Australian Security Exchange (ASX): Australia’s premier large Capitalization equity Index.
Accounting Theory: Theories and methods that are used in studying and analyzing financial reporting rules and regulations. Accounting Concepts are accounting rules applied while preparing the financial Statements and Accounts. They include Accrual Concept, Consistency concept, Going Concern concept and Prudence Concepts
Flight Centre being one of the largest Airline Company in Australia, has contributed significantly in contributing to the implementation and development of the conceptual frame work. The corporation has played a great role in ensuring that the obligations of the Accounting conceptual frameworks are met. The main purpose of the Conceptual frame work is to help the IASB to develop future IFRS and to review its current IFRS and this topic has clearly brought out how the Flight Centre has ensured that this happens (Bath, 2012).Flight Centre role of overseeing has enabled the Australian listed companies to be left with no option but to comply with the implementation of the rules and regulations set out the Boards. This has ease the work for the Australian government prepares the financial statements because it harmonizes the way financial statement are to be prepared globally (Frijns, 2010). The topic has explained the conceptual frame works that have been adopted by the Flight Centre Corporation such as the IFRS, AASB and the IAS (Viljoen, 2015). Conceptual framework is very vital as far as reporting of financial statement is concerned, for instance it help financial statement users to understand the information provided by the organization. Companies with whose portfolio have high liquidity and need a benchmark and Flight Centre provides this benchmark for such company’s
i) Provide clear defined terms that are used in discussion of accounting problems.
ii) Guides those who set the accounting standards while coming up with ways on how to review financial reporting rules.
iii) Helps to ensure internal consistency in the accounting Standards
iv) Lack of an accounting standard can lead to misunderstanding among those preparing the financial statements. Conceptual framework can therefore help to solve such misunderstanding.
v) Assist Auditors and accountants to come up with accounting concepts that are relevant to a transaction that is not captured in the existing Standards.
Flight Centre has it’s headquarter in Sydney, Australia. It has been in existence for 150 years hence has stood the test of time in exchange experience. According to Dunfordm and Palmer (2018), it comprised of 530 employee, and 6.7 million shareholders, 180 registered members, and approximately 2,200 listed entities and issuers in the year 2018. The study also revealed that Flight Centre has always been at the top for many years globally and its total market shares in terms of capital is approximately $1.5 trillion, The interest rate derivative is about $47-trillion and it is one of the biggest in Asia. The New York Security Exchange (NYSE) which is one of its major exchanges had one of the outstanding listing qualifications that required total number of shareholders equity for the last three financial years not less than $10 million. The world market capitalization of $200 million, and at least $4 share price of NYSE, 2018. The findings also stated that the beginning public offering together with secondary issuers is a mandatory requirement for them to have 400 share Owners. Cooperation (2017) stated that in 2015 information services and Technical services revenue increased by 8% and 10% respectively. The Financial Software company rose by 27% over the past years and ASX’s 19.3 Stake is now worth $334m, more than 4% of its market value (Tian, 2015).
Flight Centre raise money by declaring shares to its members who are listed on the stock exchange. The members who are also the investors benefits by earning dividends when the company makes profits.Flight Centreavails a market for potential buyers and sellers to make money. The opening time is as shown below
7am-10am Pre-open
10am open
10am-4pm Normal Trading
4pm-4:10pm Pre CSPA
4:10-4:12pm Closing Single Price Auction
Flight Centre normal working days are week-days only and it does not operate on public holidays. The time ranging between 4:10 and 4:12pm has a single auction price which is aimed at availing time for setting of each day’s closing prices.
A potential Investor who wants to have experience trading in all the companies listed on the stock exchange can do so by exchanging a single trade that has low value.
Flight Centre being the pace setter of rules that are to be adhered to by the Australian markets, and also one of the biggest listed exchange companies in the world, has various roles to play. These roles have significantly impacted on the conceptual frame work of accounting (Galariotis, 2010).Flight Centre for instance does the review of application by companies who have the qualifications and would want to be listed on Flight Centre, carry out the supervision duties to ensure that organizations that have the approval observe the rules, review the application of the Stakeholders who wants to be the participants of Flight Centre allow stakeholders to have a direct access to the share market, maintains a system of record of ownership in the data base, provide education to the members, ensure that standard corporate governance are maintained and also to make sure that its members comply to the operational rules and regulations (Chohan, 2017).
According to Hambleton and Roca(2016), for a company to be listed on Flight Centre, it must have minimum number of 300 non-affiliate investor at $2000 and a Free float of 20%. It must also pass the profit test of $1 million and the company size in terms of assets must be $4 million net tangible assets or $15 million market capitalization. The secondary markets for instance must stimulate its liquidity in the number of its company shares to realize the value of their business. The listing also requires a higher standard of disclosure which results in additional management of time and investment. The Flight Centre does all these to ensure that Assets are reported and disclosed as per the requirement of the Standard in the frame work.
As a role model to other entities, Flight Centre has ensured that all the reporting companies listed on the security exchange have adopted the conceptual framework. For instance ASX adopted the IFRS to be used by the team. By adopting this standard, Flight Centre has ensured that all the organizations that contest a broad acquires capital to grow their business and also to give comprehensive financial details (Keogh, 2018). For a company to qualify for the listing, Flight Centre has to verify that it meets all the requirements of this Standard.Flight Centre is an independent entity and serves the public, private and not-for-profit Sectors, it therefore has to make it compulsory for these companies to adopt the IFRS before it approves the application made to be listed, this will in turn make the work of the Flight Centre easier and faster. In doing so Flight Centre contributes to the development of the framework.
All the companies listed on Flight Centre are reporting entities, and from the reporting entity concept all of them are required by the Act to be in consistent with the Australian Accounting Standard (AASB). ASX being an overseer, will work with the government to help in putting this concept into action. Flight Centre has laid out the rule that requires an individual or a group who is applying for the listing to have the certification of the Australian Accounting Standards in completion. The requirement applies to both reporting periods of the interim year and those of for the financial reporting periods at the end of the financial year. The ASX avails more information about its operations and about the importance of observing the regulatory frame work by publishing its information requirements and also compares the reporting requirement with the requirements of the jurisdiction (ASX, 2013).
Flight Centre has its Corporate Governance Council which was formed early 21st century, this council unites a variety of business, shareholders and other groups in the industry. The main objective of the council is to facilitate the growth and give recommendations about the corporate governance. The recommendations are purposed to increase the investor confidence and also to help the reporting entities to reach their expectation as far as corporate governance is concerned (Frino, 2011). The Flight Centre reporting entities are to act as the benchmark and compare between their practices of corporate governance and those of the council recommendation, and to disclose the cause of inconformity. The rule is aimed at encouraging reporting entities to accept the council’s recommendation practices without necessarily pushing them to adopt them thus contributing to the embracing of the standards willingly.
Flight Centre adheres to compliance of its rule by taking the responsibility of verifying that every company listed in the stock exchange complies with the rules and that the listed company participates in observing the operating rules of different markets (Young, 2015). It monitors and enforce the compliance to encourage the participants to comply. According to Vo (2015), participants are given an admission form to verify and confirm whether he or she is a member of ASX market or not. This verification will in turn put the participants to forcefully observe the regulatory frameworks so as to avoid being inconvenienced when it comes to being registered on the stock exchange.
Conclusion and Recommendations
Conceptual frame work concept is of great importance to the prepares of financial statements
As well as to the users. Every organization should work towards meeting its obligations so as to meet the global requirements of financial reporting standards. Flight Centre has tried to meet this obligations but still there is room for improvement. For example ASX should encourage its management team to improve its approach towards the AASB and should support it by ensuring that the responsibilities of the staff and the companies listed are well defined. The ASX should also work closely with the Minister to monitor the regulatory requirements of the listed companies and the market as a whole, this will ensure that no one violets the rules and regulation set by the company Act. If the above recommendations are accepted, The Australian Government should continue to work with the Flight Centre to come up with regulatory philosophy that can add to more improvement and development of the conceptual frame work.
References
ASX, A.S.E., 2013. ASX listing rules.
Bath, V., 2012. Foreign investment, the national interest and national security-foreign direct investment in Australia and China. Sydney L. Rev., 34, p.5.
Chohan, U., 2017. Blockchain and Securities Exchanges: Australian Case Study.
Cooperation, A.A.P.E., Authority, A.A.P.R., Exchange, A.A.S., Aboriginal, A.T.S.I., Islander, T.S., Agreement, A.A.W., Accountants, C.C.P., Scheme, C.C.S. and Orders, F.F.M.S., 2017. Abbreviations and acronyms. The European Union in Crisis.
Dunford, R. and Palmer, I., 2018. Managing for high performance? People management practices in Flight Centre. Journal of Industrial Relations, 44(3), pp.376-396.
Frijns, B., Gilbert, A. and Tourani-Rad, A., 2010. The dynamics of price discovery for cross-listed shares: Evidence from Australia and New Zealand. Journal of banking & finance, 34(3), pp.498-508.
Frino, A., Lecce, S. and Segara, R., 2011. The impact of trading halts on liquidity and price volatility: Evidence from the Australian Stock Exchange. Pacific-Basin Finance Journal, 19(3), pp.298-307.
Galariotis, E.C., 2010. What should we know about momentum investing? The case of the Australian Security Exchange. Pacific-Basin Finance Journal, 18(4), pp.369-389.
Hambleton, J. and Roca, R., 2016. MORE CLARITY ON PRICE-FIXING IN DISTRIBUTION RELATIONSHIPS: FLIGHT CENTRE LTD V ACCC.
Keogh, K., Gordon, C. and Marinovic, P., 2018. Cyber security: Global developments in cyber security law: is Australia keeping pace?. LSJ: Law Society of NSW Journal, (42), p.82.
Tian, X., Do, B., Duong, H.N. and Kalev, P.S., 2015. Liquidity provision and informed trading by individual investors. Pacific-Basin Finance Journal, 35, pp.143-162.
Viljoen, T., Westerholm, J., Zheng, H. and Gerace, D., 2015. Fleeting Orders and Dynamic Trading Strategies: Evidence from the Australian Security Stock Exchange (ASX). Journal of Accounting and Finance, 15(4), p.108.
Vo, M., Cohen, M. and Boulter, T., 2015. Asymmetric risk and return: Evidence from the Australian Stock Exchange. Pacific-Basin Finance Journal, 35, pp.558-573.
Young, J.P., Win, A.K., Rosty, C., Flight, I., Roder, D., Young, G.P., Frank, O., Suthers, G.K., Hewett, P.J., Ruszkiewicz, A. and Hauben, E., 2015. Rising incidence of early?onset colorectal cancer in A ustralia over two decades: Report and review. Journal of gastroenterology and hepatology, 30(1), pp.6-13.
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