Globalisation of Financial Reporting Standard †MyAssignmenthelp

Question: Discuss about the Globalisation of Financial Reporting Standard. Answer: Introduction As discussed by Cascino Gassen (2015), in general, the various types of the financial regulations are the laws and rules which govern the financial institutions such as banks, brokers and investment companies. The various types of the rules are seen to be propagated by the government regulators for protecting the investors interest and promotion of financial stability for maintaining an orderly market. The regulatory activities are considered with setting the minimum standard for the capital, conduct, making regular inspections, and investigating and prosecuting misconduct. The primary purpose of the financial regulation is seen to be based on presenting the data in a comprehensive manner and make sure that the firms and investors are receiving equal opportunity for sharing their interests (Chen, Ng Tsang, 2015). The various depictions made from the study has focused on the literature review of the UK and Australia associated to the regulatory requirement. The main form of the discussion of the study has been able to state on the regulatory environment and involvement of the major decision makers. The primary discussion of the study has stated on the including the appropriate legislations. The next important consideration has been based on the advancement of Australia and the UK in the adoption of IFRS. The important learnings of the study have been able to highlight on the adoption of appropriate legislations. The next aspect has focused on the shown the importance of the selected regulatory environment in the lens of financial regulatory environment through the lens of Regulatory Capture Theory. The final part of the report has discussed on the theories which may be captured with the use of the regulatory theory in the individual countries (Cheung Lau, 2016). The perceived problems of each system As stated by Christensen et al., (2015), The primary motive of the IFRS implementation has been based on enhancing the standards of standards, comparability, accuracy and transparency of financial statements for a company within a particular period. However, the initial problems in the IFRS regulation has been identified in terms of issues such as lack of training, problem for the entities, auditors, regulators as well as the interesting parties who are familiar with previous accounting standards. Moreover, there is significant issues for adhering to the requirements considered with addition skills for application and evaluation of IFRS. The important nature of the issues has been seen to be based on the significant problems which is seen with the compliance to the political and legal environment. Some of the other aspects of the study have stated on the problems related to the maintaining uniformity. This factor has been identified as the main reason for failure of the IFRS implemen tation. The understanding of the technical knowledge is seen as one of the main challenge pertaining to IFRS adoption (Christensen et al., 2015). As discussed by Deegan (2014),in the U.K. the main challenges in the IFRS implementation has been identified with the delay on the implementation process. The different types of the other issues are based on the slow process of endorsement. It is further observed that the that European Financial Reporting Advisory Groups (EFRAG) is identified with the early issues in the adaptation of the new standards which were aired in the Europe. In responses to Philippe Maystadts enquiries about IFRS in 2013 on behalf of the Commission, depicted that Europe is identified as the standard body for modifying the international standards. This is seen to pose major problem in the future stages. Moreover, the implementation of the IFRS 2 Share-based payment has reduced down by 2.38% (Ji Lu, 2014). IFRS has been seen to discontinue the several types of the activities which were held for sale. This notion is evident with reducing the assets from the recognition of profit by 0.35%. in some of the vario us types of the other cases the IFRS on group accounts has affected the net profit on the equity of large listed companies. In various situations the disposal of the subsidiary and the goodwill was either not included in the assessment of the loss on the disposal of the calculation or the amount of goodwill is not recycled back into profit where there involves disposal of subsidiary (Hla Md Isa, Bin, 2015). Working of Regulatory Environment In Australia the AASB is considered as the agency working under the Australian Government. It is observed as the AASB standards are known as Australian Accounting Standards consisting of the Australian equivalents to International Financial Reporting Standards (IFRSs). The initial process of the implementation of IFRS has been conducted by Australian Accounting Standards, the AASB thereby making some modifications to IFRSs, including removing some options and adding some disclosures. It has been further identified that the AASB has made certain changes to the Australian Accounting Standards for ensuring the requirements are identical to the IFRSs as issued by the IASB for for-profit entities. The different types of the other disclosures are retained with the non-IFRS compliant requirements which are seen to be applied with the not-for-profit and public-sector entities. The consideration of the new differential reporting standard has been seen to be related to the by Australian Accoun ting Standards Board (AASB) in July 2010, which selected the adaptation of the Reduced Disclosure Requirements' (RDR). The requirements adhered to the requirements as per the recognitions and the measurements standards as per the Australian Accounting Standards (which are equivalent to IFRSs), but with reduced disclosure requirements (Joshi, Yapa Kraal, 2016). The net effect of the changes of the company law has been seen to be identified with implementation of EU accounting directives. This is made compulsory with the including the UK and Republic of Ireland (ROI) accounting standards for ensuring the consistency in the legal framework and financial reporting. The different types of the legal framework had been able to provide the relevant opportunity related to the considering the most suitable accounting standards to support the new micro entities regime. The several types of the changes made to the company is with an impact on the regimes made for the small companies and minor amendments drafted as per the UK and Republic of Ireland accounting standards (Meier Mitscherlich, 2015). The company law is further able to differentiate the financial reporting framework known as IFRS and UK and Ireland GAAP (generally accepted accounting practice). In addition to this, the public listed entities are needed to apply the IFRS for the preparatio n of the group accounts and entities which offered freedom to choose between the among IFRS and UK and Ireland GAAP in preparing the individual parent accounts. It needs to be further identified that UK GAAP mainly comprises of five regimes and three among which were seen to be available in the FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. It needs to be further understood that the financial relations were mainly considered with the micro entities regime, small entities regime, FRS 102 and EU adopted FRS (Kabir Rahman, 2016). Countrys progress towards the adoption of IFRS The implementation date of IFRS in Australia has been brought under effectiveness from 1 January 2005. AASB commenced on the adoption and review of ongoing relevance of the IFRS as per Australian for-profit and not-for-profit (NFP) reporting companies. In several cases, the transition process is identified with the respective modifications which is needed for the cost efficiency and quality of the reporting. The adoption of the IFRS process has been further seen to be taken into consideration with the various types of the factors which has allowed the users and preparers for switching between countries and sectors with adequate skills and knowledge. The internationally active entities are based on the adoption of the IFRSs across the different sectors which has allowed the preparers to comply with the new standards especially with the requirements as per the disclosure (Morris et al., 2014). The initiation of the accounting standard in the U.K. was developed by Accounting Standards Board (ASB) from 1 August 1990. It needs to be understood that on 2 July 2012, the FRC Board assumed responsibility for setting accounting standards. Most of the accounting standards were introduced by the ASB known as the Financial Reporting Standards (FRSs). The most implemented standard is seen to be considered with the FRSSE (Financial Reporting Standard for Smaller Entities). FRC introduced new standards on November 2012, which is seen as a part of the new UK GAAP framework. This framework is considered with the FRS 100: Application of Financial Reporting Requirements and FRS 101: Reduced disclosure framework. The FRC was seen to be introduced for setting out the relevant requirements for the reporting in lieu of FRS 100, 101, 102 and 103 (known as new UK GAAP), which were effective from 1 January 2015. In addition to this, FRSs replaced the existing financial reporting standards facilita ted by the FRC for reporting periods starting on or after 1 January 2015. The FRC has been further seen to introduce two new standards associated to FRS 104: Interim financial reporting (issued in March 2015) and FRS 105: The Financial Reporting Standard applicable to the micro-entities regime (Ramanna Sletten, 2014). Regulatory Capture Theory and its usefulness The concept of regulatory theory relates to the failure of Government which takes place when the regulatory agency creates to act in the interest of the public and works alongside the special interest groups. This theory works in favour of these special interest groups which dominates an industry or sector when the regulatory charges are implied. The implementation of the regulatory capture is applied as per the interests of firms or political groups are prioritized over the interests of the public, leading to a net loss for society. The government agencies suffering from the regulatory capture are known as captured agencies. The application of this theory is able to identify the such agencies in which the interests of the political groups and firms are prioritized over the interests of the public. The various forms of the public interests are controlled by the industries as per the captured agencies. The theory of regulatory capture is considered with the situation where gamekeeper turns poacher. The interest agencies are seen to set out to protect the ignored who are in favour of the regulatory interest. The regulatory capture theory is identified with the augmented focus on the branch of public choice which is considered with the economics of regulation with a speciality of the conceptualization of the government regulatory intervention (Ramanna Sletten, 2014). Characteristics indicating regulatory environment might be captured The important discourse from the regulatory environment has depicted the regulatory capture theory with several variations in different countries. In some of the cases, IFRS in Australia is important in implementing the cost savings policy during preparing the financial reports. The organizations have been further seen to be benefited from the various type of the other factors such as revision of the standards and exposure drafts. In Australia the small businesses are identified to be main victims of the regulatory capture theory. There is a preference given to the large public industries which are regionally situated in the main areas of Australia. The various types of the regional special interest groups are seen to be situated in the New South Wales, Victoria and Western Australia. In addition to this, the small business sectors have made significant indirect contribution which are often not included in the data published in the small businesses shares of national employment and o utput aggregates (Kabir Rahman, 2016). In the U.K. the introduction of Competition Act (1998) and Enterprise Act (2002) is recognized to provide the UK regulators more to act against the abuses of the monopoly power. Some of the most noted examples include, the FSA and the Bank of England who have been identified as the major sufferers in the banking sector. It has been further accepted by Governor of the Bank of England, Sir Mervin King that the intricacy and the importance of the regulations has made it difficult for the regulators to operate. The second example has been able to highlight on the alleged capture of the tax authorities (HMRC) by the UKs mobile phone giant, Vodafone, who apparently negotiated a 6b tax reduction, reducing their tax bill for 2009-10 from 7b to 1b. The five-year period after the Enterprise Act (2002) was brought into power with not a single major factor cartel as investigated by OFT. This is due to the fact that the heavy fines and convert collusion is difficult to prove. The new powers have provided the regulators to undertake the covert surveillance of the firms for establishing regulations for collusions which may take place. The tacit collusion is impossible for proving the different type of the statistical techniques used with the correlation among the proc movement in theory and practice. In some of the different types of the other instances the application of the regulatory theory leads to cheating or finding loopholes, such as getting round the regulations by moving into an adjacent market. Some of the major criticism in the single market has been defined inadequately (Sugiyama Islam, 2016). Conclusion The findings on the capture theory in Australia has been identified with in Australia seen to be important with implementing the cost savings policy during preparing the financial reports. The organizations have been further seen to be benefited from the various type of the other factors such as revision of the standards and exposure drafts. In terms of the depictions made in the regulatory capture theory, in Australia the small businesses are identified to be main victims of the regulatory capture theory. The different types of the regional special interest groups have been traced in the areas such as New South Wales, Victoria and Western Australia. In addition to this, the small business sectors have made significant indirect contribution which are often not included in the data published in the small businesses shares of national employment and output aggregates. The significant depictions made in the capture theory assertions in the UK has been considered with the Competition Act (1998) and Enterprise Act (2002) which are recognized to provide the UK regulators more to act against the abuses of the monopoly power. In addition to this, the significant evaluation of the regulatory capture theory in the U.K. The identified victims are seen to be going out of control in the way banks wayward behaviour has played a large part in the recent financial crisis. In addition to this, several types of the other findings have revealed that the alleged capture of the tax authorities (HMRC) by the UKs mobile phone giant, Vodafone, who apparently negotiated a 6b tax reduction decreased their tax bill for 2009-10 from 7b to 1b. Additionally, the five-year period after the Enterprise Act (2002) was brought into power with not a single major factor cartel as investigated by OFT. This is due to the fact that the heavy fines and convert collusion is difficult to prove. Some of the other depictions show Enterprise Act (2002) was brought into power with not a single major factor cartel as investigated by OFT. This is due to the fact that the heavy fines and convert collusion is difficult to prove. References Cascino, S., Gassen, J. (2015). What drives the comparability effect of mandatory IFRS adoption? Review of Accounting Studies, 20(1), 242282. https://doi.org/10.1007/s11142-014-9296-5 Chen, L., Ng, J., Tsang, A. (2015). The effect of mandatory IFRS adoption on international cross-listings. The Accounting Review, 90(4), 13951435. https://doi.org/10.2308/accr-50982 Cheung, E., Lau, J. (2016). Readability of Notes to the Financial Statements and the Adoption of IFRS. 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