The objective of this essay is to provide an understanding of the implementation of General
Accepted Accounting Principles (GAAP) in financial reporting and business practices in
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The quality of this essay will be assessed based on the following criteria:
o Identify the implementation of GAAP in Australia.
o Explain why GAAP is crucial for financial reporting and business practices.
o Provide one example to illustrate the implementation of GAAP in the financial
reporting of an Australian company.
o Give one example when GAAP is not used by an Australian company and explain how
this will impact on its performance from the perspective of investors.
o Use paragraphs from the Australian Conceptual Framework, AASB 101 Presentation of
Financial Statements and AASB 15 Revenue from contracts with customers as
guidelines to support your discussion if it is necessary.
o Demonstrate effective communication, logical presentation and integrated evaluation.
GAAP is accepted by many entities and business practices, which have set out fundamental
accounting rules and principles to record and report business transactions in their accounts.
GAAP provides guidelines regarding issues such as how and when assets, liabilities, income
and expenses are recorded, what are the measurement and valuation methods used, and
what are the requirements for disclosures of financial information.
GAAP adopted in Australian regulatory framework complies with International Financial
Reporting Standards (IFRS) and the Australian version of IFRS is prescribed by the Australian
Accounting Standards Board (AASB). You can find Australian Conceptual Framework and a list
of AASBs from the link of the website: http://www.aasb.gov.au/Pronouncements/Conceptual-f… andhttp://www.aasb.gov.au/Pronouncements/Current-stan… . It is
a legal requirement for listed companies to comply with the AASB / GAAP (as per section 296
of the Corporation Act in Australia.
However, from the survey conducted by Coulton, J et al (2014), they found an increasing
number of listed companies used non-GAAP in their earnings enouncement. More than 40%
of the largest 500 listed companies on the Australian Stock Exchange (ASX) used at least one
non-standard metric in the earnings announcement. Refer to the source:
http://newsroom.unsw.edu.au/news/business-law/comp… To complete this essay, you should find a 2015/2016 annual report of a listed company on the
ASX. Reserve your chosen company on the discussion board. You can’t choose the company if
it has been chosen by others based on first come first serve.
You are required to answer following 4 questions:
1. Discuss how to identify an income of a company. Introduce what are the recognition and
measurement requirements of incomes used by the chosen company. (150 words)
2. Explain why GAAP is crucial for financial reporting and business practices in general. (250
3. Provide one example to illustrate the implementation of GAAP in the financial reporting of
your chosen company, and explain. (250 words)
4. Give one example when GAAP is not used by your chosen company. Explain how this will
impact on the performance and valuation of the companies from the perspective of
investors. (350 words)
If there are any references used in the essay, the references should follow Harvard