Kevin Stevenson retires as AASB Chair Essay Example for Free

Kevin Stevenson retires as AASB Chair Essay This media article is about the accomplishments and achievements of Kevin Stevenson regarding his retirement from Chairman of the Australian Accounting Standards Board on 30th June 2014. (Media releases, 2014) While Kevin Stevenson was in his position, he ensured the long traditions of financial reporting was being supported both internationally and domestically and that counseling was provided for the issues raised about FRC. (Media releases, 2014) Mr. Stevenson was the first to research, develop and create Accounting Standards Advisory Forum which is dealt within International Accounting Standards Board. The AASB’s Research Centre was established while Stevenson worked as the Asian-Oceanian Standard Setters Group’s chair. His leadership focus was mainly on the interest of the public. This was stated by Lynn Wood, FRC’s chair and trustee of the IFRS Foundation. Ian Mackintosh, the former Chair of the PSASB of Australia and Deputy Chair of IASB was in agreement with this statement. (Media releases, 2014) According to Mackintosh, Mr. Stevenson has largely contributed to have Asian countries to join IFRS, like Nepal and Korea. From the beginning of the 1970s, Stevenson has put all his attention in setting principal based standards and developing a Conceptual Framework to be used in financial reporting. Mr. Stevenson supported accounting regulations as it was evidenced by his organisation and also by Australian Accounting Research Foundation. He has also been appointed as a director of AARF while watching AARF grew with it’s development of regulations. He was a leader and was in the most important position when setting the international pace to develop the common accounting standards for both the public and the private sectors. (Media releases, 2014) Stevenson has contributed in the formation of the Public Sector Accounting. He took a significant role in the establishment of International Financial Reporting Standards in 2005 and this Standard has widely been used in Australia and the entire Europe. (Media releases, 2014) Concepts, ideas and facts There are two important components that need to be satisfied to offer accounting services exhibiting high efficacy and quality. These are teamwork and leadership. Management models in accounting services need to employ strategic human resource techniques to teams in accounting teams and leadership positions in order to provide high-quality services in the shortest time possible. The operation of accounting services operates under a clear and concise manner and performs its measurement. Therefore, to provide the best accounting services and not get involved in fraud accounting, there needs to be an ultramodern investigation that uses scientific leadership when working as a team with major stakeholders (Topic 2, 2014). Stevenson was leading in the right direction by using new techniques in accounting. These techniques of accounting were important steps which need leaders with efficient skills to apply concepts like efficacy, cost benefit analysis, economies of scale and cost-effectiveness analysis that will progressively measure improvement. To resolve a core issue of the organization and get a competent solution, it is important to acquire efficient leadership. Strategic leadership in accounting provides quality and up to date accounting services to an organization. Leadership like that of Stevenson, brings together all of the incomplete system consisting of thousands of accountants working within a fragmented system of organizations. (Topic 7, 2014) Advanced fraud investigation is developed through effective teamwork and leadership in accounting. Leaders’ decisions are encouraged to be made by considering social and moral implications so it will have a positive effect on the shareholders and customers of the organization, such as the leadership of Stevenson’s. (Topic 7, 2014) Every employee bears an ethical responsibility to act in an ethical manner and make sure that their company does is tax compliant and allows reasonable deductions. Employees should ensure that the company appropriately allocates the importance of the business activities. The Accounting Issue The best way to improve the truthfulness in accounting and financial reporting is by ensuring that ethical standards are used through efficient manners of reporting, sufficient financial management and a strong system of governance. Maintaining a right to the truth is an ethical practice in financial reporting and accounting. Both the clients and stakeholders of an organization have the right to information that is true and accurate when making any investment discussions. It is the legal obligation of any accountant to provide services that are professional and competent and this should be done within their required skills. It is a common argument that a large number of accountants do not have the ability to recognize and solve ethical dilemmas in an ethical manner. This has made it necessary to incorporate ethics education as a key element in the accounting profession. Early initiation of the inclusion of professional values and ethics should be emphasized in the accounting profession. Major issue of the article Stevenson clearly shows that ethical management and taking responsibility to act in the best interest of the company that they are providing accounting services for, relates with providing accurate and truthful records. This beneficial not only to the organization, but also to the society in general (Media releases, 2014) Management should be ethical by being honest, accurate and complete when dealing with financial data and have ethics held in place. Every employee bears the responsibility to make decisions that are wise and up to date for the future well-being of the company. The accounting standards are useful in financial reporting and accounting as they are critically examined when processed. (Topic 2 , 2014) In order to uphold the highest code of ethics, organizations should emphasize on the major functions because shareholders and customers often make their decisions based on financial and accounting reports. Mr. Stevenson’s case is a clear demonstration of the importance of legal and ethical factors in accounting and financial reporting. It is through these two issues that Mr. Stevenson was able to establish effective departments of accounting and financial reporting and design specific rules that govern general functioning of any company. Relevant topics and theories Positive Accounting Theory plans for the future and gives information of what is currently not known. Financial reporting has its history with Positive Accounting Theory applied. It has focused its major interest on various aspects of accounting techniques which has provided an informative background with in depth details of the functionality of accounting in financial reporting (Topic 2, 2014) The application of financial reporting and accounting is concerned with all the future business of a company that relates to any economic unit. There are four main ethical elements involved in accounting and financial reporting. These elements are truthfulness, objectivity, autonomy and competence and they require employees in the accounting and financial reporting profession to act independently towards the clients to whom they offer their services. They should ensure that their desire to attain better living and to acquire more wealth should not be an obstacle to their financial responsibilities. Obligations of ethics greatly affect the decisions of accounting and financial reporting. Also helps solving unfair situations that may alter information symmetry. (Topic 2, 2014) The decision by Nepal and Korea to join the IFRS was based on the financial guidelines that govern accounting and financial reporting. Every employee in the accounting and financial reporting profession, whether in a private or public company bears an ethical responsibility to act in a manner that is loyal and impartial to his or her obligation when reviewing both the financial or individual reports of an organization. It is quite normal for accountants and financial reporters to encounter possible ethical violations when working. As a result, one should maintain carefulness and desist from manipulation of financial records as this is a violation of ethical guidelines. The important elements of normative accounting theory are the integrity and being open to public scrutiny. For some companies to maintain certain public image they may receive pressure from management. Most companies in the public sector are faced with the pressure to be seen as highly successful. Consequently, it becomes an ethical concern for the company to maintain ethical reports of the company assets because the pressure from management could fail them to resist the temptation (Topic 2, 2014). Management should not manipulate the company’s financial records and alter the figures in an effort to create an image that falsely portrays the company as successful. This is often temporary because it only portrays the prosperity of the company on a short term basis before the fraud is detected by the Securities and Exchange Commission (Topic 2 , 2014). Such manipulation, which is often based on poor decision making skills aims at putting up a false image of the financial status of the company and only has negative effects on the well-being of the company. Accounting professional should by all means disregard such practices. Despite the temptation associated with manipulating financial records, management should act as the last defense tool against accounting fraud. For these reasons, accounting theories assert that companies should maintain their ethical vigilance in order to avoid any potential breach of conduct (Callahan, 2014). Every individual engaging in any activity relating to financial reporting and accounting should uphold the highest standards of ethical behavior. It is through these standards that guidelines and rules are set to guide employees in performing their professional responsibilities. Question 2 In comment letter 1, the Financial Reporting Committee of the IMA wrote this letter to express its opinion on financial accounting standards, to simply the income statement presentation by eliminating the concept of extraordinary items. The FRC is in charge of several accounting books of different companies. This basically means that FRC has the responsibility of making timely responses to statements, pronouncements, research legislation, proposals and pending legislation. Their main concern in this comment letter is the complexion of financial statements within FASB. They support the simplified financial statements adopted by the board which is easier for common people to understand CITATION Sch l 1033 (Schroder, 2014). Their support is on the elimination of very unusual items as in most times this criterion is not satisfied. Their proposal to simplify the income statement gets rid of the tedious work in the preparation of financial documents. Their support is based on the fact that the allocation of time in preparing income tax reduces to a great extend by eliminating the occurrence of other income items. They thus advocate for a thorough examination of the details of this suggested proposal CITATION Sch l 1033 (Schroder, 2014). In comment letter number 2, Marcum Accountants and Advisors write to the FASB to simplify the income statement by eliminating the concept of extraordinary items regarding the proposed accounting standards. Their letter is generally a response to several questions regarding the process of simplification of the income statement. They support the concept of elimination of extra ordinary items from the General Accounting principles. Their argument is based on where the extra ordinary items make the application difficult in accounting practice CITATION Giu14 l 1033 (Giugliano, 2014). They thus support the application for extra ordinary items in previous accounting periods. A sudden change of the rules would otherwise lead to confusion in the accounting practice CITATION Top14 l 1033 (Topic 2 , 2014). The ease of application with the proposed update makes it easy to make these recommended changes to adopt. They thus suggest the immediate adoption of the proposed update. They agree with the decision made by the board which was to comply with the principle of separate disclosure of infrequent transactions. They also suggest the importance of offering guidance on deciding the unusual item. CITATION Giu14 l 1033 (Giugliano, 2014) Proper definitions should be provided of the unusually occurring items. In comment letter 3, Ford Motor Company also writes supporting the simplification of financial report assessed and initiated by FASB. Their agreement is based on the reasonable evaluation, identification and improvement of the generally accepted accounting principles CITATION Cal14 l 1033 (Callahan, 2014). This thus means that by reducing the complexity and simplifying the income statement, it will possibly reduce the cost of application. They are also in agreement with the board that such an update would not lead to data loss. The overall benefit would be to the end users of such financial statements. References Callahan, S. (2014). Comment Letter No. 6 (1st ed.). FORD MOTOR COMPANY. Retrieved from http://www.fasb.org/jsp/FASB/CommentLetter_C/CommentLetterPagecid=1218220137090project_id=2014-220 Callahan, S. (2014). Comment Letter No. 6 (1st ed.). FORD MOTOR COMPANY. Retrieved from http://www.fasb.org/jsp/FASB/CommentLetter_C/CommentLetterPagecid=1218220137090project_id=2014-220 Giugliano, G. (2014). Comment Letter No. 5 (1st ed.). MARCUM LLP. Retrieved from http://www.fasb.org/jsp/FASB/CommentLetter_C/CommentLetterPagecid=1218220137090project_id=2014-220 Media releases,. (2014). Kevin Stevenson retires as AASB Chair. Proposed Accounting Standards Update. (2014) (1st ed.). Retrieved from http://www.fasb.org Schroeder, N. (2014). Comment Letter No.2 (1st ed.). IMA/FRC. Retrieved from http://www.fasb.org/jsp/FASB/CommentLetter_C/CommentLetterPagecid=1218220137090project_id=2014-220 Topic 2 The role of ethics in accounting. (2014). Topic 6 International Accounting. (2014). Topic 7 Normative Accounting theories. (2014). Source document