Involvement Of Stakeholders Existing Practiceâ€Myassignmenthelp.Com

Question: Discuss About The Involvement Of Stakeholders Existing Practice? Answer: Introduction With the help of this report information related with the financial reporting as well as financial statements will be shared so as to provide better as well as effective set of information to the organizations. For an organization it is necessary to make an appropriate financial statement because it is essential aspect which helps in providing relevant set of information to the stakeholders available in the market. On the basis of given case study this project report has been prepared on the Sunshine Ltd industry that is a departmental store in which depreciation straight line method is being used. It is assumed after studying the case study that general manager of the organization desires to diminish the past years profit and add it on to the approaching years. This report gives the fair idea about the involvement of stakeholders like immoral practices, governance, ethical behavior and these can make negative impact on the companys stakeholders. Apart from this, some help is to be p rovided to the manager by suggesting recommendation in order to make changes according to the AASB116. Discuss, analyze and research ethics and governance of the above case. Your paper should address the stakeholders, ethics, governance, changing depreciation methods and suggestions for Maria to ensure compliance with the AASB116. Ethics During the decision making process ethics should be considered as principles and moral (DeGeorge , 2014). Ethics is considered as an important element by which right decision is to be made by involving moral values into the decision and influence both external and internal environment of business. It is assumed that activities of an organization should not affect the surrounding environment and society norms and their practices that they are going to use must be fair, incorporated and honest through which nourishment of a society can be done (Eun, 2009). Issue related to ethics As it is given in the case study that issues related to the ethics is to be evaluated through manager and accountant (Fernando, 2012). There are some aspects associated with the professional ethics which must be followed by the employees and professionals of the organization and perform their duties with fairness, integrity and honesty. It is suggested by the general manager of the Sunshine to the accountant Maria that some changes should be implemented into the financial statement of the company and generates fair revenue in the upcoming year (Frankena, (2015). After taking suggestion an accountant of Sunshine Ltd has prepared his mind to make some alteration into the financial statement by shifting the method of depreciation to sum of years digits methods from straight line method. In this situation, ethical issue has been generated that financial statement of Sunshine Company is being altered according to the necessity in which basic accounting guidelines are being unnoticed (Raym an, 2013). Governance Governance is considered as well defined system which establish policies and rules for the organization in order to maintain and manage the practices of business .Some ethical guidelines is to be developed in favor with the stakeholders by which organization can be able to attain its goals without disrupting interests of stakeholders ( Fernando, 2012) Issues of governance Governances task is to focus on the fulfillment of proper guidelines and organizations internal process along with some external rules and laws that are implied by the government (Karapinar, et. al., 2012). It is also discussed that policies and procedures must be followed by the company which is provided by governance. As given in this case study that Sunshine Ltd has not been able to follow up the accounting standard so that can further impact the interest of stakeholders. It is considered to be obligatory to open up with the method of depreciation which is being used within the company and also disclose the reason of changing the depreciation methods or else it will become the issue of governance ( Fernando, 2012) Involvement of stakeholders in the existing practice Stakeholders are considered as the participants who are associated with the organization directly or indirectly (Chapple, 2016). Decisions which are taken within the premises can influence the interest of stakeholder. In the present case, the manger of Sunshine Company has tempered the statement of finance through which they can attract more stakeholders. For attracting stakeholder manger changes the depreciation method by which she can show that her company is making profit consistently (Finch, 2010). It is a wrong practice which is being performed by the manager on ethical basis which can make negative impact on the stakeholders and some are discussed below: Investors They are the unit that can support the business by giving funds for operating activities of an organization. By performing this immoral activity by the manager of tempering the financial statement of an organization showing more profit in comparison with reality can attract more investors. Investors expect higher returns on the basis of companys wrong financial statement but in reality they will get nothing (Rayman, 2013). Government It is mandatory for an organization to imitate all regulations which are prescribed by the government. Sunshine company has shown false profit in its financial statement which is not ethically correct and breaking the rules of accounting standards which is treated as high offence and can influence the image and goodwill of an organization (Arnold, 2013). Management Management is considered as the unit which manages all activities and functions of an organization (Baxamusa, et. al., 2015). According to the recent situation, the decision of the management will also get influenced. By making false presentation of profit in the financial statement management of Sunshine Ltd would make several decisions in respect to execute new business activity and further on this will influence the stakeholder of this company. (Karapinar, Zaif and Torun, 2012 Suppliers Suppliers are considered as the external stakeholder by whom organization can get resources. This situation of showing wrong profit in the statement will attract more suppliers but in reality when suppliers will come in contacts with the company they get to know the reality and they lose trust over company which can generate the issues of liquidity to the company (Baker, et. al., 2013). Customers By taking such great step of showing wrong profit will attract more customers but after sometime the real position of Sunshine Company will be revealed and customers trust over company will be breached. That can further affect the goodwill of the company and no customers can trust them again (Arnold, 2013). Accounting standards compliances Changing of depreciation method Based on the evaluation of the case, to represent consistent and reliable profits in next years financial ledger, the accountant changed the current methodology of depreciation (Bacon, 2010). As per the standard codes of accounting, it is mandatory to furnish the depreciation methodology at first place (Fernando, 2012). It is also mandatory to provide information about depreciation expenses and asymmetrical features about depreciation. The firm Sunshine Limited has been using conventional methodology for fixed assets depreciation calculations (Baker, et. al., 2013). Depreciation charges must be furnished on sufficient assets having vision of financial support for the company. Australian Accounting, Standard 1021 suggests the features associated with the overheads of depreciation of companies. The depreciation methodology, as per the standards, can only be changed or modified categorically in the below circumstances only, If there is a change in the government laws. In this case, based on the directions by the governing bodies, the methodology can be changed or modified. Betterment of the information; i.e. in order to represent the economic statements intuitively and more accurately. The change should also be well explained (Baker and Filbeck, 2013). Any other situation, where the change is required to comply with the existing laws. Here, in the case study of Sunshine Limited, it is observed that there are no lawful reasons for change in methodology of accounting depreciation (Eun, 2009). To comply with the Australian accounting standards 116, below is the suggestion for the accounts officer Maria, As per the Australian accounting standard 116, it is mandatory for the accountant to furnish the information that can affect the stakeholders (Baxamusa, et. al., 2015). Reason being, the stakeholders make their financial decisions after studying the financial statements of the company. It is therefore suggested to the accountant to furnish the transparent information useful for the stakeholders to make right and unbiased decisions. If the information is insufficient and it can affect the interests of the stakeholders, it is not suitable as per accounting ethics (Bacon, 2010) It is also suggested to the accountant to furnish the information about the amount of depreciation levied and the methodology used to furnish the same (DeGeorge , 2014). In addition, it is also mandatory to furnish the details about the reason for change of the methodology. The reason should be valid and should be one from the above stated circumstances. It is suggested to the accountant to furnish the details about the change in the methodology she used. (Finch, 2010) Conclusion It is concluded on the basis of this project report that a financial statement of an organization is act like a face of a company on which basis important decision is to be taken and which shows the companys real and exact position in the market. It is mandatory to all the organizations to imitate the rules and procedure which are provided by the government. Company should perform activity which is right ethically. It is suggested that company should not make alteration into the financial statement as this can breach the trust of their stakeholder. By showing right information helps the organization to attract more stakeholders on trust basis References; DeGeorge , R. T. (2014). Business Ethics. Pearson Educatio. Eun, C. (2009). International Financial Management. McGraw-Hill Higher Education. Fernando. (2012). Business Ethics and Corporate Governance. Pearson Education. Frankena. (2015). Ethics. Pearson Education. Rayman, R., 2013.Accounting Standards. Hoboken: Taylor and Francis. Karapinar, A., Zaif, F. and Torun, S., 2012. Accounting Policies in the Extractive Industry: A Global and a Turkish Perspective.Australian Accounting Review, 22(1), pp.40-50. Anon, 2001.International Accounting Standards 2001. London: International Accounting Standards Committee. Finch, B., 2010.Effective financial management. London: Kogan Page. Arnold, G., 2013.Essentials of corporate financial management. Harlow, England: Pearson. Bacon, F., 2010.Corporate financial management. Acton, MA: Copley Custom Textbooks. Baker, H. and Filbeck, G., 2013.Portfolio theory and management. New York: Oxford University Press. Baxamusa, M., Mohanty, S. and Rao, R., 2015. Information Asymmetry about Investment Risk and Financing Choice.Journal of Business Finance Accounting, 42(7-8), pp.947-964. Chapple, S. (2016). Book review: Aiming for Global Accounting Standards: The International Accounting Standards Board, 2001-2011.Accounting History,21(2-3), pp. 364-365.