Law is a system of rules and regulations which are formed for the betterment of the society and its people. Law provides a basic frame work which provides basic guidelines and procedures in accordance to which the rules are created and enforced through social and governmental institutions (Kraska and Pedrozo, 2013). In addition to this, there are different types of law which are framed in different fields. One of them is the company and securities law which provides a legal hypothesis, in accordance to which the company should operate its functions. In this present report various aspects regarding to the companies and their financial status have been discussed.
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Present arrangements regarding Reporting methods of companies
Business organizations in order to conduct their operations in a smooth and legal manner, perform their functions in accordance with the lawful requirements laid down in the laws and legislations that are framed in this regard. Companies are required to adhere all the rules and legislations which are framed with a point of view to enhance the legal framework of their business concern. The Corporation Act, 2001 is framed in Australia, which is a common wealth act of Australia which lays down various legislations, rules and regulations of business activities in the said country. It is the principle act which owns the control over the companies in Australia (Sealy and Worthington, 2013). In accordance to the provisions of act, there are various reports which are required to be framed by companies includes financial report, annual report, CSR report and Director's responsibility statement. It can be further explained as:
In this aspect, annual report of companies are prepared in aspect of rendering the true and accurate financial position of companies to its shareholders and stake owners. It comprises of entire activities which are performed by companies for transaction of business. Also, Auditors reports are also framed in order to provide a clarification by an Auditor by conducting an audit. In annual reports of company, balance sheet. Income statement cash flow statement and different accounting policies are mentioned. Annual report aim to provide true and accurate financial statement and position of company to its stakeholders. Through balance sheets and income statement, actual position of company is determined (Waldron, 2013). The disclosure arrangements of annual report are adequate as balance sheet renders the present state of company's liquidity and equity regards.
CSR reposts are prepared by companies in order to convey their mechanism of CSR for the betterment of society, to its stakeholders. Also, it can be analysed that there are various aspects related to CSR which are also mentioned in this report. This report can be considered as the true and adequate platform as it enable the companies to render all the detailed information about various CSR activities performed by companies (King and Raja, 2012).
Comprehensive analysis of existing corporate reporting
Various reports are prepared by business organizations in order to provide the correct and true information regarding the actual statement of company. The main motive behind framing different reports is to provide all information required to its stakeholders, stake owners and government. In order to facilitate this, business organizations prepare financial reports, governance related reports etc, by which they can transmit various activities and their outcomes in a legal and ethical manner. The existing corporate reporting involves preparation of financial reports and CSR report in order to facilitate information in respect to their respective fields and streams.
In respect of financial reports , annual report of the company is the most significant report of the business organization. Annual report is a document which render true information regarding all activities and deeds of companies conducted throughout the previous year. It provides the financial information to stakeholders. In accordance with the Corporation act 2001,it is mandatory to disclose annual reports which provides true and ethical information regarding various requirements (Cunningham, 2012). Also, annual report is an effective platform which provides the effective information of company with the help of various particulars. Various particulars and components of annual report through it can depict genuine and accurate information can be as follows:
General corporate information
This is a concept in which the companies provide general information regarding their business concern. In addition to this, it provides basic information regarding the establishment of company and its managerial hierarchy.
It is the report which has been prepared by Board of directors, in accordance with the provisions of the Company law. It illustrates the present situation of company along with its compliance and adherence with financial and accounting standards and CSR standards (Liu, 2012). Director's report provides a legal framework for greater transparency in corporate governance. It is rendered necessary as it aim shareholders to sort out issues of finance, potentiality of market and expansion of marketing opportunities etc. The objectives are met clearly with the proper disclosure of information. It is necessary for providing the financial position of the company through its shareholders. Also, in this report, the directors of business organization also provides necessary details regarding the remuneration and company accounts. Director report should be disclosed to public as it acts as a social accounting information system. It also includes the future strategies and projects which the company is required to adopt for the attainment of all the objectives and goals of company.
It is a report which can also be named as the disclaimer or clarification by a internal auditor which is a result of an audit by an auditor. It depicts true information regarding that the companies have complied with all essential legal and financial requirements (Carney, 2012). Audit report is considered to be an important tool as it renders the information regarding the finance to its users. However, some companies do not conduct audit. Companies should conduct both internal and external audit as it attracts investors helps in attainment of loans and also improve appearance in public.
It includes the balance sheet, income statement, cash flow statement etc. it is a summary of all the assets and liabilities and equity. The companies should make sure that all the assets and liabilities are marked at market value. It is important that the balance sheet should be clear and concise which should contain all the necessary elements like assets and liabilities of company. Financial statements are consist of all the essential requirements and which are clear in nature. It includes cash in hand, total assets , total equity funds, which illustrates true position of company. In this aspect the companies are required to follow the requirements laid down under the Corporation act, so that it would be able to render all the essential requirements related to financial statements (Kerr, 2014). In this context the companies adhere to the guidelines which are specified in the context of the preparation of financial statements. Although companies did not comply all the requirements which are laid down in the Act . They record their price of assets and liabilities at market price.
AS, financial statements are required to provide the essential are required to provide an actual state of companies to its stakeholders.
It is important as it is an effective medium which provides the basis of revenue and expenses. It is the clear and precise form of recording all expenses and costs which are necessary for companies. The main focus of formation of financial statement is to analyse whether the business concern has made or lost profits during a particular year (Yang, 2013).
Cash flow statement
It is the statement which provides the clear and precise information regarding the cash outflow and inflow. As per the requirements laid down in act, the companies are required to form its cash flow statement in 3 headings which includes cash from operating activities, cash from investing activities and financial activities. However, the companies do not frame cash flow statement in accordance with the procedure. It leads to the wrong decision to be concluded. In this context the companies are required to follow all the guidelines of act.
Now days, various companies are not able to comply with all the requirements which are laid down in the Corporation act, 2001 and in the guidelines of ASIC. The management of the companies make sure that all the necessitates should be meet up.
Various guidelines laid down in ASIC in aspect of formation and preparation of financial statements by business organizations :
In accordance with the RG 230 guidelines.
Companies are required to introduce the various additional information regarding the non- IFRS financial information which is required to be provided in the aspect of additional disclosure.
Information should be presented with all the essential requirements in accordance with the accounting standards (Tankard, 2012).
Also, financial information and details that has been provided as in accordance with the standards are not able to be included in the financial statements. In this regard such said type of information is only considered to be included when it is rendered s necessary in the financial report.
Also, the figures of profits that are calculated in accordance with the context of accounting standards are required to be not involved as a part of total or line items in the context of income statement.
Non IFRS information should be included in the directors report through which investors can gain profits and knowledge regarding the company's information.
The companies should use Non -IFRS information in order to provide the aspects relating the information to be presented in a contextual and legal manner (Solove, 2011).
The companies should include those information which are full and clear for its investors , stake owners and other users of investors which are required to be communicated with them with all the essential requirements.
In accordance with the guidelines of RG 247:
These guidelines are basically formed for listed companies and their board directors.
It is considered as necessary in rendering the useful and substantive information in respect of the shareholders or other unit holders while preparation of operating and financial revaluation of directors report.
In accordance with the section 292(1) of Corporation act, it can be said that all the business organizations and companies are required to prepare an annual financial report.
Also, the financial statement is formed with the basis of essential requirements which are characterised as operations, financial place, business schemes and various prospects for future (Berndtsson, 2012).
Companies should consider operating and financial review as important part as it affects the performance of company. It also promotes the disclosure consistency as it has been required by the legislation to list all their matters in the particular format of OFR.
The business concern should comply and frame their business organizations in a legal and ethical manner so that they can not be penalised. Various penalties should be ensured so that companies can conduct their work strategies in time.
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In accordance with the above report, it can be analysed that there are various laws and legislations which are required to be meet up in accordance with the Corporation act. Also, various guidelines are framed in respect of the financial reports and statements. In addition to this, the companies should disclose all the essential information in respect of their business organization to its shareholders.
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