The entire world has been moving with an accelerating pace which apprises continuously that the world is on the peak of innovation and globalization in which any happening can have a significant effect over the other thing instantly. Finance is the name of accumulating and investing funds of the organization in a place where it get optimal return, above its weighted average cost of capital (WACC) (Vernimmen, 2000). The main prospective of this study is quite straightforward, as we want to check the implementation of accounting standards on a particular organization. Actually the accounting standard which has been followed while doing this work pertains to Australian Accounting Standard Board (AASB). Actually we have to see that how the company is using different accounting standards prescribed by AASB while making financial statements. AASB is just differing from the standards prescribed by International Accounting Standard Board (IASB). We will see the difference between these two standard boards under subsequent headings. The organization which we have chosen on which this entire study will depend on is G8 Education Limited. Let's start the analysis.
Company's Background G8 Education Limited
G8 Education Limited (GEM, formerly Early Learning Services Limited) is the result mind centre hand in Australia, focusing on the individual desires of each kinship. GEM conducts a breadth of infant tending overhaul activities, counting: the acquisition of teen heed centers, the management of outcome nurture centers, business-related scheme management, military and consultancy. The Company is a bringer of developmental and educational teen treatment services. In addition, the Company is engaged in the procedure of infant tension centers owned by it and agreement management of child worry centers. Its facilities grant family day bother, long day bother, before, and after instruct tension, casual mind, and holiday caution.
Words about AASB
The Australian Accounting Standards Board (AASB) is an Australian Government activity that develops and Investments Commission's (ASIC's) role is to enforce and regulate troupe and monetary navy laws to protect Australian clients, investors and creditors.
The AASB uses a conceptual framework, which includes Statements of worldwide economic reporting values and simplifies the AASB implemented the broad strategic bearing from the Australian Financial Reporting Council (FRC) to entities in the reserved and broadcast sectors of the Australian reduction. Since 2002, the participation of the Australian commune in global yardstick scenery. The AASB's functions and powers are set out in the Australian Securities and Investments Commission Act 2001. The Australian Securities and maintains economic treatment values applicable to adopt International Accounting Standards Board (IASB) standards for economic reporting periods launch on or after 1 January 2005. In July 2004, the AASB adopted several standards that operate from 2005, counting: Also, the AASB contributes to the development of Accounting Concepts (SAC 1 Definition of the Reporting Entity and SAC 2 Objective of General Purpose Financial Reporting); developed by the previous AASB and the Public Sector Accounting Standards Board (PSASB), to evaluate projected accounting standards (Bierman, Hundle 2008).
Australian Accounting Standards that incorporate IASB Standards Other AASB Standards supporting the Australian Accounting Standards that incorporate IASB Standards Other AASB Standards that applies to certain types of entities. Now, the readers get the basic idea of the terms like IASB, IFRS and AASB and their implementation too and now fully ready to see the basic difference between the IASB and AASB. Let's examine the same.
Difference between IASB and AASB
On EU-regulated heap friction to broadcast sector agencies, Inevitably, The planetary framework-bearings evolution began somniferous decades proceeding as an accomplishment by crude and small nations powerless to coordinate their individual tool standards. AASB required from their next companies to register the comprehensive returns in the body of the profits testimony. Comprehensive revenue or earnings are no big difference between the reporting of these two fiscal regulation bodies. The stance of reveal based payment is difference mendacity between the AASB and IASB. The formatting and the check of the IFRS several companies from different countries are diverting towards IFRS. Following from these changes, the International Accounting Standards Board (IASB) sure that no new accounting values or foremost amendments to International Financial Reporting Standards (IFRS).
From the analysis, the researcher has been substantial changes in accounting values and the communal sector (Clarke, Thomas & dela Rama, Marie 2006). Due to the great extension of the municipal sector-specific accounting values will increase. Nevertheless, as the gamble unease became more global, regulators, investors, importunate companies and auditing firms began to find out the count of having identical standards in harmony with IFRS. The AASB's work course for the communal sector mainly involves the harmonization of the Government Finance Statistics (GFS) and fiscal coverage requirements for shared sector agencies over modern time resulting from the implementation of this work are budgeted On the converse the IASB doesn't want from their compressed money statements in all areas of the diversification towards the IFRS will strengthen the copy of monetary records (Lewis & Pendrill 2004). There is an open word used in companies' monetary conduct from the group-entirety location of observe. Companies in Australia, New Zealand, Canada and even US are diverting to IFRS because according to finance professionals the coins treatment tether the globalization of matter and sustain has diode more than 12,000 companies in almost the essential countries to adopt IFRS. In 2005, the European Concurrence (EU) began requiring companies incorporated in its slice states whose securities are probable to have significant impacts on potential economic coverage in the Australian Generally Accepted Accounting Principles (A-GAAP) exposure frameworks, and demo of the pecuniary account are almost the same in both measure boards. The outcomes of Australian Equivalents to existing morals would be used by industrialized nations to show values that There have analyzed that could be necessary to be useful pending after 1 January 2009. The AASB has subsequently concentrated its focus on addressing some issues definite to make their following companies to tell comprehensive income in their fiscal statements.
G8 Education Limited Australia and its Complying with AASB
G8 Education Limited is the result mind centre hand in Australia. It is also the maximal buzz session in State by hawk capitalization. It was shaped in 2001 by the union of Australia's Dejected Elevation Copyrighted Assortment (DECA) and the Anglo-Dutch plc. The repercussion is a twofold-planned bundle with regard backing in Melbourne and Author. G8 Education Limited, Elfin, which is the common individual in the threefold-traded establishment, is listed on the Australian Securities Riot. The house began fuel inquiry in the 1960s with discoveries in Deep Embarrassment, a hobby which became an improvement centre. G8 Education Limited began to spread offshore in a judgment of projects. Lone abide was the Ok Tedi carmine quarry in Papua Latest Poultry, where the consort was successfully sued by the virgin populace because of the environmental humiliation caused by the wealth dealings. G8 Education Limited had doctor up beefing up with the outsize Escondida burgundy abundance in Chile (57.5% owned) and the Ekati Lozenge Mine in federal Canada. The inefficiencies of what was, by orbicular standards, a teeny bait chopper usability in Metropolis sometime immovable up with the reunion and the Metropolis operations were congested in 1999. The 'remote merchandise' plane of the post was spun erase to form One Steel in 2000.
The company's shares are actively traded on Australian Stock Exchange (ASE). The company has a large workforce comprises on 38,267 employees worldwide. The company has joined a large amount of revenue of US$ 44,113 million and profit of US$ 6.338 billion.
After a careful analysis of the research report of the company, one can say that the company is adhering with the Australian Accounting Standards (AAS) and the company is complying with the standards efficiently. If you look over the income statement of the organization then you can judge that the company is effectively compliance with AASB. There is no comprehensive income section in the financial report of the company. The depreciation and inventory methods used by the company are also according to the AASB. The balance sheet of the company is also complying efficiently with the standards of AASB. The company is using First in First Method (FIFO) inventory method which is allows by the AASB and by IASB as well.
We have to assess that whether company have comply with the proposed standards. First let's check whether the company complies with the AASB 101 "Presentation of Financial Statements". The standards state that the company has to make their financial statements transparent and easy to understand. There should be a section of comprehensive income in the income statement which is duly present in the income statement of G8 Company limited. The company has also record the expenses and revenue according to the prescribed procedures and standards of AASB. Now take a look over the other standard which is the standard number 107 called presentation of cash flow statement. The standard states that the specific activities should be recorded under the appropriate activity headings like the operating activities, investing activities and financing activities. The standard is some what different in recording as compared to the accounting standard of IASB. The dividend received and paid would be recorded under the investing activities heading in IASB but it will be recorded in operating activities in AASB and G8 Company Limited did the same by recorded the dividend received and paid under the operating activities.
The accounting standards no 116 and 138 of AASB would account for the same thing by describe the recording of property plant and equipment (PPE) and intangible assets under the appropriate headings. Both IASB and AASB are in connection to say that PPE and intangible assets should be recorded at its fair value rather than the historical value. PPE would be depreciated while intangible assets like goodwill, patent and rights would be impaired for any gain or losses. Standard 116 states that companies should record corporate gains if the selling amount exceeds the salvage amount of the assets and such gain will become a part of the company's income statement. According to both the standards the depreciation expense would be add back to the income statement because it is a non cash item. After adding back the total amount would become the part of the company's cash flow operating activities. All these provisions have been duly complied by G8 Company in their financial statements of 2009 and 2010.
The total tax given by the company is $1.90 billion in the year 2009 which is 30% of the total income earned by the company. The accounting standard prescribed according to AASB states that the companies have to give 30% of their net income in federal income taxes. Deferred tax amount which the company recorded is $ 3.08 million. The accounting treatment of deferred as well as corporation tax is similar under both IASB and AASB.
Liabilities and assets are some very important ingredients finds under the financial statements of the companies. The company which we are analyzing has a strong amount of contingent assets recorded in their balance sheet. In accounting term contingent means dependent or fixed or long term. According to the company's balance sheet, the total amount of company's assets account for around $3, 4578 million in the year 2009 with contingent net liabilities of $ 2, 2579 million in the same year. The assets and liabilities are recorded on the fair value as described by the AASB which shows that the company is effectively complying with the standards of Australian Accounting Standard Board (AASB).
The assignment on which the researcher has worked is indeed difficult because it required ad hoc, extensive and prudent research. The writer has researched a lot on the companies of Australia to find company which complying with the AASB. The company which we have chosen is G8 Education Limited. We have analyzed that the chosen company is effectively complying with the standards prescribed by AASB and doing a good job.