"1Financial Accounting TheoryInternational Financial Reporting Standards (IFRS)Table of ContentsIntroduction ..................................................................................................................................... 2PART A .......................................................................................................................................... 2PART B ........................................................................................................................................... 6Conclusion ...................................................................................................................................... 7References ....................................................................................................................................... 92 IntroductionThe language of business is accounting and financial reporting isthe medium through which the language is communicated. Accounting and financial reportingare regulated by the Generally Accepted Accounting Principle (GAAP). GAAP consists ofaccounting standards, company law, stock market regulations, etc.The global GAAP aims atunifying accounting and financial reporting all over the world through International FinancialReporting Standards. IFRS is prepared on the basis of guidelines issued by InternationalAccounting Standards (IAS, Standing Interpretations Committee (SIC) pronouncements, andInternational Financial Reporting Interpretations Committee (IFRIC). IFRS was developed in2001 in order to provide high quality and uniform reporting standard accepted all over the worldby the International Accounting Standard Board (IASB).The International Financial Report Standards (IFRS) are practicedfor money and accounts management for the global market based organizations (Boddy,Boonstra and Kennedy, 2005). This report presents accounts and finance related decision makingprocess for multinational companies which have effectively supporting managers to givejustifications. The financial accounting is a field of business which is accessed for understandingand learning different characteristics of monitory management in organizations. The IFRS forcapital market is discussed with regards to understanding and supporting financial accountingconcepts. While managing different activities in international business affairs, it will providesignificant information for managing financial affairs. 3PART AUnderstanding the conceptThe financial management in various business organizations is anattempt for reviewing accounts, money management, investments, capital structure, corporateaccounting etc. Through involvement of research and development of international standards andmoney transferring operations, such practices and activities in business can be improved. Themultinational corporate and organizations are involving different aspects of accountingmanagement for such employees, customers and board of management for decision making.With permission of people involved in financial accounting and capital management, suchinternational standards and policies are set which can be implemented in finance and accounts inbusiness practices (Bogdanova and Guseva, 2014). While considering different consequences ofmoney and financial figures, the financial accounting theories are required to be understood sothat effective decisions can be made for allowing transactions. The planning for investing in different sections of business forstarting new venture or installing new set up is dependent on such studies and policies fromIFRS. Through observation of standards regarding project management and innovation reflectfrom different practices and operations in business. The capital structure and money managementcan be noticed through regular improvements and updates. While involving multiple productsand operations in business, it is understood that funds are necessary to arrange assets andproductions in business (Bogdanova and Guseva, 2014). While focusing to changingrequirements with accounting standards and practices, it is necessary to reflect upon managementcharacteristics. While observing, the study about financial theories and standards, it soundsessential for managing different production and services in business. The effective operationsand practices in finance and accounts can be managed through learning and understanding ofIFRS. While targeting the objectives of financial management, the journals, ledger, balance sheetand other entries can be well managed through understanding of financial practices. It is noticedthat several changes can be managed through accessing information of business affairs. Therespective values of business can be well accessed through getting the transaction informationfrom business in and outs (Cœurdacier and Portes, 2005). The changes and implication indifferent monitory exchange are understood by capital investment on each activity.4The organizations which are following the international businessstandards must access the IFRS for mechanizing different characteristic of accounts. Throughfollowing such standards the business affairs of whole business industry of world can beimplicated in financial transactions of capital. The investment information of funds is accessedthrough accounts and various sources of capital. The management of all available funds can beutilization in planning for internationalization and business expansion. Through identification ofmultiple resources and factors to collect money, it is observed that the different industries arerequired separate benchmarking for measuring monitory transactions. While understandingdifferent characteristics of business, it is understood that changing environment and socialaccounting concerns can introduce business operations with concern to advancement of financialstandards in organization. To understanding the requirement of investment, it is necessary tofollow some guidelines and instructions from industry. The new entrance in global market needsto explore market for taking financial decision (Erratum, 2013). The standards and theories ofaccounting practices like transactions of liability and assets can be performed by accountantsthrough involvement of IFRS standards. The changes and improvement requirements can be monitored forevaluating profit and loss in business through proper guidance of financial managementdepartments. While learning and observing changing different characteristics from business, it isrequired to get environmental factors in business through getting details of investment formoney. With restrictions and filtering of accounts information and capital transaction, thechanges can be done on behalf of profitability objectives of business. The financial theories andcritical decision making can be understood by management of product and services in business.Through effective monitoring and controls of financial transaction, the value achieved and lost iscalculated in financial decisions. With specific account details need identification andimplication to manage international business as per standards. The financial theories are supportmaking of financial reports and accounting of such details (Galbraith, 1999). Through measuring profitability and loss in financial statement, allthe methods of critical analysis of social, environmental, economic consequences etc. can be wellmanaged through regulating industry norms of financial practices. The cost-benefit analysishelps in managing different operations through identification of transaction information throughlearning of financial theories. With cost and benefit analysis of financial transactions and 5information can be well managed in principle, practices and money transaction practices. Thechanging circumstances of business through identification f corporate affairs need to be placed inaccounts which can be accessed in near future for making financial decisions. While obtainingdetails instruction and operations in business for new market and products, the financedepartment allow and supply funds for investing in new venture. It is noticed that changes infinancial terms and conditions can be managed through observing theoretical practices (Holmesand Pentecost, 1992). The money management usage financial theories for taking decisions forwhether invest in any functional practice or not. To sponsor the investment in any businessproject, it requires motivation and improvements through business decision making which can bebetter managed through research and development. The financial standards and practices areaccessed through certain financial practices. Moreover various financial market conditions andpractices will have effective role in managing business values and operations. Throughidentification of different roles and responsibilities of accountants, finance executives, managersetc. are accessing information and industrial theories of finance. The sourcing of fund and assetscan be better managed through observing practices, assets, social, environmental and capitalinvestments in management operations. The involvement of theories of financial accounting areobserved useful for taking business decisions according to demand of market (Zhou, et.al.,2015). While observing the effectiveness of financial practices, theinternational standards are made benchmarking for financial operations. The raise of capital canbe managed through learning and practices different operations involved in managementdecision. Through observing the changes and implicating them to business, it require tounderstand financial theories for different records of balance sheet, cash flow and inwardstatement, profit and loss statements etc. For example if an organization is planning to invest inforeign market, then it requires to understand changing market conditions and previous base offinancial transactions. Through maintaining different characteristics of business decisions, it isnecessary to focus on investment in new market. The cost-benefit analysis are supportingmonitoring and controlling of market situations according to demand of market. Whilecontrolling the transaction of money for new market, some specific parameters are set accordingto demand of project. The investment done for observing changes in existing conditions, itrequires to concentrate possible outcomes through practices based on financial accounting. The 6MNC are taking such decisions on the basis of products and services in the market place.Through observation of different rules and regulation which are designed according to demandof consumers, it is observed that financial management theory will be suitable to take effectivefinance management. With prior permission of chief financial executive of company, such globalmarketing and business decisions can be taken on behalf of management understanding. Whilemonitoring the changes in various conditions, the financial operations are supporting to takeindustrial standards of finance department. Through learning and development of financialtheories and practices several changes and improvement can be noticed in operationalmanagement. The external and internal environment of business is managed through the bettereconomical conditions. The sound financial management affect useful investment decisionthrough which multiple business factors can be accessed for planning to relocate or expandbusiness locations (Holmes and Pentecost, 1992). Through several research and study, financialstandards are designed which are executed according to demand of management decisions.Through influence of business in marketplace, it is requires to access previous record of targetcountry for globalization in business.PART BInternational Financial Reporting Standard for social accounting IAS 37 Provisions,Contingent Liabilities and Contingent Assets The IAS 37 standard presents the accounting process for provisions,contingent assets and liabilities. The provisions are accurately estimated based on theexpenditures required to cover up the existing obligation. In addition to this, it also outlines thepresent value of expenditures that is required to pay the liabilities in case when the time value ofmoney is material.The objective of IAS 37 is to apply recognition and measurementcriteria to the provisions, contingent liabilities and assets. Also included in it is the disclosure ofsufficient information related with the financial transactions to the users in an understandablemanner (Xiao, 2013). The purpose is to enable stakeholders to help with decision making processrelated with their investment. The key principle behind the introduction of the standard is torecognize the provision only in the presence of a liability which is related with the past events. 7The Standard therefore, ensures that only accurate and reliable liabilities or obligations areconsidered in the financial statements (Gordon and Gelardi, 2005). These obligations are plannedfor future expenditures even if the authorized members are excluded from it.Business entities often realize the need to serve the local communityand undertake certain activities. These may include – improvement in the infrastructure,contribution to education, clean water, building residential area for the poor, employmentgeneration, support to small scale industries and many more (Kabir and Akinnusi, 2012). Thesecommitments are termed as Corporate Social Responsibility (CSR) in accounting. IFRS lays down specific guidance on the accounting forprovisions, liabilities and asset obligations. The outline discusses the procedure to consider theCSR obligations under IAS 37.The process explains when and how should a company recognize a CSR obligation – The IAS 37 requires a provision to be recognized when all the below criteria are met –? The entity has present obligation that occurs as a result of the past event.? The obligation to be paid requires an outflow of resources that will also generateeconomic benefits.? An estimation of the amount of obligation The legal obligation is termed as that derives from a contract,legislation or other operation of law. A constructive obligation is termed as that derives from anentity’s actions in an established pattern of past practice, policies and specific statement. Also theentity informs other parties and stakeholders that it will accept responsibilities for the fulfillmentof obligations. Moreover, the provisions also require that the entity informs other parties such asstakeholders that it will fulfill responsibilities on their part as well (Moser and Martin, 2015). In order to determine the CSR obligation, a judgment will berequire to apply that whether the obligating event is occurred to support the introduction of legaland constructive obligation. So at the first instance, it is essential to recognize whether theobligation is legal or constructive. The entire procedure for the recognition of provision andobligation will be based on the facts and figures. 8CONCLUSIONThus it can be concluded that a provision to be recorded under theIAS 27, the mining entity need to determine the recognition of the provision to record as anexpense for the time duration. A judgment will be required to determine the reliability of theaccounting treatment. If the obligation to be recorded as the CSR exist during the introduction ofthe order issue, then the mining entity need to consider the IFRS statements and provisions forfinancial reporting (Chetty, 2011). The mining entity can also consider that CSR obligation ispart of the overall cost to develop the mine and therefore will capitalize the liability as part of themine asset. Therefore the construction of healthcare facility in such a case would be consideredas the property of the ABC Company.On the other hand, if the obligating event for the CSR liabilityexists during the construction phase, then the obligating event will be considered as the operatingexpense for the period. This would further need determination of the type of event on the basis offacts and figures. The CSR process for the business entities have been made complex andrequires due process of exercise of judgment to arrive at a conclusion."