been effectively complying with the regulations and laws laid out by Australian government. While disclosing the components of report, organization is required to have some ethical considerations as per th e rule of AASB. Strategic report provided in the annual. The directors also authenticate report of company. Authenticity is indicative of the fact that directors of organization is giving endurances and accepting the results depicted by the future projects (Huntonet al. 2014). It has been ascertained that many activities leading to unethical transactions by directors have reduced in recent year due to new insider trading implementation. The above figure depicts the remuneration report of K S Corporation that is prepared according to the regulations and requirements of Corporation Act, 2001. Remuneration payable to non-executive directors is payable as per the listing rules of ASX and its constitution. External control is sought by organization such as Remuneration and nomination committee in determination of remuneration payable to directors (Dovbiy 2014). The above figure depicts the independent auditors report of K S Corporation limited that demonstrates the reporting on financial report presented in the annual report. Reports provides with the discussion of responsibility of directors in preparing the financial statements. preparation of financial statement ate enabled by directors of company that they are free from material misstatement and are prepared in accordance with the Corporation act 2001 and Australian accounting standard. In the opinion of auditors, it is identified that the financial report of organization is prepared according to the corporation act, 2001 that provides the true and fair view of financial position of consolidated entity along with their financial performance for particular financial year (El-Firjaniet al. 2016). It was ascertained by auditors that financial report complies with the International financial reporting standards and Australian accounting standard. Remuneration report of K s Corporation als o complies with the section 300A of the corporation act, 2001. Analysis of conceptual framework of Transurban Group: The interpretation of AASB and amended accounting standards are adopted by the organization in effect from July, 2014.The Transurban group has adopted the revised accounting standards that have been effective since the preparation of annual report 2014. It is confirmed that when the occurrence of payment is triggered by any activities, then the liability is recognized for paying a levy.Financial statements of Group is prepared according to Australian accounting standard, corporation Act, 2001 and in accordance with any other Australian accounting standard brad authoritative pronouncement. Organization has adopted all the relevant accounting policies that has been disclosed in the financial statements (Dyckman and Zeff 2014). Furthermore, Transurban Group for presenting the consolidated financial statements under one section has also applied under ASIC Corporation. International financial reporting standard also forms the basis for preparing the financial statements. revised accountin g standard has not amended or changed the accounting policies (Henderson et al. 2015). Some of the accounting standards and interpretations that are issued but not yet effective is depicted in following figure. The directors report discloses the proportional and statutory results of Transurban Group. Report discloses the business principal activities, financial and overview. Strategy and value propositions of business is also mentioned in the directors report. However, it does not disclose the basis of preparation of finance report and the compliance of organization with the accounting standards. The above figure demonstrate the remuneration report of Transurban group along with its structure and framework. The framework of remuneration report revived strong support in the annual general meeting and it is considered that they offer a range of mechanisms that motivates executives in delivering outstanding results and helps in balancing sensible management of risks. A combination of incentive is provided in the framework of remuneration report. There are three components involved in the framework of remuneration of each senior executives. Area of accountability of the remunerations involves the individual key performance indicators (Bromwich and Scapens2016). The remuneration report helps mainly in the identification of remuneration payable o non-executives directors of company and it can be seen that the remuneration payable in year 2016 is more than remuneration paid in year 2015. The remuneration payment does not involve the issuing of shares to non-executives directors of company as per the declarations according to the Australia Corporation Act 2001. The act also mentions the method that are applied by the organization in preparing the financial report. Free floats of shares of company are reduced with the help of remuneration report in the event of any bad news. The above table depicts the remuneration payable to senior executives of Transurban Group. Groupn makes the annual review of remuneration framework by taking into consideration various factors such as expectation of market, feedback of shareholders, regulatory development and considerations of security holders. In year 2016, remuneration recommendations were not provided to human resource and remuneration committee by consultants. The board approved revised remuneration package to senior executives in year 2016. There was an increase in remuneration of 3.69% in the previous year. The performance of group is linked to variable remuneration payable to executives. Prudence and its impact on addressing disparity in corporate reporting: Prudence is regarded as the desirable attribute for preparing the financial report of organizations. Unethical evaluation of the liabilities and assets of organization are reduced by the means of prudence. In order to achieve neutrality, prudence is considered to be relevant. The proposed changes in the conceptual framework requires the companies to reintroduce this particular explicit notion of reference. Exercising prudence by organizations would help in supporting neutrality. Organizations exercising prudence will not be able to understate their income and assets and overstate their liabilities and expenses. The reason is attributable to the fact that in future periods such misstatements would lead to understatement of expenses and overstatement of income. Organizations are required to measure the issues relating to the prudence so that they are able to address some of the existing disparities in the preparing of financial reports. There are many uncertainties that inevitably surrounds the circumstances and events taking place in organization and it is essential for the financial statements prepares to content with them. Some of the circumstances are probable life of assets, probable number of warranty claims that may arise collectability of doubtful receivables. Disclosing the extent and nature of such circumstances and exercising prudence in preparing financial statements would help in recognizing such types of uncertainties. Prudence is regarded as the degree of inclusion of caution when making judgment about some uncertainty conditions and estimating the figures. Prepares of finance statements would not able able to create excessive provisions or make excessive reserves or deliberately overstate assets and income an understate liabilities and expenses as they would not have reliability quality as the financial statements would be neutral (Yingying2014). However, there are critics related to the inclusion of prudence in preparing finance statements, as it would lead to inconsistent application. It has also been interpreted that users of financial statement will face difficulty in assessing their financial performance as exercising prudence would lead to greater subjectivity. The proposed draft has come up with the reinstating prudence in the conceptual framework (Plumlee and Reckers 2014). Concerning the above-discussed facts, it is required by organization such as K S Corporation and Transurban Group to reinstate prudence and include it in their financial statements. Prudence helps in addressing the concern of downside risks of investors. They need to explain the inclusion of prudence in their conceptual framework. It helps in aligning the managers and shareholders interests and reducing moral hazard. It is considered by IASB that organizations is able to achieve neutrality in application of accounting policies by including prudence. Cautious prudence is another aspect that has helped in exacerbating the diversity of usage in this term. Many have argued that neutrality cannot be bring by inclusion of prudence and hence asymmetric is regarded as essential characteristics of relevant financial information (Lukin 2014). However, this concept of prudence in the conceptual framework is criticized by IASB. Comparing and contrasting two annual reports: The basis of preparation of financial report of K S Corporation is in accordance with the Australian accounting standard and Corporations Act, 2001. Except for building and lands, the components of finance statements have been measured at fair value and prepared on historical cost basis. On the other hand, the financial report of Transurban group have been prepared according to Australian accounting standard and their authoritative pronouncements. However, in the summary of the disclosure of accosting policies of Transurban Group, there are more disclosures. There are disclosures about adoption of all the relevant accounting policies and their disclosures in the financial statements. Both the organization complies with the International Financial reporting standard issues by board of International accounting standard. The notes to financial statements of both the organizations discloses about the accounting policies. From the evaluation and analysis of directors report of both the organization, the financial outcome can be easily ascertained. It can be seen that net profit after tax and operating revenue of K S Corporation has increased in the current year as compared to previous year. Transurban witnessed an increase in the review and profit after tax in current year as compared to previous year. However, the director report of Transurban make additional disclosures of statutory and proportional results of organization (Chandler 2014). Therefore, there is difference between the conceptual frameworks of both the organizations in some aspects. Recommendation: The accounting standard has introduced some then changes and concepts that should be included by the prepares of financial statement in their annual report. It is required by the entities to retain the existing definition of residual framework and equity in their conceptual framework. Concerning to equity, organizations should update measures of each class of equity claims and updating of any measures should be recognized. In the conceptual framework, prudence should be included while preparing the financial statements. This is so because for overcoming bad accounting practice, it is essential to practice prudence. According to the reintroduction, prudence should be included in the conceptual framework of organizations as it helps in carefully reflecting uncertainty faced. Neutrality of financial statements is affected in reasonable manner as there is asymmetric treatment concerning valuation of revenues and assets. Conclusion: The above report discusses about the conceptual framework of two-selected organization of transport sector that is K S Corporation and Transurban Corporation. It has been analyzed that whether the accounting standards of organizations complies with the requirements of AASB. 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