BUSINESS ACCOUNTING Assignment Example | Topics and Well Written Essays - 1750 words

BUSINESS ACCOUNTING - Assignment Example by, the requirement for a central global standard for accounting has emerged in order to close the gaps that exist among the many national standardization bodies. The IASB was therefore formed in 2001 as a way to consolidate the worlds accounting standards with the intention to make them more accommodative of all firms regardless of where they operate from. Accounting standardization are every important in not only allowing the generation of standard accounting and financial reports but also in increasing transparency (Needles, 2012). Accounting and financial report play a big role in the economy in that they are used to make useful economic decision both by the managers of a particular firm and by many other stakeholders who are not directly involved in the management of the firm. Standards make it easy for outside stakeholders to access this information in a form that they can understand and also have faith in such reports. Lack of such standards can lead to disaster. A good example is the Enron firm which was an energy generation firm that was based in Texas. Prior to its bankruptcy in 2001, the firm had been using unfair and substandard accounting methods to make its book look good and therefore attract many investors (Sterling, 2002). Enron was able to use this method to lure so many investors, fool the analysts at the NYSE and al so to fool the regulators. In fact, Enron management was the main supporters of the mark to market method of accounting which came to be seen as an unrealistic way to do accounting. It used this as a way to book future (prospective) profits from assets. Because it was performing so well (at least based on its fabricated accounting books), it was able to push for this kind of accounting, to the point of even pressuring the IASB to accept this as a standard of accounting. This later led to disaster and the firm had to finally collapse. The IASB was founded as an attempt to create accounting standards with which firms can generate

Critically evaluate, in relation to the common law duty of care, the Essay - 3

Critically evaluate, in relation to the common law duty of care, the liability of employers for psychiatric illnesses suffered b - Essay Example In other four similar cases in 2002, the Court of Appeal stated that for employees to gain compensation from their employers, they must inform the latter of their stressful working conditions and give them a chance to remedy the situation. Damages for psychiatric injury caused by stressful working conditions can only be recovered where the employee exhibited clear signs of the injury suffered. This must have been reasonably foreseeable by the employer. Liability for psychiatric damage can be claimed where the employer breached a duty of care by not acting in response to the reasonably foreseeable signs of damage (Munkman, 1990). Courts developed volenti non fit injuria, where the employee (defendant) had to prove the employer’s liability beyond a reasonable doubt in the 19th Century. This law excluded claims by employees against their employers. This law commonly affected the manufacturing industry. Imposing such vast liability would be too costly and would impede the growth o f the industry (Butler, 2002b). An employee who suffered from psychiatric illness due to stress at work is not enough to claim reparation of damages from the employer. In the Rorris on case, Lord Reed ruled that there must be a recognised psychiatric illness and not mere depression or anxiety. The defendant could recover damages only if she sustained a psychiatric illness commonly recognised as psychiatric disorders by a recognised a psychiatrist. She also had to have never been diagnosed with psychiatric disorder before. An action based on mere negligence only is not sufficient for a claim (Butler, 2002a). An employee who successfully proves the case can claim primary liability or vicarious liability. To claim primary liability, the employee must prove: Existence of a Duty of Care The employer’s duty is to offer reasonable care and to avoid exposing a member of staff to preventable risk of injury. This is depicted in the Walker vs. Northumberland County Council (1995) case. Similarly, in Cross Lord MacFadyen said that an employer’s common law duty is to provide conclusive care for his worker’s wellbeing and health. This should extend to include a reasonable duty of care, which does not expose the worker to working circumstances that have the potential of bringing him or her mental damage or disease (Selwyn, 1990). Foreseeability If a prediction cannot be made, then duty of care will not arise. A worker would have to prove that, on his part, the risk of getting psychiatric injury was predictable. Anguish, anger, sorrow and anxiety cannot attract reimbursement because they are ordinary feelings experienced by all human beings (Giliker, 2010). People can claim rewards only in situations where psychiatric illness is reasonably foreseeable. This was the case as indicated by Lord Bridge of Harwich. Breach of Duty If the injury is foreseeable, then follows the inquiry of whether or not there is breach of duty of care. To determine this, complain ts made by the worker should have been clearly recorded. The history must sufficiently prove that the employer was aware that a psychiatric illness was likely to occur due to the employee working under stressful conditions. Then it should be determined whether the employer acted promptly by initiating a probe into the issue. If so, it is hard to say