The preparers and users of Australia’s financial statements strongly support the continuance of the body that does domestic standard setting having the principle function of improving the financial reporting quality in the country. The remuneration committee which states the remunerations of the directors including the CEO enhances the financial reporting quality. They also have influence for the development of the accounting standards internationally.
The domestic body of standard setting help maintaining awareness with investment and business community with respect to the accounting standards importance to the financial system’s growth and stability. It also helps in the promotion of compliance and culture with the standards of accounting. However, there are plethoras of options with regards to the way of setting accounting standards that can be carried out in Australia. The principal options for this are:
Setting standards that are returned to the profession of accounting undertaken on the basis of self regulations.
The processes’ greater control is taken by the government and making the accounting standards a regulation.
In setting the standards, the stakeholders are involved at a greater level by adopting the accounting standard structure setting similar to the systems practiced in UK and US.
The option (1) can be looked upon as backward looking. The accounting standard’s delegation of responsibility in relation to the setting of standards to the profession of accounting does not augur well with standards of accounting that have legal recognition (Robson, 1992). Alternately, the provision of complete control by the government over creating standards of accounting as explained in option (2) would not be addressing call for greater involvement of the stakeholders.
Essentially, with respect to the social and environmental issues, there is nothing new. They have been existent throughout with businesses never ignored them. The newness of it is their occupation of place on the agendas of politics and business. There have never been a situation in the past twenty years that matters related to the interactions of the organizations with society and environment been regarded as so crucial and central to the well being and future of a business and ones being affected by it. All organizations have to make and assessment explicitly with regards to social and environmental impact whether it is for pragmatic, legal, economic and moral reasons (Heeffer, 2009). They must be attempting for repositioning themselves because the social contract terms between the society and business has been increasingly under scrutiny. It is well established now that success of businesses is derived, at least in fraction, from the society and natural environment. This is not debatable. The debatable subject is the question that whether the gaining of success in the business is at the expense of social and environmental degradation. The importance of the social and environmental initiatives has become an underlying necessity for performing well financially. In order to appreciate this requirement, the remuneration of the CEO of Northern Star Resources LTD can be linked to the success of the social and environmental initiatives that the company would take.