Financial Analysis - Planning and Forecasting

Question: Discuss about the Financial Analysis, Planning and Forecasting. Answer: Introduction Accounting is one of the most important tasks in an organization and it plays vital role in functioning the day to day business activities of that organization. It records all the financial event of the organization, all the transaction made by the organization during a specific time period recorded by the accountant of the organization. Moreover, the information is used to prepare the essential reports of the organisation when required (Berry, 2011). The basic idea of accounting and its uses like the measurement of the income and valuation of the asset are performed on the basis of uncertainty. The accountants remain not sure of the procedures of defining income and the assessment of income is one of the most difficult problems in financial accounting theory and practices. Besides this, the asset valuation is also one of the most difficult tasks and in global corporate structure it becomes more problematic. Apart from this, the cost measurement is also difficult as costs are extreme ly contestable figure and possibly computed from the rivalries or collusion of the companies, where the other fact and figure are negligible in most of the cases (Diamond, Stice, Stice, 2000). The process of allocating revenue and expenditures is middle of the accounting period and assessment of the asset and liabilities in the end of the accounting period invokes difficult issues, that never been solved. Besides this, it is also perceived in many cases that the numbers can be changed for showing the good management. Moreover, the accountants are mostly used to justify the decisions of the management and to hide the mistakes from the management (Ebisike, 2010). In order to evaluate these events a real organization has been taken for the study and National Australian Bank is the organization, which is a listed ASX organization. Description In accounting the most difficult issue is assessment of the income and there are several different approaches has been adopted and several methods are use to assess the income. The most conventional method of the income measurement is the transactional method or operational approach to income assessment. This method detects the changes between the valuation of assets and liability for any transaction (Elliott Elliott, 2008). The transactions are mainly related to the money transactions in the form of cash, cheques and the account based transfers seems to be based on the activity carried out by the organization. These transactions add the receipt or else the payment of the cash or in other way are depicted. Furthermore, in the case of the concluding cash exchange is not ended with the third parties then the time of assessing income the equivalent incompleteness is permissible with the assistance of adjustment process (Lee, Lee, Lee, 2009). At the time the adjustment procedures initi ates the revenue as well as the costs are matched in order to derive accounting income. The activities approach to the income assessment is also an important method of assessing income. This approach varies from the former approach. In this approach the description of the activities is main rather than only reporting of the transaction. As per this approach the income generates at the time any certain activity or events takes places. Moreover, it is not a result of the certain transactions (McSweeney, 2009). Both the former method and the current method are unsuccessful to provide actual reflection of the assessment of the income in actually because of the dependency in the similar structural relationship. Other important method is the balance sheet approach. The balance sheet approach is usually known as approach of capital maintenance. It states that increment of the asset is the outcome of the income. Here, the assessment of income needs assessment of the net increment in the ass et within a specific period of time (Weismann, 2012). The net wealth can be accessed from the available data in a balance sheet. In case of the closing asset increased from the opening asset then a profit is made, alternatively when the opposite happen means the closing asset decreased from the opening asset then the a loss is incurred. And the other approach for the assessment of income is value added approach. Underneath this specific approach the income is assessed by the help of value added with the organization during a specific period of time (Pratt, 2000). As well as the similar decided by the differentiation between the value of services or outcome over the cost of the raw materials inclusive of the stores along with the essential components which are procured from outside and utilized in the process of the production. Regarding this the fraudulent of the test is seemed in this case of the bank and thereby the duplicate SMS links are provided by the bank in order to gain the information of the credit card details. The valuation of the asset is also a difficult task it is a procedure of measuring the value of a firm the item worth and asset that generates cash flow. There is several method of asset valuation such as assessing potential cash flow of the organization, cost of acquisition and the replacement cost. Besides this, asset valuation of relative along with transaction method is also important method that provides accurate valuation of the asset (Riahi-Belkaoui, 2000). Discussion The discussion on the problems of the organisation National Australian Banking depicts the challenges that are discussed as per the context of the AASB/IASB. With considering the annual report of the organisation National Australian Banking, the changes that are depicted as per the accounting standards AASB/IASB are as follows:- The organisations momentum is seemed to be reduced with the consideration of the fraudulent activities in the business. The statement provides the appropriate judgment with providing the customer dissatisfaction with disobeying the guidelines of the AASB. With the appropriate analysis is seemed to be made by the National Australian Banking for enhancement of the structures of the organisation (Dauber, 2005). It thereby also helps in constructing the values that are depicted with creating the focus for the regaining the momentum for the National Australian Banking with the provision of customer satisfaction. The out forms are depicted in the illegal and fraud activities continued by the National Australian Banking in the year 2015. The case provides the downfall of the financial market of the organisation of banking activities carried out National Australian Bank and thereby the reduction of the profit seems to be created for bank. Outdated progress plan with the advancement of technology which reduces the profitability of the organisation National Australian Banking. The renovation of the structure is one of the most critical challenges that the National Australian Banking sector It thereby creates a new operation format for the organisation with expecting the improvement of the banking sector. De-acceleration created by Old results of AASB (Horngren, 2013). The conversion of the data of AASB depicts the inversion of the capabilities and thereby the creation of non-productive inventory is depicted with focusing on the increment of the services in the organisation of National Australian Banking. Inappropriate management of portfolio with inappropriate capital allocation. It thereby provides inappropriate management of the capital portfolio and thereby the capital seems to be increased with the increment of the value of the shareholders. Inappropriate customer satisfaction (Larkin DiTommaso, 2012). The inappropriate customer satisfaction seems to be provided in the case and thereby the net financing cost of the organisation is lowered. Increment in the cost of the organisational management with the decrement of the gross profit. It signifies the overburdening of the taxes for the organisation in accordance to the infrastructural details provided. Henceforth the overall entities provide the financial review of the management that are described as challenges for the organisation. The environmental and the explanation of the management helps in providing the reviews that entitys financial performance and the financial position are related to the part of the challenge in context of the National Australian Banking. It thereby also provides the overview of the factors that are creating challenge as per measured according to the standards of AASB/IASB (McMillan, 2010). These are discussions that are made in context of the AASB standards and thereby the implementation policies are focused for the enhancement and justification. Comment With the presentation of the challenges regarding the assets and the liabilities, National Australian Banking provides representational faithfulness with using the processes of measurement in order to achieve the estimates of assets and the liabilities (Smith, Boje, Foster III, 2013). Henceforth the annual report of the National Australian Banking provides the detailed view of the estimates that are made on various transactions rather than the banking system obtained. Along with the banking business, National Australian Banking also consists of the unfaithful act that ensures to gain a sustainable competitive environment with creating appropriate trading performance by maintaining the strong returns to the shareholders (Mechelli, 2009). The performance of the National Australian Banking seems to decreasing the environment of sustainability in the competitive market and thereby the appropriate enhancement of the issues is depicted with implementing the reflection of the subsidiaries. With the implementation of IASB framework, the users of the financial statements are included that seems to be the present and the potential investors, employees, lenders, suppliers and the other trade creditors with thereby increasing the customers and their segregation. The government and the other trade agencies with the public are enlisted which represents the appropriate use of the capital resources and thereby the consideration of the public claims are processed with considering the decision-making process for the organisational claims which are made for the resources depicted. The appropriate allocation of the resources and the assets helps in the appropriate positioning of the resources with considering the viewpoint of the organisation (Moldovan, 2014). The organisational accrual accounting is considered with created the need for the allocation revenues and the expenses appropriately with considering the standards with increasing the values of the assets and the liabilities. It thereby provides the appropriate enhancement of the raised problems with implementing the accounting framework created. The above diagram provides the process for the enhancement of the problems that are identified seems to be mentioned above. It thereby also helps in considering the changes and the claims made for the resources. It thereby depicts the implementation strategy of the present era with thereby providing the potential resources plan and also the implementation of the process helps in the increment of the cash flow of the organisation National Australian Banking (Oppermann, 2009). It thereby also indicates the values with providing the management of the system. It also helps in depicting the appropriate management of the system with appropriate functioning of the financial informations. It also helps in implementing the appropriate resources regarding the enhancements of the objectives of financial statements. Therefore the governmental and the regulatory bodies are created with providing the enhancement of the system and thereby it also provides the views of the advancement implementation in keeping in view for the enhancement of corporate accounting (Schroeder, Clark, Cathey, 2011). Conclusion The problem is assessing the income of an organization is remain existing as there are several contradictions in measuring the value of the income. The transactional approach is used for the internal and external transaction (Stittle Wearing, 2008). And internal transaction takes place when conversion of the asset has been dome within the firm. Alternatively the external transaction occurred at the time of dealing with the external entities. Thus, the transfer of asset or liabilities from the firm is considered as external transaction. The valuation of income is not appropriate as the adjustments perform in order to match the balance sheet of the organization. The accrual accounting or corporate accounting require placing the revenue and costing between the accounting periods as well as compute the value of the asset and liabilities at the ending of an accounting period raises issue for the accounting and it never solved (Wild, 2005). In case of National Australian Banking, is also perceived that the liabilities and the assets of the organisation were not well defined so that the income is also varied. References Berry, L. (2011).Financial accounting demystified. New York, NY: McGraw-Hill. Diamond, M., Stice, E., Stice, J. (2000).Financial accounting. [Cincinnati, OH]: Southwestern College Pub. Ebisike, O. (2010).Real estate accounting made easy. Hoboken, N.J.: Wiley. Elliott, B. Elliott, J. (2008).Financial accounting and reporting. Harlow: Financial Times Prentice Hall. Lee, A., Lee, J., Lee, C. (2009).Financial analysis, planning forecasting. Singapore: World Scientific. McSweeney, B. (2009). The roles of financial asset market failure denial and the economic crisis: Reflections on accounting and financial theories and practices.Accounting, Organizations And Society,34(6-7), 835-848. https://dx.doi.org/10.1016/j.aos.2009.04.007 Pratt, J. (2000).Financial accounting in an economic context. Cincinnati, Ohio: South-Western College Pub. Riahi-Belkaoui, A. (2000).Accounting theory. London: Business Press. Stittle, J. Wearing, B. (2008).Financial accounting. Los Angeles: SAGE Publications. Weismann, M. (2012).Corporate crime financial fraud. Chicago, Ill.: American Bar Association, Criminal Justice Section. Wild, J. (2005).Financial accounting. Boston: McGraw-Hill/Irwin. Dauber, N. (2005).2006 auditing standards. Australia: Thomson. Horngren, C. (2013).Accounting. Frenchs Forest, N.S.W.: Pearson Australia. Larkin, R. DiTommaso, M. (2012).Wiley not-for-profit GAAP 2012. Hoboken [N.J.]: John Wiley Sons. McMillan, E. (2010).Not-for-profit accounting, tax, and reporting requirements. Hoboken, N.J.: Wiley. Mechelli, A. (2009). Accounting Harmonization and Compliance in Applying IASB Standards: An Empirical Survey about the First Time Adoption of IAS 7 by Italian Listed Groups.Accounting In Europe,6(2), 231-270. Moldovan, R. (2014). Post-Implementation Reviews for IASB and FASB Standards: A Comparison of the Process and Findings for the Operating Segments Standards.Accounting In Europe,11(1), 113-137. Oppermann, H. (2009).Accounting standards. Lansdowne: Juta. Schroeder, R., Clark, M., Cathey, J. (2011).Financial accounting theory and analysis. Hoboken, NJ: Wiley. Smith, W., Boje, D., Foster III, T. (2013). A tetranormalization intervention of the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB).Recherches En Sciences De Gestion,99(6), 65.