Recommendation Letter to the Carcraft Board

Dear Mr. Noelle:

They have sought of a piece of advice and recommendations from this office to the Board of Directors of The Carcraft Company with respect to its financial statements for the fiscal year ended June 30, 2016. By making recommendations to Terfel, the office responsible for this task has taken important and important actions to move the company forward. From a letter circulated by the General Manager asking the team to assess whether a general accounting system under Australian GAAP should be pursued. It also helps boards address the financial implications associated with disclosure of company rebates next fiscal year as well as providing details of any conceptual framework guidance.

Your letter indicated that it is unclear for the board on why they should adhere to the Australian accounting standards in preparing general accounting statement for the company. I believe this question is important to the future growth of the Carcraft Ltd and for proper record keeping as well as accountability. Adhering to the Australian accounting principles is a requirement by the Australian government when an organization prepares its financial records at the end of a given fiscal year. Besides, developing the general purpose accounting in accordance with Australian accounting principles will assist the company to file corporate tax returns in future. Carcraft Ltd is a corporation that is still growing. Consequently, the best approach to support the institution in keeping financial reports and statements in a format that will be understandable to future shareholders. Furthermore, it will help the company to reference the current economic growth in future thus preventing the occurrence of conflicting accounting standards used.

However, some accounting standard components can help them understand the conceptual framework for the transactions of the company. These include;

The aim of any financial statement reporting

The principal users of accounting and financial information

The type of financial statement that will meet the requirements of the handlers

The kind of information that the board should include to ensure that the financial statement satisfies these needs.

Defining items contained in the financial statement

Recording and measuring of items included in the financial statement.

Rebates are financial offers given to the customers or shareholders for their contribution in the success or management of the company respectively. Disclosing the company’s rebates in the next fiscal year will adversely affect the profitability of the organization, rebates have caused a significant loss to companies. Rebates are pervasive in retailing, and large corporations, these repayments have produced an income of equal value to retail earnings. However, the significance of rebates in a company are sensitive, and therefore, it is not advisable to the board of directors to disclose the amount of the rebates. Rebates are one of the legitimate approaches used by most companies to stimulate the growth of financial margins within a particular fiscal year. However, the rebates should be recorded appropriately as per the Australian accounting principles provided they are genuine. Discounts are good for the company; however, there is a great need for the stakeholders of Carcraft Ltd to manage them properly. Additionally, there is no requirement for the company to disclose these benefits to the public as long as the management has accounted for them in the correct manner.

Bibliography

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