IFRS standard by Audit Organisation of Iran
What Are the Need Of IFRS Standard?
Audit Organisation of Iran (AOI) is the regulated and controlled by the law of Iran country that adopt international financial reporting standard to analysis measuring the financial status and position of the company. Audit Organisation of Iran (AOI) wants to apply IFRS or conduct by all listed company of Iran so government of the country to easy to proper evaluate them financial position in the effective manner. It is not require to other company to conduct IFRS to analysis financial standard at internation level. Social contracts of the country play and vital role that help to manage and control on society and help to develop a healthy and fair environment for society's persons.(Chung and AitSahlia, 2012) Volkswagen is the auto mobile company that provide various type of four wheeler cars to society and provide safety and security during driving the car(Coslor, 2011).
ASSIGNMENT HELP AUWe Aim At:
Consider the country where you have lived the longest time of your life. Has this country adopted the International Financial Reporting Standards (IFRS) yet? If yes, when and how?
The Audit organization of Iran is authorised by the legal body to implement accounting standards in Iran. The audit wants to implement this IFRS standards in many more companies started from Iranian financial year 1395 according to the Gregorian calender. Most of the companies of cited country get permission to adopt this effective policy but according to them it is not essential or indispensable for them to execute this IFRS standards. In fact these companies wants to adopt IFRS standards but after effective modification from 1396 which consider as financial year. One of the famous or popular institution of Iran named as Securities and exchange organization whose main motive is to regulate the security is going to announce the appropriate criteria to identify more and more large listed enterprises( Czarniawska, 2014).
Audit organization of the Iran has implemented two types of IFRS standards one is the with reforms and changes whereas the other one is the without any changes or reformation of the standards or in any terms and condition. Apart from this audit organization want to enforce or implement this IFRS standards in most of the companies by establishing various effective modifications with the help of one of the popular institution that is audit organization of the Iran.
1.Reputation of the particular company is reduces over its useful life but its not exceed the twenty years and also decreases if damages is indicated. According to the IFRS 3 business combinations , the recover profit or capital of a goodwill or image existed in the market must be calculated or measured each year. In fact IFRS helps in covering the principle amount of the business invested while establishing by recognizing the profit as well as loss(Volkov, Volkov and Tedford, 2011).
2.Investment amount of the business also measured to understand the loss or any damages faced by the company. Under IFRS 9 Financial instruments, these kind of investments must be measured at equal value
That is, what mechanisms and regulations are there to ensure that firms actually implement the IFRS in preparing their financial statements?
It is very indispensable or mandatory to understand the principles of IFRS, which included or consist of purpose of the institution with appropriate framework which consider as blueprint of the overall document of IFRS(Busco and Scapens 2011). Apart from this, the major scope or focus of this cited institution that is calculation has been expanded according to the changing scenario. One of the challenging matter of the IFRS is to allow a large number of financial assets and liabilities must be calculated or measured at equal value. In fact equal value measurement requires a appropriate level of judgement criteria to remove or eradicate any risk or errors that means accounting data might be misrepresented due to the unusual judgement or wrong decision. Therefore to remove such kind of risk and challenges it is very important and necessary to:-
After adopting the IFRS standards most of the companies improves their overall scenario with the development and growth( Busco and Quattrone, 2015).
Question 1: In your opinion, has VolksWagen (VW) breached its social contract?
Volkswagen is the automotive company that provide various types cars to society that help to provide better services with safety and security but at this time Volkswagen breached the social contact that totally related to the society in the explicit and implicit term. All organisations are working for society and their responsibilities for society. This company through breached the contract in the directly and indirectly way its not good for the society of the Australian country and their people.
Volkswagen through breached the social contract so that explicit manner affecting on the external or social environment like flue gas, pollutions and harmful gases those are develop unhealthy environment for society so they cannot working effectively and efficiently manner. Society contracts are refers to the legal requirement on the level of pollution in the environment, flue gas that has also breached by the German Auto maker. There is having some rules and regulations those all are have to be follow by the all car maker company in the country and also emission or pollution, flue gas standard are set by the government that should not breached by these companies(Lee and Baskerville, 2012). The Volkswagen company through affecting on the environment in the directly and indirectly manner. This company is provided at the higher level comparison to set or allotted standard by the government of the country. Volkswagen through also breached us the clean Air act that help to provide clean and healthy environment for all persons of the country. By this company adopting defective items and equipment in the cars those are increase the pollution level and harmful environment. These defective devices are only properly working for testing the car driving by the consumers. EPA(Environmental protection agency) through help to protect environment of the country and some standard those not breached by the any car maker companies(Barth, 2013). But Volkswagen company through generate the 40 times more Nitrogen Dioxide that very harmful for all persons and effecting on the environment. For example: on the basis of the US EPA of the country is Tier 2 / Bin 5 emission( pollution, flue gas) standard those are not breached by the automotive companies also mention the limit of the NOx gas that should not more than 0.043g/km but by the Volkswagen automotive company's of two cars one is Jetta through generate the NOx is 0.61-1.5g/km and second one car is Passat through generate the NOx is the 0.34-0.67g/km. In the other hand, Volkswagen through also breached other rules and generate the CO2 by some irregularities activities and works. NOX gas through develop some harmful issues and problems for the society and generate some health issues for peoples. Its help to develop acid rain in the country and also develop the green house gas that impacting directly and indirectly manner on society.
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Question 2: Consider the daily ordinary share price (in Euros) of VW over the period from 10 Sept 2015 to 6 Oct 2015. Why do you think the VW stock price reacted in the way it reacted during this period?
Volkswagen through generate some harmful elements in the environment there is conduct an scandal on 18th September 2015. By the US through issued a notice to the company there is mention the violation of the CAA that affected by the financial and social reputations by the company(Ballestero, 2015). After the conducting scandal by the US so this company's of share price or market size is decrease and break the trust by the customers on this company. EHM( efficient market hypothesis) through measuring the share price of the company Volkswagen company's of market share is reduces due to this Scandal. After that announced the market share or size of the company by EPA on 18th September that become €161.35 to €133.70 on 20th September .
Question 3: Explain how the future earnings performance and financial position of VW would be affected as a result of the scandal?
Through the Scandal of the Volkswagen company that affecting on the company's image and their financial position also affecting on the future earning and performance of this company. Because due to this scandal through break the trust bye the consumers and develop the negative image in the market(Young, 2011). To resolving the problem,s by the Volkswagen company so had been announcement of spending the $7.3 billion by the company that announce by the US. During to this scandal company's P/L statement in very changes created in the expenses and revenue of the company so there is high loss by this situation that have to faced by the company.
This report is all about overall description of IFRS standards set by the appropriate modification implemented by one of the famous organisation named as Audit Organisation of Iran. The main motive of this institution is to establish the IFRS standard at international level to measured their goodwill value in a proper manner by applying the effective techniques and method. Apart from this it also included the change in the stock price of Volkswagen according to the time period.
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