Advanced Corporate Reporting Essay Example | Topics and Well Written Essays - 2250 words

Advanced Corporate Reporting - Essay Example This is in particular for the companies that issue public bonds on a regulated European market. These accounting standards have shown a significant impact on the potential influence on the behaviour of economic agents. Accounting standards caused the financial institutions to behave in a certain way that enhances the financial stability in the long run.1.2 Arguments of European Commission/ Union on IFRS: It was opined by analysts that the core of the financial mismanagement lies within the commission and due to the fact that structure is opaque. The problems of financial mismanagement are the basic enforcements weaknesses. The court of auditors of European union admitted that the 80 percent of taxpayers money was never accounted properly. The responsibility for combating fraud has been considered by European commission. It was observed that the EU's financial regulation 2342/2002, article 87(4) claims that there I no need to attempt the recovery of any sum less than million euros and this has been ruthlessly exploited. By eliminating the loop hole, the European commission resulted in shared responsibility instead of separation of the responsibilities. As the improvement is not possible if each EU institution or department works with different standards and criteria, the common standards for the accounting were considered. Due to the erroneous accounting the debtors of European commission simply disappeared in 2002-03. ... Another problem with the old system is potential mismanagement of cash due to lack of principles in cash flow analysis. The maintenance of huge cash suggests the deliberate retention of member states and companies surpluses against EU rules, the establishment of own resources by the tax payers money. These huge funds are used to maximize the public funds. This should be avoided as the cash in hand by any company should be reported and the use of it can be restricted. To avoid these issues, the credit rating of the companies should be true and fair and must be based on accounting statements. This should be regulated by EU. The implementation of IFRS auditing on EU and the companies in the EU states resulted in overcoming the problems regarding the financial mismanagement and misuse of cash. The action on fundamentals and injection of commercial reality was made possible by the introduction of IFRS. The commercial organizations will ask themselves the questions regarding their performa nce and they should be reflected in the financial statements. The IFRS made it possible and the transparency has been resulted in the use of the money of the investors. This needs a creation of financial infrastructure and that was taken by the lesson from New Zealand that will audit fully singed annual accounts within three months. The auditors were made independent in assessing and auditing the company's financial statements and strict guidelines have been imposed according to IFRS. This made possible good financial management in the company's possible and gave the required security for investor's money in the company. This gave chance to investor to estimate the