Competition and Financial Accounting Skullduggery

Question: Discuss about theCompetition and Financial Accounting for Skullduggery. Answer: Introduction In this article there is discussion of the activities of accounting skullduggery of the companies. It has been observed that there are more than $26 Billion dollars in write down that has been observed in companies such as BHP Billiton, South32, Rio Tinto, Santos, Woolworths, Orica, Woodside that has been to the collapse of more than $44 billion collapse. These kinds of write down practices has grown immensely in the last year. The Australian Securities and Investment commission has stated that it would investigate into this matter. Woolsworth company had somehow converted 800-million-dollar profit from 1.2-billion-dollar profit. If this had occurred in countries such as the United States, the SEC of the country there would have been stringent actions against these practices by the corporation. The ASIC considers the companies to follow the ethical mandates and have proper regulatory practices. The remuneration to the top management is higher and is also a problem. Response The Australian Accounting Standards is a part of the Australian government that is used to develop and maintain regulation of the financial reporting standards of the company. This applied to the private and the public sectors of the company. In this the companies are expected to balance between the stakeholder interests more than the shareholder or investor interests. The corporate governance of the company favors only some stakeholders and they ensure that the people (Balakrishnan Cohen, 2013). There is also the incorporation of the positive accounting theory of opportunistic perspective that is adopted in the accounting practices of the company (Bazley et al., 2012) . The oversight and the ethical committee of the companies should do more to address these claims. To conclude the article discusses about the ethical mandates required while balancing the budget. Durkin, P. ( 2016, September 16). Accounting skullduggery hides $26b in losses. Australian Financial Review,.p. Retrieved from https://www.afr.com/business/accounting-skulduggery-hides-26b-in-losses-20160918-grit83 Article 2 Summary In this article there is critical view of the HSBC reporting of the people retirement savings. There is the concept of positive bias in their retirement accounts and there is underestimation of the costs involved in the process. There are a number of biases that has been found in the report that the author argues. The issues with the positive accounting theory when accounting for the personal retirement accounts has been detailed in this article. The biases such as earning more would lead to better retirement lives or that selling of assets would mean a better quality of life has been disputed in this article. To summarize the article, it points out towards the issues of positive accounting theory and overestimation. Response to the Article Positive accounting theory tries to make positive accounts and predictions about the real world events and uses these positive assumptions to the accounting transactions (Deegan, 2012). There was discussion in the 7th sessions of the importance of positive accounting theories. Normative theories on the other hand discusses about what needs to be done. But the positive theories explain the positive bias and predicts the events. The reasons firms use this practices is to ensure that there is maximization of the prospects used for survival. The issues in the positive accounting theories is that they make invalid assumptions. There is no systematic or scientific review of what needs to be done nor is the predictions assured (Horngren, et al., 2012) . The positive accounting theory in the past has not been able to show substantial positive growth in the markets. Even though it has been in play from 1970 onwards. The issues of positive accounting theory and its inherent limitations has bee n explained in this article from a practical perspective. Patten, S ( 2016 August 2016) Accentuating the positive can backfire in retirement, warns HSBC. Australian Financial Review, P. Retrieved from https://www.afr.com/personal-finance/accentuating-the-positive-can-backfire-in-retirement-20160801-gqi3tt Article 3 Summary of the Article Wesfarmers had said that the actual earnings of Target would be 53 million dollars and not 74 million that was reported by Target. This is a 5.7% difference in the reporting. 21 million dollars was assumed to arise from the rebate arrangement. Apart from this there was the issue of plunging coal prices in the last year. This had caused the company to suffer a lot of losses. The remuneration losses for the executives were considered to be 10 million dollars. However, in spite of this the Wesfarmers executive remuneration was more than 1 million dollars. The short term incentive payments and the inherent risks of the process has been reported in this article. Response to the Article While an accounting reporting is made the most important aspect is maintaining the ethics. This is the core value of the corporate governance. Meeting bottom lines, maximization of the earning and adding of the intangibles in the accounting balance sheets are added in order to keep the investors of the company satisfied. However, in this case there has been considerable losses yet the management continues to receive considerable amount in bonuses in spite of the losses posted. The ethics review of the company needs to reexamine the practices of bonus payout to the top executive (Macve, 2015). To summarize it is quite clear that the company should have a better ethics and corporate governance practices in place. Greenblat, E ( 2016, September 22) Troubled year costs Wesfarmers executives $10m in entitlements, The Australian, Retreived from https://www.theaustralian.com.au/business/companies/troubled-year-costs-wesfarmers-executives-10m-in-entitlements/news-story/40434a5917e419327c68a3eaff7bf63e Article 4 Summary of the Article Shine Lawyers face the risk of a class action after the collapse of the share price. The Shine lawyers are blamed for the 75% decline in the share price. This had wiped over 253 million in the market capitalization. Reason for the class action is that Shine has been criticized for over-estimating the firms ability in recovering from the loses. The company has however declined that they had ever committed any wrong doing. Over estimation of the company progress is the reason cited for the class action brought against the company. The class action has been brought against the company. Response to the Article The issue in the article can be linked to the positive accounting theory and is considered to be opportunistic perspective. This is assumed that the managers were driven by self interest and also had employed in creative accounting practices where the objectivity has not been considered. It seems to refer that the people responsible for the accounting practices were not clear and has caused this issue to arise (Henderson et al., 2015) . Shine lawyers would have been prematurely motivated to reported the revenue that there would be a future profit in the future. This is the reason for the company to face the class action. While the intention or the actions of the Shine company are yet to be uncovered it is quite clear that the company has not been meeting objectives and there is an obvious issue in the operational procedure of the company. Merrit, C ( 23rd September 2016) Shine faces class action from investors over share price fall The Australian Retrieved from https://www.theaustralian.com.au/business/legal-affairs/shine-faces-class-action-from-investors-over-share-price-fall/news-story/dd911bf7579321570aa642b2f6ab499c Reference: Balakrishnan, K., Cohen, D. A. (2013). Competition and financial accounting misreporting.Available at SSRN 1927427. Bazley, M., Hancock, P., Fisher, C., Lovell, A., Berk, J., DeMarzo, P., ... DeMarzo, P. (2013).Financial Accounting: An Integrated. Thomson Pty Ltd, South Melbourne. Deegan, C. (2012).Australian financial accounting. McGraw-Hill Education Australia. Durkin, P. ( 2016, September 16). Accounting skullduggery hides $26b in losses. Australian Financial Review,.p. Retrieved from https://www.afr.com/business/accounting-skulduggery-hides-26b-in-losses-20160918-grit83 Greenblat, E ( 2016, September 22) Troubled year costs Wesfarmers executives $10m in entitlements, Retreived from https://www.theaustralian.com.au/business/companies/troubled-year-costs-wesfarmers-executives-10m-in-entitlements/news-story/40434a5917e419327c68a3eaff7bf63e Henderson, S., Peirson, G., Herbohn, K., Howieson, B. (2015).Issues in financial accounting. Pearson Higher Education AU. Horngren, C., Harrison, W., Oliver, S., Best, P., Fraser, D., Tan, R. (2012).Financial Accounting. Pearson Higher Education AU Macve, R. (2015).A Conceptual Framework for Financial Accounting and Reporting: Vision, Tool, Or Threat?. Routledge. Merrit, C ( 23rd September 2016) Shine faces class action from investors over share price fall The Australian Retrieved from https://www.theaustralian.com.au/business/legal-affairs/shine-faces-class-action-from-investors-over-share-price-fall/news-story/dd911bf7579321570aa642b2f6ab499c Patten, S ( 2016 August 2016) Accentuating the positive can backfire in retirement, warns HSBC. Australian Financial Review, P. Retrieved from https://www.afr.com/personal-finance/accentuating-the-positive-can-backfire-in-retirement-20160801-gqi3tt