Financial Analysis Essays

3020 Words Mar 5th, 2013 13 Pages
Introduction:
The primary purpose of financial and accounting management is to organize, plan, control and direct the financial and accounting activities, but to ensure that every stakeholder is adequately served. The effectiveness of financial and accounting management, therefore purely depends on the policies, regulations and frameworks that are designed and being evolved from time to time. According to Gray, Owen and Adams (1996) financial management is the core business discipline which is meant to ensure that financial resources are deployed in the most effective manner, within the best interest of every group of stakeholder. Moreover, the importance the financial management also increases in current business context because of the
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Legal and Professional Regulatory Framework of Accounting:
In recent years, various organizations across the world have adopted inadequate and inappropriate accounting and financial management policies for different reasons. The best examples of illegal and unethical accounting and financial policies can be seen from the facts of Enron Scandal (2001), AOL (2002), Kmart (2002), Parmalat (2003), Lehman Brothers (2010), and Autonomy Corporation (2012) are just few of the notable accounting and financial scandals, the world has experienced in past decade. Such accounting and financial scandals did not only influence the brand image of organizations, but also effected the economic strengths and highlighted the weak elements of legal and professional regulatory formwork of accounting. Although International Accounting Standards Board (IASB) has been continuously working towards the betterment of accounting and financial policies, has become more practical after such events.

Moreover, in order to respond the unfaithful and illegal accounting and financial practices, IASB has also focusing on International Financial Reporting Standards (IFRS), which are designed and developed to improve and refine the financial policies. The purpose is to ensure that changes in business environment, economical context and business practices do not affect the validity and transparency of the financial and accounting policies adopted by the business entity. While

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