ACC514 : Finance - Newsletter And Financial Statement - Assesment Answer

Marketing Case Study Assignment

Assignment Task

The regulatory environment for financial reporting?

Preparation of statement of financial positions and the statement of profit and loss and other income.?

Introduction

In this detailed assignment, the focus has been laid on the regulatory environment for financial reporting in which a newsletter is prepared that helps to identify and describe the development and changes in the financial reporting for the period 1st May to 31st July 2016. The potential sources for the financial reporting are analysed and the various factors which are required to be considered or not required are discussed in this assignment. The statement of financial position and the statement of profit and loss is presented in the project that helps to understand the financial condition of Swish Ltd.

Question 1: The regulatory environment for financial reporting

A newsletter is a form of advertising that is sent periodically by the company. The newsletter is advertised in a regular interval and is mainly related to a particular topic. The newsletters are mostly used by the owners of the websites who uses them in order to communicate with the reader and subscriber. In the opinion of Floyd, Li & Skinner (2015), newsletters are useful in promoting the business and motivating the customers to buy goods and services from that particular company. Moreover, the information delivered by the newsletter helps the customers to understand the business in details. The newsletters can be used as an effective communicating tool and the clients appreciate the creative newsletter. This helps to increase the communication between the company and its clients and further convert the customers into loyal customers (Revelli & Viviani, 2015).

Newsletter: The regulatory environment for financial reporting from 1st May to 31st July 2016.

Identification of changes and developments

There are a number of changes and development in the sources of the financial reporting over a given period. The changes and development take place in the technical issues, regulation and the monitoring of the financial reporting and the impact of political influences on the potential development.

The current accounting standards often prove to be an inefficient guide for the corporate managers and the investors of the organisation. The main concern that arises is whether the accounting standard should be continued to be set by the FASB (Financial Accounting Standards Board) and further approved by the SEC (Securities and Exchange Commission). Furthermore, while considering new accounting standards the alternative solutions might have chances of having attached arguments. This makes the decision of choosing between the different alternative accounting system difficult. Liang, Tsai & Wu (2015) mentioned that on an application of the accounting system there prevails rigidity that acts as a barrier. Moreover, the accounting standard cannot go beyond the statute as it is necessary to frame standards within the ambit of existing statutes. The recent change that took place in the June 2016 meeting is that the income of the NFP Entities has been focusing on resource inflows. The resource inflow has been the perpetual endowment and the capital grant principles.

The reporting and the monitoring team are the standard setting boards. However, the Australian Accounting Standards Board, the Auditing and Assurance Standards Board are the other important roles in the Australian regulatory framework that includes The Australian Securities and Investments Commission(ASIC), which maintains the Corporations Act. they are assigned to issue further regulations and guidance that are required. The Australian Prudential Regulation Authority(APRA) keeps checking on the prudential regulation of the financial institutions.. There has been a significant difference in the existing GAAP that had been noticed by the insurance. It had been agreed that more concern is required on the public sector.

Political sources:

The various list of sources are the websites of the Australian Accounting Standards Board, Financial Reporting Council, Australian Securities and Investment Commission, Australian Securities Exchange, International Federation of Accountants, Chartered Accountants Australia and New Zealand, CPA Australia, International Accounting Standards Board, Websites of large accounting firms. The professional publications such as the In The Black (CPA) and the Acuity (CAANZ) are also sources of financial reporting. The various newspapers and journals of Australia are also effective sources that provide relevant information.The RDR agreed the draft Australia NZ policy statement in order to determine the tier 2 disclosure procedure.

The complex sources of the financial reporting have been used by the business that supports the business to manage their operations and exposures more effectively. As opined by Schoenmaker & Wierts (2015) there has been therefore a need of complex reporting requirements due to the rise in the complexity of the business. The task force states that the IASB is taking up effective measures that help to rationalise the requirements and thus ensure professional judgement. The current accounting can be considered as the hybrid measurement framework that includes the historical cost and the fair value. However, Isaksson & Woodside (2016) argued that even though the fair value has reported the profit, the concern about the volatility has been increasing. Furthermore, the dividing effects of the profit and loss and the other comprehensive income are also the major concern. The financial crisis and scandals also get included into the financial reporting which is illogical and increases the complexity.

On the other hand, there are chances for the one-off transaction to take place in the company again. It is also difficult to work with anti-abuse type provisions in the law. There is no such requirement of a number of obligations in terms of the remuneration reporting. The disclosures become difficult and complex as they explain the outcome of a number of remuneration schemes and are not readily reconcilable to the accounting results (Uechiet al. 2015).

Question 2: Preparation of statement of financial positions and the statement of profit and loss and other income.

The statement of financial position and the statement of profit and loss helps the financial managers of the Swiss Ltd to understand the position of the company in terms of finance in comparison to its competitors. The profit and loss statement of the company indicates whether the company is earning a profit from the investment made by them or they are running at the loss. The financial statement and the profit and loss statement of Swiss Ltd. as per 30th June 2016 is discussed below:

Trading account as per June 30, 2016:

The financial statement is described as the official record of the financial activities and the business ;position in the market. The paragraph 82a states that financial statement analysis helps to understand the risk and the profitability of the company by analysing the reported information of the finances. The financial analysis also helps the managers of the company to determine the balance sheet. The ratios of the financial statement such as the utilisation ratio, profitability ratio, leverage ratio and the liquidity ratio are used to prepare the balance sheet. The analysing of the financial statement is an effective method in order to determine the past, current and the level of performance of the company (McLaughlin, 2016).

The financial statement of Swiss Ltd. helps the investors of the company to decide whether it is beneficial for the investors to invest the funds in the company or not. The regulating authority like IASB is able to ensure that Swiss Ltd has been following the accounting standards that are necessary to be followed. Weygandt, Kimmel & Kieso (2015) added that the amount of tax owed to the company can be determined with the help of the financial statement of the firm.

Profit and loss statement of Swiss Ltd.

From the above statement, it can be inferred that Swiss earns a net profit of 6,170,000 after paying off its total expenses. The net profit of the company is calculated by subtracting the total expenses from the gross profit. With the help of the profit and loss statement, the company is able to obtain the actual information about the expenses that are indirect (Saeidi et al. 2015). According to the paragraph 89, indirect expenses can be easily controlled in order to increase the profit.The Ratio between the net profits to sales can also be determined with the help of the profit and loss statement.

As per the AASB 101 paragraph 99, the entities help to analyze the expenses that can be identified in the profit and loss statement of the firm produced annually (aasb.gov.au, 2016).

Conclusion

From the above-detailed project, the financial reporting of the Swiss Ltd can be evaluated. The newsletter of the financial reporting has been carried out that helps to understand the nature of development and changes and is the impact in the political sense. The newsletter even supports the staff of the company to obtain more information about the changes and the development if they are interested in gathering more knowledge. Furthermore, the evaluation and the analysis of the statement of financial positions and the statement of profit and loss helps the Swiss Ltd. company to understand that they are at a stable financial position with a good amount of net profit.