Fair Value Measurement And Mandated Accounting – Free Samples
Discuss about the Fair Value Measurement And Mandated Accounting.
Answer:
Introduction
British Petroleum is one of the largest oil and natural gas company in the world and is very much focused on developing a more varied sustainable environment where equal weightage has been given to the health of the environment along with the possible steps that the company can take in this regard, going by the modern rules it has become mandatory for the companies to indulge in proper sustainability reporting that they need to include along with their annual reports. Sustainable growth refers to use of natural resources in such a manner that equal amount of it is available for the future generation. Sustainable reporting is very much followed in countries all over the world. Given the BP is using such massive use of natural resources being one of the top natural gas and oil petroleum companies in the world, it becomes mandate for them to follow a sustainable approach in their overall activities (YUAN, 2018).
Analysis
There is a brief history attached with BP and the unwarranted damage to the natural habitats that it has been doing since past ages. Some six years the company ended up spilling 4.9 million barrels of oil in the Gulf of Mexico, that caused a lot of damage to the natural environment and caused a negative impact on the people with regards to offshore drilling of gas and natural oils. It killed more than 11 people and caused a lot of health issues to many (Coate & Mitschow, 2017). It had a negative impact on the other ships and the waterbody was totally devastated, it is one of the most popular disaster that has been caused due to human activities. A lot of wild animals and water animals lost their lives due to this and after effects continued for years to come due to this disaster, the company suffered a lot of losses due to this and this made them realize the importance of having a sustainable approach to their activities and taking care of the environment in which they function (YUAN, 2018). When it comes to gas and oil company they need to take extra care because they have a lot of natural resources to use for the company. When the disaster occurred, the company tried its best to undo the damage but it was not possible (Maynard, 2017). The government ordered a probe into the matter and along with the company the contractors are also taken into context. The damage done was so huge that it made the government realize how important it is to have a sustainable approach and a basic sustainability activity that companies should follow so that in the future they don’t have to face lot of issues with regards to natural resources, their use, their preservation and forming proper controls that will bound the companies to follow it so that in future such activity does not occur again (Norberg, 2018). BP is such a big company if it can fail at some point it is very possible that many smaller and medium companies can end up indulging in such activities that can harm the environment (Boghossian, 2017). So, for that the rules for sustainability and sustainability reporting was formed and in case the companies fail they need to pay penalties, it is mandate for all the listed companies especially those that indulge in environment related activities for the company. Gulf Mexican oil spill case was an eye opener for BP and that is reflected in their current sustainability reports, a brief analysis of that is given below
Sustainability Report of BP
BP now issues a detailed sustainability report every year along with its annual report in which it states the various initiatives that have been taken by the company for the betterment of the environment and the efforts they are putting to eradicate that have occurred before. It states that the company is reaching the sustainability level or not and the total amount that the company is spending on this is also stated briefly. The main aim of this report is to make the investors and the stakeholders aware of the decisions of the company and how is it affecting the environment for the public and the overall related elements. Sustainability reports contains declaration from the directors and the CEO where they recognize their responsibility towards the environment and how they are abiding to their duty (Anon., 2017). The report also contains details regarding the risk element that are associated with their activities and how is the management mitigating the same with their actions. If the company fails in this, they will be penalised and their license to operate can also be cancelled (Ghofiqi, 2018). For oil and natural gas companies there is a certain limit that the company needs to adhere to with regard to It is also verified by the auditors of the company who gives their opinion on the steps taken by the company and if the company is following the rules stated by the authorities and none of their activities are causing harm to the nature (Chron, 2017). It is important that all the accounting rules and regulation that have been framed with respect to sustainable development and reporting are properly followed by the company while framing their accounts and books and proper opinion is given on that by the auditors, the company can also hire experts that can help them in this regard with respect to effective sustainable maintenance (Chariri, 2017).
There is another aspect to sustainability that not only focuses on the development and protection of the environment but also focuses on the overall growth and development of all the stakeholders that are related to the company in some way or the other (Delone & Mclean, 2004). The basic aim of a sustainable approach is to build enduring relationships with the management, employees, investors, shareholders, people who are related to the company in any way and taking the environment as the center of all that. This is how a company that believes in a sustainable environment works (Kusolpalalert, 2018).
As per the sustainability report of 2017, the biggest challenge that BP as a company has faced is with respect to control of carbon emission in the environment. The 2015 Paris agreement has been set that focuses on providing a minimum carbon emission level within the coming five years. The CEO states in its declaration how the company as a whole is taking steps that would help in reducing the total emission of carbon, as oil and natural gas forms the basis of a rich environment for the future. Hence reduction of carbon emission is important to ensure that in future the company will grow but not at the caste of the nature (Alexander, 2016).
The report also states the steps that the management is taking for reduction of carbon emission and how far they have been successful in that. This is how the company presents in its sustainability reports all the steps that they have taken and the possible outcome of the same (Grundy, et al., 2017).
The Sustainability Accounting Standards Board have been formed in 2011, that states down the necessary guidelines that companies need to follow with respect to emission of certain materials in the environment and has also stated the possible line of control for the companies (Abbott & Kantor, 2017). BP is also following the same in its sustainability report and has stated the overall variance from the line of control if any in its annual report for the investors to analyse. It is not a one day affair but a constant effort from the management that will help in development of a clean environment where the rights of all the parties would be entact (Alsagoff, 2010).
The sustainability report of the company can be found in the below link :
https://www.bp.com/content/dam/bp/en/corporate/pdf/sustainability-report/group-reports/bp-sustainability-report-2017.pdf
Conclusion and Recommendations
On the basis of the overall analysis it can be said that protection of the environment is the duty of each and every human being and hence companies should adhere to safety standards when they are dealing with such natural resources. This is important in various contexts the most important being that the future should have something to use and that only be possible when the present is vigilant enough in their actions. It is very important that companies should follow all the guidelines that have been stated by the government. This will help in preventing such accidents that occurred in case of the BP in the Gulf mexico. Sustainablilty should be followed in each and every thing that a company does.
References
Abbott, M. & Kantor, A., 2017. Fair Value Measurement and Mandated Accounting Changes: The Case of the Victorian Rail Track Corporation. Australian accounting Review.
Alexander, F., 2016. The Changing Face of Accountability. The Journal of Higher Education, 71(4), pp. 411-431.
Alsagoff, N., 2010. Microsoft Excel as a tool for digital forensic accounting.
Anon., 2017. Explaining auditors’ propensity to issue going-concern opinions in Australia after the global financial crisis. Accunting and Finance, pp. Carson,E;Fargher,N;Zhang,Y;.
Boghossian, P., 2017. The Socratic method, defeasibility, and doxastic responsibility. Educational Philosophy and Theory, 50(3), pp. 244-253.
Chariri, A., 2017. FINANCIAL REPORTING PRACTICE AS A RITUAL: UNDERSTANDING ACCOUNTING WITHIN INSTITUTIONAL FRAMEWORK. Journal of Economics, Business and Accountancy, 14(1).
Chron, 2017. five-common-features-internal-control-system-business. [Online]
Available at: https://smallbusiness.chron.com/five-common-features-internal-control-system-business-430.html
[Accessed 07 december 2017].
Coate, C. & Mitschow, M., 2017. Luca Pacioli and the Role of Accounting and Business: Early Lessons in Social Responsibility. s.l.:s.n.
Delone, W. & Mclean, E., 2004. Measuring e-Commerce Success: Applying the DeLone & McLean Information Systems Success Model. International Journal of Electronic Commerce, 9(1).
Ghofiqi, M., 2018. FORMATION OF VIEWS AND INTERESTS TO THE ACCOUNTANTS PROFESSION IN MASTER OF ACCOUNTING STUDENTS OF JEMBER UNIVERSITY FORCE OF 2016 USING STRUCTURATION THEORY ANALYSIS. THE 3RD INTERNATIONAL CONFERENCE ON ECONOMICS, BUSINESS, AND ACCOUNTING STUDIES.
Grundy, Q., Held, F. & Bero, L., 2017. A Social Network Analysis of the Financial Links Backing Health and Fitness Apps. American Journal of Public Health.
Kusolpalalert, A., 2018. The relationships of financial assets in financial markets during recovery period and financial crisis. AU Journal of Management, 11(1).
Maynard, J., 2017. Financial accounting reporting and analysis. second ed. United Kingdom: Oxford University Press.
Norberg, P., 2018. Bankers Bashing Back: Amoral CSR Justifications. Journal of Business Ethics, 147(2), pp. 401-418.
YUAN, T., 2018. The Prospect for RMB Becoming One of the Two Center Currencies of the Dual-Center Global Financial System. The Dual-Center Global Financial System, Issue 1, pp. 83-91.
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