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Financial Statements Of A Reporting Entity

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Introduction: It has been suggested that the AASB should reclassify the meaning of a reporting entity to include all companies and businesses across Australia as well as internationally by the IASB due to the current confusion of who a reporting entity really is by some professionals.

The current reporting entity concept adopted: In Australia the current reporting entity concept to abide by for reporting entities is the Corporations Act 2001. It and AASB101 determine who must compile financial reports (SAC 1), what financial statements companies must produce (AASB101.10), when (AASB101.36) & details of the company 's financial records (AASB101.112-124) are to be reported to its shareholders & customers. There is no one way to display this information, an entity can choose from up to 3 different costing methods, and 2 different analysis methods (AASB101.102). (ICAA Financial Reporting Handbook 2014)

Reporting entities must, in accordance with the Corporations Act, prepare financial statements, must comply and must apply the following particular Australian reporting standards:
• AASB 101 - Presentation of Financial Statements
• AASB 107 - Statement of Cash Flows
• AASB 108 - Accounting Policies
• AASB 1031 - Materiality
• AASB 1048 - Interpretation & Application of Standards
(Meade, 2012)

Small proprietary companies are not considered to be reporting entities (Leo et al, 2012), it is assumed that most of the people who need financial information about the business

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