Advance Financial Accounting Slater and Gordon

Question: Describe about the Advance Financial Accounting for Slater and Gordon. Answer: Slater and Gordon included its ongoing cases revenue as working progress and in this way the revenue of the company has been increased and which is not the actual revenue earned by the company (Beil, 2013) There are many firms use work in progress accounting methods and maximum of these without actually happening. The similar things are done by the Slater and Gordon Company in order to improve its financial position in the reports. The analysis and evaluation condition for the services revenue identification under the law of IAS18 and AASBIFRS15 are as follows, the firm need not create some rules and regulations of the time to detect the revenue as per the need of IAS 18 and IFRS15 guidelines (Fox and Dodge, 2012). However, the research by VGIs indicated that the company pitched up 10 red flag inclusive of the companys work in progress accounting along with the companys aggressive desire to purchase the small law firm. VGI stated that the company purchased the law firms which are undervalued WIP as well as inflating up its value the companys own accounting so that it can artificially improve the revenue and profit for the company(Dobler, 2008). During the investigation within the company ASIC observed few serious doubt on the revenue along with the WIP so that the ASIC ordered the company Slater and Gordon to hire a new CFO as well as alter their external auditor. However, after altering of CFO as well as external auditor the company Slater and Gordon up graded their accounting policies (Kober, 2010). Besides this, the UK laws need alteration in order to adopt IFRS standard for revenue. For this reason a requirement for the changes in the working progress treatment. As in the previous financial statement the company included revenues which supposed to come from its ongoing cases and the as per the terms and condition of the company that in case of defeated the company would not get any payment, therefore, the amount the company included for the ongoing cases as work in progress were not secure income for the company. This accounting standard needs that Slater and Gordon record the revenue which is highly probable and agreed by a contract. Moreover, this specific accounting standard applied by the company required that the company book only those revenues, which are detected as high probable as well as contractually agreed and this changes the work I progress substantially in 2014 the amount is computed $382 million and it was vast different from the older $467. Similarly in 2015 the amount computed in accounting standard was $694 and in the older version was $826. The company disclosed that owing to the obligatory needs of IFRS 15 essential discounting of work in progress by 15% to 20%. For these incidents the goodwill of the firm has been impaired immensely, which hamper the business of the organization. 5. The company Slater and Gordon is a specialize firm in no win no fees for the personal injury cases the company recorded the revenues based on the work in progress for the cases which take around 18 to 20months time (Qu and Yang, 2012). As per the basic principles of accounting ethics prescribed by APES 110 code of ethics the firm violate the integrity as it was not honest as well as straightforward to the profession in which the company involved. The members of the company did not follow the requisite rules and regulations to credit the profession. As per the previous accounting standard it was not illegal but by the new adopted IFRS15 riles these are not allowed and so these must be excluded from the financial statement the revenue has been dropped significantly. The revenue detection policy till June 2015 was an the basis of Result of the services may be scaled reliably Stage of the finishing point of case. Revenue detection to the amount of cost incurred. Interest revenue detected on a comparative basis as per the interest rates. Other revenue detected once when the right to achieve the income has been detected Moreover for the six months interim period the financial report for FY15 will ass larger disclosure on revenue detection policy. Due to this the company has to comply with detection under IFRS 15 is more stricter than the old standard. AS, the firm Slater and Gordon specialize in no win no fee personal injury cases (Bragg, 2010). Thus, if the company could not win the cases in that cases the company would not get any payment so it was totally unethical to include this revenue in the financial statement and as per the IFRS 15 standards of financial reporting it is totally illegal. 6. After detecting the company Slater and Gordon accounting treatment problems on the revenue and work in progress referred by the VGI investigation report as well as amendment in some laws in UK the management of the company consulted with the auditors has determined to accounting policies as well as to adopt the IFRS 15 standards which is more suitable to the firm to reveal a clear picture (Sudan, 2009). The new CFO as well as the auditors has faith on the OASB 18 reporting standard. The internal auditors of the firm did not disclose important information on the company. At the time of the preparation if the financial statement or report the firms use information as per the guideline of the IFRS 15 however, the law of the nation and as well as the accounting standard then the firm are very important. There is a close relation between the company and the government. The regulations of the commercial law serve to save the interest of the stakeholder. The early adaptation of the stand ard of IFRS15 would be benefitted to the firm as according to the IFRS15 standard the firm can only record the revenue which is highly potential as well as clearly defined in the term, and condition in contract so the company would not be in the adverse condition (Wink and Corradino, 2011). References Beil, F. (2013).Revenue recognition. [New York, N.Y.] (222 East 46th Street, New York, NY 10017): Business Expert Press. Bragg, S. (2010).Wiley revenue recognition. Hoboken, N.J.: Wiley. Dobler, M. (2008). Rethinking revenue recognition the case of construction contracts under International Financial Reporting Standards.IJRM, 2(1), p.1. Fox, M. and Dodge, E. (2012).Economics demystified. New York: McGraw-Hill. Kober, M. (2010). Gauge theories under incorporation of a generalized uncertainty principle.Physical Review D, 82(8). Qu, X. and Yang, Y. (2012).Information and Business Intelligence. Berlin, Heidelberg: Springer Berlin Heidelberg. Sudan, S. (2009).Revenue recognition. Kbenhavn: Thomson Reuters. Wink, G. and Corradino, L. (2011).Intermediate accounting demystified. New York, NY: McGraw-Hill.