Law and public policy in financial reporting in Australia
- Publication Type:
- Thesis
- Issue Date:
- 1998
Closed Access
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01Front.pdf | contents and abstract | 8.39 MB | |||
02WholeV1.pdf | 156.17 MB | ||||
02WholeV2.pdf | 171.29 MB |
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NO FULL TEXT AVAILABLE. This thesis contains 3rd party copyright material. ----- The diversity of information needs of different interest groups in a market economy
inevitably result in divergent views of the objectives which are to be served by
mandatory reporting requirements, presenting a challenge to formulate generally
acceptable principles. Company financial statements are required to comply with the
statutory accounting standards and to give 'a true and fair view' of the profit or loss for
the period to which the accounts relate, and 'a true and fair view' of the company's state
of affairs as at the end of that period. However, the statutes neither provide a definition
of the phrase 'true and fair view', nor do they stipulate how compliance with accounting
standards is to fulfil this requirement. As a result of extending the private sector
accounting standards to the public sector in recent times, the issue has become more
complex.
Notwithstanding the diversity of legitimate interests financial reporting is to serve,
mandatory policy objectives such as decision-usefulness and investor protection, are
frequently found to be associated with both private and public sector financial reporting.
This research attempts to test whether such policy objectives are defensible, and
whether they can continue to form a tenable basis of financial reporting for corporate
entities in Australia.
To delineate the evolution of the many objectives of fmancial reporting, a historical
study of relevant statutes and standards has been undertaken. To determine the
enforceability of specific policies, cases of purported negligent misstatements involving
auditors in Australia, the United Kingdom and the United States, are analysed, revealing
a reluctance by courts to impose a general duty of care on auditors to the public.
Other objectives such as public accountability have been found wanting at a time when
the public sector is turning away from its previous responsibility for societal welfare,
exposing society to the vagaries of the market economy which is dominated by
corporate entities, making transparency of financial reporting imperative as a substitute
safeguard for the public.
However, current accounting standards do not guarantee transparency of information
provided, which raises serious concern as to the decision-usefulness of the information
made available by the current regulatory regime. If one supports the notion of a free
market economy, a fully transparent disclosure regime must be guaranteed enhancing
the function of enlightenment, which is the only defensible public policy objective of
financial reporting.
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