Accounting theory in Australia Essay Example | Topics and Well Written Essays - 1000 words

Accounting theory in Australia - Essay ExampleMy reflection is based upon Watt and Zimmermans list that the managers of a firm will attempt to utilise methodologies to avoid taxes and dividendsIn this vein I waspreoccupied reflecting upon and reading on the Enron disaster and how song git not be seen as neutral and un strokeedTaking this course changed my perceptions about the rattling pith and substance of how I would ever perceive numbers.After taking this course I realised that numbers like words and conduct and can be just as easily manipulated by the kind-hearted mind.T presentfore they will be seldom neutral and un separatrixed.One of the close to revealing moments were when I was fitted to see that evening share valuation will be subject to novel accounting methodologies.For example I was able to see that in valuation of shares there would likely be an involvement of a lot of opus work in accounting terms in order to adjust the Capital Gains Tax valuations for rebasin g and indexation purposes ,assess heritage Tax on shares and also assess the situation now with employee share schemes.It was seen that there might be a biased view of accounting when the share valuation will have to account forIt was seen umpteen times that by choosing certain accounting techniques it would be possible to see a certain bias emerging.For example while using the Asset based approach it was seen to ignore factors like Industry prospects ,Management fibre / stability ,Growth potential ,Competitive bidding and the alternative opportunities for the company being valued for tax purposed to avoid paying large amounts of tax money to the Inland Revenue .Infact it was possible to see a conflict of views here where as many times what seemed like creative accounting reminded me of biased accounting .It was learnt that the process of attempting to bias accounts is often referred to as creative accounting. which often attacked for not being neutral and ethical as some techniq ues can cause bias1. Revenue whitethorn be recorded overly early. In particular tax income from sales may be recorded in the accounts before the sale is agreed.2. Bogus revenues may be recorded. For example refunds from suppliers might be recorded as revenues.3. Profits from recurring business may be artificially boosted by the inclusion of one-off gains. Also losses from recurring business might be depict as non-recurring.4. occurrent expenses could be allocated to a later period. This could take the form of depreciating or amortizing too slowly.5. Future expenses may be shifted to a current period. For example depreciation or amortization may be too rapid.6. There may be a failure to record all liabilities.7. Current income may be allocated to a later period.8. Unrealistic valuations might be given to inventories.9. Unrealistic lousy debt provisions could be made.10. Items may be held off-balance sheet.Infact it is worth mentioning the hazards of careless accounting as learnt from the Enron Saga. For the purposes of accounting practices the most important thing to analyse is that who exactly in the accountancy/auditing profession should have taken responsibility for the shortcomings in the accounting records .These accountants were clearly abusing their authorities as watchdogs for shoddy practices and instead they perpetrated fraud on the investors.. The assertion of Accounting Standards 100 clearly allocates responsibility to auditors in the matter of fiscal statements the responsibility for the preparation of the financial statements is that of the directors of the entity. In this vein I learnt that accounting is a profession requiring much responsibility.The should be able to see and guard any financial wrong doing on behalf of the directors with regard to Auditing and Accounting Standards. It is evident from the events leading up to Enron