Chief Accountant of ASIC - FNP - Report Writing - Accounting Assignment Help

Assignment Task

The purpose of this report is to provide the Chief Accountant of ASIC with an analysis of areas in which Freedom Food Group Ltd (FNP) has potentially breached accounting standards. The restatements of years 2018 and 2019 within the 30 June 2020 financial report will be at the forefront of this report. The necessity of the restatements made by FNP, and how these subsequently indicate non-compliance of a multitude of accounting standards will be discussed. The key Accounting Standards that this report will focus on, in terms of FNP’s non-compliance, are AASB 102 and AASB 116. The possible economic consequences associated with FNP’s reporting abnormalities and non-compliance will then be evaluated. The primary consequences identified include investor and creditor uncertainty, inflated management compensation, and lack of consumer confidence.

Economic consequences

The June 2020 financial reports from FNP would be of great significance to current and potential investors and creditors of the company. When considering their investment and lending decisions, these parties would undoubtedly use the information provided within the FNP 2020 financial statements. With the restatements having such large discrepancies to the originally reported figures, this will be a major cause for concern from investors and creditors, and generate overall lack of faith in FNP as a business. This could have detrimental consequences for the company, and hinder all future operations.

In terms of employee incentives, FNP has adopted a performance-based remuneration plan. Management remuneration is directly linked to EBITDA targets set by the entity. In overstating assets and income in previous financial statements, it is clear that economic consequences have arisen in the form of inflated management compensation in prior years.

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