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Table of content I. Introduction……………………………………………………………………………........... II. The nature of financial reporting and its context………………………………………..........
- Financial reporting context………………………………………………………….......
- Purpose of financial reporting……………………………………………………….......
- The purpose of financial statements in meeting a need for the…………………………...
- Recommendations to improve financial reporting and performance……………............. III. Frameworks for financial reporting regulation………………………………………………
- Significance of regulatory frameworks for organizational financial reporting…..............
- The benefits and drawbacks of using IFRS instead of a national regulatory system…………………………………………………………………………………………...
- Evaluates the impact of regulatory frameworks on the organization................................. IV. Justify recommendations for ways in which the organization and key stakeholders can successfully respond to regulatory frameworks in complex operating environments…………... V. Conclusion………………………………………………………………………………....... Reference
I. Introduction My line manager has asked me to put up a business report to give to a group of overseas investors. One of the top two largest legal businesses in Vietnam, AASC Auditing Company Limited, which serves as a junior auditor, accounting, financial consulting, and tax judgments. Due to the growing number of accounting scandals, which have worldwide business investment groups worried. The financial statements, harmonisation of accounting standards, context, the goals of financial reporting, and other variables will be the main topics of this study. II. The nature of financial reporting and its context
1. Financial reporting context Businesses compile accounting data and present their current financial condition in financial reports. The estimation of future profitability, industry position, and growth depend on a large number of financial facts that are readily accessible to the general public. ( Lauren Oliver
● Accounting concepts Businesses compile accounting data and present their current financial condition in financial reports. The estimation of future profitability, industry position, and growth depend on a large number of financial facts that are readily accessible to the general public. (Published, 2022) For enterprises, accounting is advantageous. To demonstrate a clear level of openness, the accounting concepts must all adhere to the rules in a consistent manner. It gives investors and enterprises clear information about emerging activity. It is artificial and given a numerical value. ● Accounting standard
investors, customers and government agencies...etc. In addition, the purpose of the report is to: Maintain periodic records: The company's financial accounts over the years are kept confidentially for a certain period of time. Tax purpose : Facilitating corporate tax returns. Disclosure of a company's financial health : Financial data used by the public, regulators, governments, bankers, investors, and creditors to make choices. Clarifying future strategy : Management can look at financial statements to create a future strategy for their business. Bring transparency : Financial statements reveal how a company uses resources.
3. The purpose of financial statements in meeting a need for the organization( M1) Financial statements are used to give information about an organization's financial situation, operating outcomes, and related party cash flows. Readers of the financial accounts use this information to decide how to allocate resources. Shareholders Shareholders need financial statements so they can make sound decisions about their investments. Financial reporting helps investors analyze the huge amount of financial data that companies report. They need to evaluate the effectiveness of management: whether the company is profitable or not and how profitable it is. Analyze financial line items in a company's financial statements to provide detailed information about the company's performance for shareholders to grasp. Ratios that determine a company's profitability, indebtedness, management efficiency, and operational efficiency. They must examine the stockpile using various measurements in order to reach better decisions. For example: profitability ratio, solvency ratio, debt ratio, effective price ratio. ● Managers Managers require a large amount of informationFinancial reports can be used by managers to track performance, budgets, and other metrics. Tools for making decisions motivating teams and maintaining a big picture mindset. Managers are involved in the planning, coordination, and control of business operations. When planning and controlling, they are faced with a range of alternative actions. Managers must choose from among these alternatives and decide which alternative is the best course of action for the business. ● Lenders
A lender to an institution will require financial statements to estimate the borrower's ability to repay all lent funds and related interest. Lenders rely on financial accounting to obtain important information about the financial solvency of the business and the difficulties faced. Financial accounting to provide accurate and comparable information. Other people or businesses that are giving themselves capital, lending money to provide credit in the form of money or the provision of goods or services. Creditors are concerned with a business's ability to pay its debts as they come due.Bankers and other moneylenders are concerned with the financial stability of the company and its ability to meet prepayments that have been made or are under review. ● Government When governments generate substantial revenue from various forms of taxation, accounting information is often the basis for calculating tax obligations for corporate taxes, sales taxes and payroll taxes, etc. They are interested in the financial data provided by the business, assess taxes, prepare various statistics on productivity, trade, and other profits as required by law. The government has applied accrual accounting to establish balance sheets. Report their inventory of assets and liabilities; indicate whether the liabilities match the corresponding assets; whether their decisions create a financial burden. However, countries have progressed to different levels in filling out their balance sheets.
4. Recommendations to improve financial reporting and performance. (D1) Scandal 1Malaysia Development Berhad (1MDB) Form of violation: Money laundering and bribery with a history of corruption that dates back to 2009. The former Malaysian Prime Minister Najib Razak moved more than RM 2.67 billion (about $ million) into his personal bank account 1MDB, according to records that were leaked in
- Investing goals of 1MDB, a sovereign wealth fund, include economic reform and programs to reduce poverty. Low and other masterminds, including authorities from Malaysia, stole US$4.5 billion from 1MDB. Done as a "pretend" transfer of $1 billion to a Swiss bank account for the purpose of filing false financial statements. Behavior: Financial reporting that were false, made use of overseas accounts, and expenditures on diamonds, art, and real estate. Take the cover of 1MDB investment fund to redeem yourself.
Accounting standard Accounting standards guarantee that financial statements from different businesses are consistent and highly reliable so that investors can understand them simply and with ease and make the right investment choices. Teach companies how to maintain clear, fair financial reports, which will help reduce confusion caused by many people creating their own reports. Company Act Corporate law is the body of law governing the rights, relations, and conduct of persons, companies, organizations and businesses. True and fair view, as defined by the Companies Act of 1947, refers to the degree to which various accounting principles, ideas, and standards have been used. Section 396 of the Companies Act of 2006 now contains it.
2. The benefits and drawbacks of using IFRS instead of a national regulatory system. a) Definition of IFRS International Financial Reporting Standards (IFRS) are a set of accounting rules for the financial statements of public companies that are intended to make them consistent, transparent, and easily comparable around the world. Turkish using IFRS ● Implementation The Turkish Accounting Standards , financial institutions and other public institutions are required to comply with the applicable IFRS Standards. Also necessary or allowed for listing by foreign corporations are IFRS Accounting Standards. Turkey must adopt and implement IFRS in order to boost business reputation and draw in foreign investment. In addition, Turkey submitted an application to join the EU in an effort to harmonize its regulatory practices with those already in place in the EU. The Turkish Accounting Standards Board was created as a result, and it is its job to integrate IFRS into the Turkish accounting system. The Turkish Financial Reporting Standard, which incorporates all of the IFRS, has been adopted.
The new Turkish Commercial Law mandates that all businesses—listed or unlisted—prepare and show their financial accounts in compliance with the law, which has implications for the greater adoption of IFRS. IFRS. With the implementation of this rule, Turkish GAAP will be replaced by IFRS, completing the transition to IFRS. ● Advantages More transparency and improved company comparisons result from the implementation of IFRS. Additionally, it results in the harmonization, simplification, and transparency of internal and external reporting. The use of IFRS will enhance the accuracy and timeliness of management information. The implementation of IFRS is helpful for management decision- making, not just for external parties. assisting Turkish firms to compete more effectively and grow more successfully. In addition, some complexities such as hedging and deferred tax accounting are not recognized in the Turkish GAAP and the disclosures have been removed as unnecessary. ● Disadvantage One of the biggest obstacles facing Turkish enterprises looking to embrace IFRS is the lack of implementation instructions. Due to the perception of those who apply that fair value accounting under IFRS is difficult to apply, which can be explained by excellent practice, the idea of fair value of IFRS remains troublesome for Turkish enterprises. their previous. According to "Turkey's GAAP, cost models must be used to measure assets rather than fair value estimations."
3. (M2) Evaluates the impact of regulatory frameworks on the organization VINGROUP: VINGROUP is a large corporate group, which must prepare annual financial statements that must be audited in accordance with the law. In VINGROUP 's report, article 44 talks about the accounting system, the group applies Accounting Standards. Vietnam Accounting Standards (VAS) issued and approved by competent authorities. Therefore, VINGROUP will keep its accounting books in accordance with the provisions of Vietnamese law. Benefits: VINGROUP's goal Calling for capital from investors to develop technology, commerce and tourism. Thanks to the application of the regulatory framework of financial
Vietnamese enterprises applying the IFRS regulatory framework: Vietnam has been taking positive steps towards the widespread application of the IFRS regulatory framework. On March 16, 2020, the Ministry of Finance issued Decision No. 345/QD-BTC approving the scheme to apply IFRS in Vietnam. This application process consists of 3 phases: Preparation period from 2020 to 2021 Phase 1 (voluntary application), from 2022 to 2025 Phase 2 (mandatory application), from after 2025. Initial difficulty: However, in the context of integration, Vietnam has encountered many difficulties and complications. Due to competitive pressure between domestic and foreign enterprises, it is difficult. To apply IFRS is a process that faces many difficulties and challenges, specifically: Professional qualifications and foreign languages of accounting staff in many enterprises have not yet met to apply the IAS/IFRS date. When applying according to IFRS, the flexibility and use of many accounting estimates in Vietnam is affected by a culture of stereotypes, principles, and guidelines that are very conservative. IFRS is very complicated even for professionals in the field of financial accounting. It is still new to Vietnam, so the legal regulations have not been widely released and completed. Benefit: IFRS helps to ensure global consistency of financial reporting standards applicable to organizations across different jurisdictions, in terms of financial measurement, disclosure and transparency. IFRS helps to reduce the cost of capital. Insight into financial results and compliance with the IFRS set of high-quality financial standards, can benefit both businesses and investors by reducing the cost of capital. IFRS has helped improve capital market performance and promote cross-border investments. Moreover, based on IFRS investors can determine the fair value of assets, contributing to improving the liquidity of the stock market. Improved liquidity supports disclosure and reduces information disparities among market participants. Changes in liquidity are sometimes considered an indicator of the change and improvement of information disparities. Solutions for businesses to properly apply the IFRS regulatory framework : Vietnamese enterprises need to develop strategies and budgets to identify the need to apply IFRS. Determine specific plans and roadmaps applicable to your business. On the other hand,
establish communication channels with policy-making agencies, auditing firms, professional associations, and consultants. Demarcation between financial statements and tax reports, internal management reports. State-owned enterprises should train human resources. Equip the board of directors and key managers with basic financial knowledge and understanding. Develop a timely, methodical, continuous and long-term human resource training plan for the accounting, finance and other relevant departments. Information technology systems are also important to ensure efficiency. Accounting software needs a high degree of automation, aiming to be able to provide financial statements at any time. Finally, it is recommended to develop a process to convert financial statements from Vietnamese standards to IFRS. In order for all businesses to identify transactions and items on the financial statements that need to be converted. It is possible to build a system of records and data suitable to the characteristics of the business. V. Conclusion The adoption of IFRS is ushering in a new era that modifies how information is recorded, measured, and presented in financial statements of businesses and the Vietnamese government. establishing a common language with the accounting industry, opening doors for the growth of capital markets, and improving financial statements' transparency. Training institutions routinely create IFRS training programs as the government works in unison to change the political, economic, and social landscape to accommodate global economic integration.
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