Describing An Accounting Issue Business †Myassignmenthelp.Com

Question: Describing an Accounting Issue Business? Answer: Introducation This article from the Harvard Business Review dated 1st May 2017 could be linked to the topics of accounting regulation and measurement (Managing for the Long Term 2017). This title of the article is Managing for the Long-term. In this article, the main focus is to examine on attributes on how to maximize shareholder value and how it can threaten companys health as well as financial performance. The model flaws-as mentioned in the accounting news (Agency Theory) One of the theories named as agency theory works against the corporate law where the shareholders do not have the rights of possessor of the business as well as executive are not shareholders representative (Samkin et al., 2016). It is where researcher and observer noted where the thought includes shareholders owns the corporation is at best confusing and at worst incorrect. Furthermore, it is from legal viewpoint where shareholders are recipient of the behavior of the Business Corporation but are not dominion over the piece of property. It is mentioned in the lBusiness firm (Lodhia Hess, 2014).egal structure; both administrator and manager are fiduciaries somewhat than representative and not just for shareholders but also for the In this, manager are grateful for carrying out the wishes of the principal whereas the obligations of the fiduciaries for exercising independent judgment on behalf of the beneficiary. In that case, agent is an order taker where the fiduciary that expects at the time of making discretionary decisions. Furthermore, directors have the fiduciary duty that act in the best interests of the Business Corporation that is different from simply performing the bidding of the shareholders. Therefore, the heath of the financial structure widely depends upon the getting the responsibility of the rights of the shareholders (Lavia Lpez Hiebl, 2014). The next flaw is out of step with normal practice where the shareholders are not the possessor of the business in any established sense of the term for exercising care in managing the operations. For example, the beneficiaries to the company hold the share of the financial institutions. Addition to that, it is the professionals who actually manage with the investments that are typically judged as well as reward on each quarter basis of returns from the total investment attributes. Therefore, an outcome is high turnover in shares that consequences from high-frequency operate that is done by the speculators (Lall, 2015). Most of accountants especially the partners complaints about wasting time in meetings. The reason behind the above problem is that accounting firms are poorly managed (Kordecki Bullen, 2014). In order to improve the meetings, it is needed to improve over the performance of the accounting firm as it will help in solving problem rather than just recognized and conversed in theoretical terms. Open conversation is healthy where declaration is what distinguishes the major player. Accountability is a process that starts with addressing the issues and measures through which it gets resolved. Here, non-accountable partners need to avoid any of the detailed measurements, demand equality, and ridicule superiority (Jorissen et al., 2014). As far as accounting partners are concerned, they will be strengthening the standards as well as welcoming the measurement by taking initiatives and deepening the commitments as far as possible. Inclusion of item of accounting news This news explains that after there was fall during the year 2014, the hedge fund activities increases frustration with the Board of Directors. In this, it was noted that the result took the directors to task for the failure where they paid more than $400,000 per year on behalf of the business holder (IFRS - Conceptual Framework Exposure Draft and Comment letters 2017). Compensation is big part that is a main topic of concern on the Board. Often, people speak about pay for performance but in reality the Board needs to expand a balanced scorecard for evaluate the level of presentation where it helps in determining the compensation. In order to assess the performance, the scorecard will covers the major array of issue in terms of short-term and long-term that is other hedge against short-termism. One question arises whether short-termism destroy value. It is one of the topics that are debated by the leaders in business, academia as well as government (Holder et al., 2013). Linkage of major issues in article In this particular article, there was clear mention regarding the accounting regulations such as agency theory that is a concept of management responsibility that are widely accepted. In the year 1997, Business Roundtable issue mentioned in the statement that declares the fact where the paramount duty of management as well as Board of Directors for the corporate stockholders. The principal objective or purpose of business organization is to create financial returns to the owners where it issued in reaction to pressurize especially from the institutional investors. The declaration in result revises the earlier position where the investor needs to obtain a good return but the lawful concern of further community that requires proper attention (Exposure Drafts Public Comment Documents. 2017). Practical suggestion of the business centered domination considers as far reaching where the Boardrooms need to adopt the approach that expect some of the features such as: It receives greater likelihood that staggers Board for facilitating continuity as well as transfer of institutional knowledge (Exposure Draft and Comment letters 2017). It requires more Board-level concentration for sequence planning as well as management expansion It brings close link between executive compensation as well as attaining strategic goals of the company It requires more concentration to risk analysis as well as political and ecological indecision (Exposure Documents Open for Comment. 2017) It means strategic financial approach requires allocation of resources It need to strongly focus on investments especially in new potential as well as innovation It requires more conventional use of influence through market volatility It need to concern with the corporate citizenship as well as ethical that goes beyond legal compliance It is all about attributing ownership of the corporation to the sound shareholders where it takes into consideration challenging problem of accountability. It is necessary to understand the fact that shareholders have no lawful duty that can defend or in that case provide companies whose shares are owned and protected by the doctrine of imperfect accountability especially from the legal responsibility of the debts as well as misdeeds of the company. Furthermore, they need to buy and sell shares without any limit as well as requisite to reveal the individuality in case of specific situations. Addition to that, it needs to be physically distant from the others where the company invests in for a specified time period. Public company shareholders mostly have few incentives that they will consider as well as views accountable for the possessions of the proceedings that favor the business and further parties as well (Ehoff Jr Gray, 2014). In case of agency theory, it need to yet grapple w ith the certain inference of accountability those consequences from patient the essential as well as premises where the shareholders actually own the Business Corporation (Deegan, 2014) It is the effects of the omission that actually troubles and directly connected to the agency-based model of governance as well as management that weakens the company in accordance to the predictions done by expert and could damage the entire economy as a whole. It is concerned with the effects of corporate strategy as well as resource allocation that need proper attention in the recent times. From the past decades, the organization models has majorly rendered the foundation for the various changes that includes in the governance as well as administration perform that has been taken simultaneously for increasing the authority and manipulate of different types of shareholders for the elevated claims by the shareholders. In the given constituencies, it helps in establishing any other type of corporate responsibility as well as accountability on behalf of the shareholders that exercises that power. In that case, managers were found under increasing pressure on how to deliver it faster w ith the given predictable returns as well as curtailing the riskier investments that aims at meeting the future needs. It also deals with meeting or finding out the best creative solutions to the problems that are faced by the people in and across the world (Deegan, 2013). Introducing the major issues in the new standard On 20th of June 2013, the IASB (International Accounting Standard Board) had published for public comment that is a revised exposure draft of proposals that is used for secretarial of Insurance contracts. Addition to that, the Exposure Draft help in building upon proposals that was published in the year 2010 and reflects upon feedback that is received at the time of wide-ranging public discussion period as pursued in the new publication of proposals (Compilation and Review Standards - AICPA. 2017). The new or revised proposals mainly aim at offering a reliable basis for secretarial especially for insurance contracts so that it is easier for the users of monetary declaration for understanding how insurance contracts influence the financial performance, cash flows and financial position of a business entity. In this, the model mainly presents the 2010 Exposure Draft that supports some of the specific issues that was raised when IASB address it in given format. Nevertheless, the revised proposals had responded to the specific issues through introducing enhancements for presenting as well as measuring the insurance contracts at the time of minimizing the artificial accounting volatility at the same time (Comiran Graham, 2016). Explain if there is usually a agreement or if there is disagreement between the commenting parties There is consensus between the commenting parties that need to be resolved in the new proposed accounting standard. IASB had published for public comment that is an Exposure Draft that actually proposes a new or revised conceptual framework for the financial reporting. Addition to that, the new proposals aims at improving over the financial reporting as it offers complete, clearer as well as reorganized set of perception that can be easily used by the IASB. It is used by them for developing the IFRS as well as others so that the users understand the application of the given standard (Christ Burritt, 2015). The Exposure Draft is more complete as compared to existing conceptual framework as it helps in addressing the areas that are not previously covered and important. The areas relates to measurement, financial performance, derecognition, the reporting entity as well as presentation and disclosure. The new Exposure Draft can easily replace the existing conceptual framework as it clearly clarifies with the information so that it can meet the objective of financial reporting that takes into account information that are used for assessing the management stewardship of the resources of Business Entity (Anderson et al., 2016). In addition, the new Exposure Draft clearly explains the roles of prudence as well as substances that are present in the financial reporting in the most appropriate way. It also clarifies with the fact that high level of measurement leads to uncertainty of actions that makes the financial information a less relevant than other. Furthermore, the Exposure Draft clearly mentions regarding significant decision-making proves such as recognition as well as measurement that drive through considering the nature of resulting information. It takes into account both financial performances as well as financial position in an overall manner (Exposure Drafts Public Comment Documents. 2017). Therefore, the new Exposure Draft will provide clearer definitions of given assets as well as liabilities that need extensive guidance for supporting the definitions. The new Exposure Draft informs the parts of the presented theoretical structure that are outdated at present. For instance, the Exposure Draft mainly highlights the role of likelihood from the given definition of assets as well as liabilities (Anantharaman, 2015). Analyzing the statement behind public interest, economic interest group and capture theories and evaluating which one best explains each of the comment letters Public Interest theory is one of the theories that clearly assumes the fact that economic markets are fragile in nature as well as has a tendency to operate inefficiently in favor of any particular individual concern (IFRS - Conceptual Framework Exposure Draft and Comment letters 2017). It completely ignores the significance of the society as a whole. Addition to that, in order to direct as well as monitor, it is needed to have government intervention for the economic markets. It is a known fact that government regulates the banks where it works according to the social interest. It is the bank that has the ability to serve the social interest with efficient allocation of resources in proper ways (Allen Ramanna, 2013). The capture theory, on the other hand, aims at recognizing close association between the government agencies as well as industries where they actually operates or functions. As far as regulating agencies is concerned, they are created by the government at various levels, be it state, central and local levels. This will ensure protection of the overall interests of the society for taking part in industrial decisions as well as activities at the same time. For instance, in case of government agency, they are established at state level so that they can regulate the industry as well as protect the rights of the society from the adverse impact of any sort (Accounting Standards UpdatesEffective Dates. 2017). Economic interest theory aims at assuming the fact where the industry forms the groups that serves the best interests of the group. Addition to that, there are various groups that faces conflicts prevails in a given situation. These crowd lobby administration to make the legislation based on the interest of the group (Exposure Drafts Public Comment Documents. 2017). Furthermore, the financial groups do not have communal attention in their schedule. On the contrary, controller is also provoked by self interest; they are not troubled with community interest. Nevertheless, Regulators plan is to uphold their current position and also get re-elected. Hence they have to please these economic groups for the reason that they are the populace who manage the financial system. The monetary groups will have strong power and those groups who do not have the authority will not be able to lobby management. From an economic interest group theory viewpoint of guideline any possible legislation to be initiates may not lead to responsibility of business in relative to their communal and environmental presentation since legislations will be put in place keeping financial groups interest in apprehension for the reason that of lobbying with the administration (IFRS - Conceptual Framework Exposure Draft and Comment letters 2017). The best theory that is explained in the comment letters is the capture theory. The authoritarian agencies need a knowledge and proper information of the business which is being synchronized. Example, directive of the insurance industry need the proficiency of working along with the banking industry and group that works on behalf of schooling industry that has the capability in how this business works. Furthermore, the society who have most information about an exacting business, they fit in to that business either they previously worked there or would be departing in prospect or will answer with the industry information (IFRS - Conceptual Framework Exposure Draft and Comment letters 2017). From the website of FASB, it mainly states that FASB mean to spread principles only when the predictable payback surpass the apparent costs, when it is dependable, quantitative cost-benefit computation as and when required. It is known fact that cost benefit analysis is practical to authoritarian improvement when the net economic value of a new instruction. Therefore, it mainly measures the costs as well as benefits of the guideline into financial terms (Exposure Drafts Public Comment Documents. 2017). There are several agencies or groups that are normally created by given public and ultimately they create working in support of the business they fit in. If the controller or group associate are extremely emotionally concerned with the business in which they are working that means the organization is detained by the business and no more they look for the benefits of the society as whole (Exposure Drafts Public Comment Documents. 2017). The authoritarian agencies are recognized for defensive interest of the culture by increasing the allocation of resources but if the agencies are captured by the business they start working for the industrys interest. Furthermore, when government agencies are shaped to control the oligopoly industries where accounting firms work with matching products, then if these agencies are captured by the business, they are malformed into monopoly. Therefore, these agency work as effectual head of the trade and get very high authority and regard in the business (IFRS - Conceptual Framework Exposure Draft and Comment letters 2017). Reference List Accounting Standards UpdatesEffective Dates. (2017).Fasb.org. 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