Introduction – Importance of Financial Reporting

Providing and Explaining comments regarding the aforementioned statement 

It can be said that information provided under a annual or financial report are generally used by the stakeholders of a company. It can also be said that information provided in the annual report of the firm help organization to effectively make economic decisions. It can be said that it is the responsibility of the company in respect to reporting information to the stakeholders is immense. They have to maintain certain decorum while reporting the financial to the stakeholder. This is known as social responsibility of the company towards their stakeholders at Time of financial reporting. It can be said that IASB conceptual framework regarding the general-purpose financial reporting system prescribes that one of the objective of the said reporting is to maintain such responsibility towards the stakeholders of the firm. It is very important that every single bit of financial information regarding the financial position of the firm is reported to the stakeholders in an efficient manner as the following will help the company in making future economic decision and association with the company. It can be said that the statement made above is correct and it can be justified by stating that the management or the board of directors should be fair and responsible in maintain social decorum of financial reporting and creating a trustworthy relationship with the following (Nieman and Fouché, 2016). It can further be stated that the company as a reporting entity should follow the certain criteria to develop a fair financial report giving fair view of the financial position based on which reasonable decision are made. In this sense it can be said that AASB prescribes that the objective of general purpose financial reporting is to promote social accountability of financial reporting activities carried out by a firm. This will eventually better the quality of disclosure increase the trust relationship between the stakeholders as well as the companies. This is also a objective of GPFR to create a proper reporting and communication bond between the stakeholders and company (Gamayuni, 2018).  

Based on the analysis of Australian financial regulatory framework, explaining why it is necessary to establish and develop AASBs in Australian business practices

It can be said that through the guideline provided by the Australian Accounting Standard Board companies are able to operate significantly, which helps the firm to efficiently operate there accounting system within the firm. AASB is essence of business practices that are conducted within Australian territories as it binds the company under a proper framework to disclose financials and accounts of the business activities carried out by the following in the previous years. It can be said that AASB is considered to be a efficient set of accounting standard which gives companies the liberty to to operate in a manageable way by creating proper accounting records in an significant way. The Australian financial regulatory framework has an objective of protecting the investor and consumer that sets out mandatory policies that are to followed by company to maintain the social responsibility that includes the process of financial reporting too.It can be mentioned that in a coordination consumer and investor protection. AASB helps the firm to properly disclose financials of the firm to the investors that helps the firm to display correct and efficient knowledge to the stakeholder in order make sure that proper knowledge regarding the company’s financial status is shared with its stakeholder. Hence it can be said that AASB plays a significant role in a company’s financial report which helps the company to share adequate and correct financial information to the stakeholder for the purpose of protecting the stakeholder rights under the Australian financial regulatory framework (Henderson et al. 2015).

AASBs in Australian Business Practices

Examining what types of information are provided in the annual report of the chosen company

The Star Ent. Group is a ASX listed company which operates in the Australian market hence the company is based in Australia and has to follow but AASB as well as IFRS in their financial reporting process. The company also complete to the general-purpose financial reporting rule as prescribed by AASB (Starentertainmentgroup.com.au, 2018). It can be said that as the company is big company an external auditor also conducts audit process in order to determine the viability of financial report created by the firm in the annual year that is conducted in benefit of the stakeholders. It can be said that following is done to maintain the trust of the stakeholders on the financial report of the firm. There are various types of financial information provided by the firm in the annual report in accordance to the IFRS reporting system (Starentertainmentgroup.com.au, 2018). The annual report of the company consists of Directors remuneration report that shows the remuneration done to the board of directors and executives of the company. The annual auditor’s remuneration report is also provided under the annual report of the firm. After this there is a section in relation to the financial reporting of the firm in which the auditors and consolidated financial statements of the firm is provided which consist of Profit and Loss Statement, other comprehensive income statement, Changes in equity statement, cash flow statement and financial position statement which is the balance sheet of the annual years this gives overview of the company’s financial position. Notes to financial statement are also provided for in depth knowledge of financial procedures undertaken which include companies valuation procedure, impairment testing, depreciation valuation and others (Leuz and Wysocki, 2016). Other than Financials, the annual report of this company also has and Auditors report which expresses the viability if the financial report the independence of auditing procedure and key audit matter identified by the auditor giving a fair view of the financial reports. The annual report contains all the future goals and objectives of the firm and evaluation of the companies performance in the recent years. Hence it can be said that the annual report of Star Ent Group provides all the relevant information regarding the corporate governance of the firm, board structure within the firm, remuneration policies in the firm, financial position and auditors investigation information’s too.

Features of Star Entertainment Group Annual Report

Explaining what are the incentives for the managers to disclose certain type of information in the annual report

As per the Remuneration policy of the firm it can be said that the remuneration of executives as well as the managers are mainly performance based. It can be said that performance base operations with the firm will derive higher incentives and remuneration. Although there has been no clear indication of the incentives which are received by the executive by disclosing certain types of information but it is very prominent that the for voluntary or corporate disclosure under the General purpose annual report executive do receive incentives base on the amounts and quality if information provided by them behind the requirements of annual report in order to make the annual report transparent to the stakeholders. It can be said that compliance to the GPFR and increase the essence of information supply within the stakeholder units increases the performance of executive to perform the reporting job in this sense increase performance increases the amount of incentives received by the executive in an annual year. It can be seen in the annual report of the firm the corporate governance objective within the company is to work in the stakeholders benefits this means that company is focused deriving highest quality of service and transparency to the stakeholders and information related to the company also increase the transparency. Hence executive working for same disclosure receive voluntary incentives within the firm (Giner et al. 2016).

Discussing how the investors or securities markets will react to the disclosures of certain information provided in the annual report

It is very evident that stakeholder use annual reports for making future decision and for knowing the current financial, strategic and managerial position of the company. Most of the stakeholder use information derived from the annual report to make economic decision in regards of the company. By economic decision it means the investor seem to look at the financial information provided by the company in the annual report to judge the financial position of the company bin the market based on which future investment in the company is decided by the firm. It can be further stated that the some stakeholder even use the information provided by the company in making decision related to the future association with the company. The stakeholders also use annual reports of the form to identify the key existing problems and the changes which are required by the company using this the following matter is discussed in annual general meeting to ensure everything is properly operating within the firm. It can be said that mainly annual report are used by the stakeholder to make economic decision in regards of the company in which they have invested in (Zhang and Andrew, 2014).

Conclusion:

Concluding in the light of above context it can be said that the annual report are used generally by stakeholder for economic decisions hence its is important that the company report everything is fair manner. This will display a fair position of the company giving a unbiased view of the company to the stakeholder for making future decisions.

Financial reporting is considered as one of the most important phase in business cycle of a organization. It can be further stated that financial report is done to ensure every information passed displays the current financial position of the firm in a fair manner. Financial report should be done considering the parameters like information, in depth analysis and fair valuations of financial reported. In the current assessment, there will be discussion over aspect relating to reporting financial information in companies the chosen company for the current assessment is The Star Ent Group.

References

Gamayuni, R.R., 2018. The Effect of Internal Audit Function Effectiveness and Implementation of Accrual Based Government Accounting Standard on Financial Reporting Quality. Review of Integrative Business and Economics Research, 7, pp.46-58.

Giner, B., Hellman, N., Jorissen, A., Quagli, A. and Taleb, A., 2016. On the ‘Review of Structure and Effectiveness of the IFRS Foundation’: the EAA’s Financial Reporting Standards Committee’s View. Accounting in Europe, 13(2), pp.285-294.

Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting. Pearson Higher Education AU.

Leuz, C. and Wysocki, P.D., 2016. The economics of disclosure and financial reporting regulation: Evidence and suggestions for future research. Journal of Accounting Research, 54(2), pp.525-622.

Nieman, G. and Fouché, K., 2016. Developing a regulatory framework for the financial, management performance and social reporting systems for co-operatives in developing countries: A case study of South Africa. Acta Commercii, 16(1), pp.1-7.

Starentertainmentgroup.com.au, (2018) THE STAR  Avaialable from https://www.starentertainmentgroup.com.au/annual-reports/ Accessed on 15 September 2018

Zhang, Y. and Andrew, J., 2014. Financialisation and the conceptual framework. Critical perspectives on accounting, 25(1), pp.17-26.