Deep water Horizon Oil Spill for Accounting - myassignmenthelp

Question: Discuss about theDeep water Horizon Oil Spill for Accounting Research. Answer: Introduction All the legal facts and figures such as accounting laws, financial implication and penalties and charges are consisted by this report which is imposed on Deep water Horizon Oil Spill for the strictly proven liabilities. Mainly, this report is made up of damages observed due to deep water Horizon Oil Spill and how organization comes with strategies for replacing its existing eco-safety machines. In this report, it is given that group has maintained escrow account to meet their contingent liabilities. It has been made and maintained as per the legal and regulatory requirements. In this case bifurcation is done on fines and penalties which are to be imposed on the Deep water Horizon Oil Spill and also the liabilities which are uncertain for the legal fines. In addition to this, this report on Deep water Horizon Oil Spillshows the direct and indirect impact of ecological and sociological services in and around the Gulf of Mexico. This Deep water Horizon Oil Spill forces the government an d regulatory authorities to introduce mandatory requirement of ecological and sociological services used by all the organizations in Mexico. There are many discussions and recommendation which are given; it reflects the true impact of Deep water Horizon Oil Spill (Boyd, 2010). Points of Discussion First of all the main argument discussion is made regarding negative impact of Deep water Horizon Oil Spill which causes because of the less effective ecosystem implemented by BP. In this case bifurcation is done on fines and penalties which are to be imposed on the Deep water Horizon Oil Spill and also the liabilities which are uncertain for the legal fines. BP has deposited all the money and penalties in escrow account with a view to discharge its liabilities. However, only penalties and fines which are certain have been looked into the escrow account. On the contrary to this side of BP, it is observed that BP should have deposited all the money in escrow account. It will increase the brand image and business functioning of organization. After doing analysis of all the details and points in this case study, it has been observed that BP did not disclose the proper information regarding eco-system services and other environmental support system which are used by company to eliminate the negative impact of its business functioning. However, BP had also implemented the new eco-system which hasno use and no positive response can be obtained. Deep water Horizon Oil Spill gives the negative impact on the financial positions of the company. It is observed that in 2009 BP was having profit of around $ million 6947 which suddenly decreased by the large amount and company had to face loss of $ million 11071. In addition to this, BP had promised to make contribution of $ 500 million in its research and development department in order to develop an effective level of eco-system after analyzing the negative impact of Deep water Horizon Oil Spill. Nonetheless, it was required to strengthen its destructive brand image, The BP group had also committed to provide fund $ million 360 cost of Six berms in Louisiana island project. The main discussion point is about the amount of money which was invested by BP in the development of Eco-system. Company charged this amount from prof it and loss account by considering its revenue expenses. As per all rules and regulation given by IFRS, the investment made for eco-system is capital expenditure. All the expenses are charged by company from profit and loss account (King, et al. 2015). This proves that company has not been following proper accounting standards and financial implications and regulatory requirements. This shows the company had been making several positive plans and strategies in order to lessen the negative impacts arouse in Mexico gulf. However, as per the accounting and regulatory requirements, it is been analyzed that BP had maintained all its required and promised funds in its escrow account. This escrow account was required to be maintained with a view to keep penalties of money and uncertain charges which could be aroused if all the imposed charges proved to be strict liabilities under the clean water act against the company. Moreover, all the requirements regarding consolidated financial statem ent and annual reports are prepared by BP in order to comply with IFRS rules AASB standards. Further to notice, BP describes amount of loss which it suffered from Deep water Horizon Oil Spill in its consolidated balance sheet for complying with its domestic and international regulatory requirements. It is being considered that the total value of eco-system which was destroyed due to oil spill would cost around USD 12 to 47 billion. The main concern in this report is related to the transparency of BP working system. Company got failed to maintain the transparency regarding disclosing of required amount of information to its domestic and international stakeholders. BP never followed international nor domestic reporting frameworks properly. If company really wants to maintain an international brand image then it should comply with IFRS rules and AASB accounting standard while providing report on its consolidated financial statements with regulatory authorities (Bodle, et al. 2016). It is evaluated that BP oil spill case has destructed the brand image of BP Company. It also failed to make disclosure of all its financial and non financial information. This has resulted into loss of not only tangible assets but also intangible assets. BP should have followed all the IFRS rules and regulation for establishment of harmonization in its domestic and international policies and frameworks. It had also made investment in its research and development department at the time when the company is facing loss from its business functioning. This type of management decisions had resulted into destruction of business. After happening of Deep water horizon oil spill, BP should have strengthened its safety policies and measures for the betterment of society. But, it had instead of installing effective eco system had indulged in investing its remaining funds in research and development department. BP was also not able to make proper level of disclosure to its stakeholders which had ma de company in default to comply with its accounting and financial regulatory requirements. BP did not disclose proper information on eco-system services and other environmental support system which could be used by company to lessen the negative impact of its business functioning. There are several drawbacks which have been faced by BP in its business functioning. Deep water Horizon Oil Spill had resulted into negative impact on the financial positions of the company (Zhuang, 2016) Reflection on the Case of BP In this case, BP had paid several penalties and charges which are caused due to its Deep water Horizon Oil Spill. These expenses are charged by company as revenue expenses from profit and loss account. On the other hand, as per IFRS and AASB 137 standards if company has made expenses and investment which is having high amount for investment and expenses and which is related to capital expenditure then it should be charged as Capital expenditure. BP has charged all its losses from the profit and losses which reflects high amount of losses in its business functioning as capital expenditure. Perhaps, BP had accounted many transactions as revenue expenditure to save tax from the governments. It is being evaluated that BP should have made proper disclosure of all its financial transactions to its stakeholders. BP was not able to make proper level of disclosure to its stakeholders which had made company in default to comply with its accounting and financial regulatory requirements. It is b eing observed that BP did not disclose any proper information on eco-system services and other environmental support system which could be used by company to lessen the negative impact of its business functioning. Deep water Horizon Oil Spill had resulted into negative impact on the financial positions of the company (Zhuang, 2016). It is being observed that company has lost its economic value and in 2009 BP was having high profit of around $ million 6947 which was decreased by very big amount and company had to face high amount of loss of $ million 11071. The reason behind all this negative impact was that BP had not followed proper compliances and disclosure requirements. In addition to this, Company was becoming less effective and consequently business functioning of BP had resulted into high level of losses. With a view to conclude the point of view on this subject matter it is being reflected that BP needs to make changes in its reporting frameworks and should work on its trans parency issues in determined approach (Gutierrez, et al. 2013). Moreover, there was much other inefficiency which has been disclosed and BP had introduced in its financial reporting. These all the details reflects that BP had failed to comply with all the possible rules and regulations and IFRS 137 which had resulted into damage to the brand image of company in stakeholders mind. After that, the mechanisms which have been used by BP to overcome the negative impact arouse from Deep water Horizon Oil spill is also not satisfactory. The management department and accountant who prepared financial statement was also in fault as he had not complied with international financial reporting standards and had less transparency in its reporting frameworks. Conclusion This report reflects the inefficiency of BP regarding accounting and financial regulatory compliances. There above study on Deep water Horizon Oil Spill was analyzed and it has provided how management department had encountered with the financial requirements of BPs responses to Deep water Horizon Oil Spill. Stakeholders had claimed that company did not maintain transparency regarding disclosureof proper information in its annual report. Accountant of BP had charged all of its expenses as revenue expenses with no capital expenditure. In addition to this, the company suffered many losses due to its negative business functioning. If BP wants to again establish its brand image then it will have to pay off its all charges and establish an effective eco-system. Now in the end it would be concluded by the things that accountant and financial managers need to analysis all IFRS rules and accounting standards in determining approaches before analyzing and making financial statement of BP.Also , after the case of Deep water Horizon Oil case, government and regulatory authoritieshas made changes in mandatory requirement of ecological and sociological services used by all the organizations in Mexico. This would not only introduced to increase the health safety requirements but to maintain the transparency in disclosure of financial and accounting details to its stakeholders after following all the legal requirements (Liu, et al. 2016). References Bodle, K.A., Bodle, K.A., Cybinski, P.J., Cybinski, P.J., Monem, R. and Monem, R., 2016. Effect of IFRS adoption on financial reporting quality: Evidence from bankruptcy prediction.Accounting Research Journal,29(3), pp.292-312. Boyd, J., 2010. Lost ecosystem goods and services as a measure of marine oil pollution damages. Resources for the Future DP 10-31, 25p Gutierrez, T., Singleton, D.R., Berry, D., Yang, T., Aitken, M.D. and Teske, A., 2013. Hydrocarbon-degrading bacteria enriched by the Deepwater Horizon oil spill identified by cultivation and DNA-SIP. The ISME journal, 7(11), p.2091. King, G.M., Kostka, J.E., Hazen, T.C. and Sobecky, P.A., 2015. Microbial responses to the Deepwater Horizon oil spill: from coastal wetlands to the deep sea. Annual review of marine science, 7, pp.377-401. Liu, Z., Liu, J., Gardner, W.S., Shank, G.C. and Ostrom, N.E., 2016. The impact of Deepwater Horizon oil spill on petroleum hydrocarbons in surface waters of the northern Gulf of Mexico. Deep Sea Research Part II: Topical Studies in Oceanography, 129, pp.292-300. Zhuang, Z., 2016. Discussion of An evaluation of asset impairments by Australian firms and whether they were impacted by AASB 136.Accounting Finance,56(1), pp.289-294.