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Points of discussion

Discuss About the Valuable Factors and Figures On Financial?

This material pertains of all the judicial facts and numbers i.e.; accounting laws, financial implication all penalties and charges enforce on Deep water Horizon Oil Spill for the strictly proven liabilities. The core focus shown in this report is harm done by deep water Horizon Oil Spill and how companyis coping up with it by introducing strategies to replace its existing eco-safety machines. This report, also give details about escrow account which has been maintained to meet their contingent liabilities according to the legal requirement. This study gives a clear information on the fines and penalties which are enforced on the Deep water Horizon Oil Spill and of liabilities which are uncertain for the penalties. It also provides brief information about the direct and indirect impact of ecological and sociological services in and around the Gulf of Mexico. This Deep water Horizon Oil Spill has forced government and regulatory authorities to makes changes in mandatory requirement of ecological and sociological services used by all the organizations in Mexico. There are several discussion and recommendation given which reflects the true impact of Deep water Horizon Oil Spill (Boyd, 2010).

The main debate has been done on the damage by the Deep water Horizon Oil Spill which was happened due to the ineffective ecosystem implemented by BP. The Deep water Horizon oil spill gives complete information on the fines and penalties which were enforced on the Deep water Horizon Oil Spill and the liabilities which are uncertain for the legal fines.  After evaluating all the information provided in the case, it was observed that BP haven’t disclose the proper facts and details on eco-system services and other environmental support system which could be used by organization to mitigate the harmful impact of its business operations. Although later BP implemented new eco-system which was proven unproductive and did not put any positive effect. Not only on ecosystem but on the financial position also Deep water Horizon Oil Spill had put negative impact on the company. According to the analysis it was observed that in 2009 BP’s total profit was around $ million 6947 which was drastically reduced and had loss to the company around $ million 11071. Moreover, BP decided to fund up by contributing $ 500 million in its research and development department for better and effective eco-system after evaluating the consequencesof Deep water Horizon Oil Spill. Also to build up its goodwill again in the market, The BP promised to contribute over $ million 360 cost of Six berms in Louisiana island project. The core focus was related to the amount of fund which BP group invested in the development of Eco-system but Company considering it as revenue expense charged itfrom profit and loss account. According to IFRS norms, the investment made foreco-system is capital expenditure but Company has charged these expenses from profit and loss account (King, et al.  2015).This analysis shows that company was not following the proper accounting and financial regulatory system. Similarly this reflects that organizationhad been making several good plans and strategies in order to rationalize the negative and bad impacts arouse in Mexico gulf. However, all the money put in escrow account of the BP should be open for using government compliance and paying all the legal charges irrespective of the fact that they are proven or not yet. Furthermore, consolidated financial statement and annual report was prepared by BP in order to comply with IFRS norms AASB standards. In respect to that, BP has also provided detail information about the amount of loss which it bear from Deep water Horizon Oil Spill in its consolidated balance sheet for complying with its domestic and international regulatory system. As per the report, it wasconsidered that the overall value of eco-system which were damaged due to oil spill would cost around USD 12 to 47 billion. The core focus in this report is related to the transparency of BP working system. Organization became insufficient to disclose the required amount of detail to its domestic and international stakeholders. BP had neither followed international nor domestic reporting frameworks properly. If the respective organization wants to maintain its goodwill in an international market then it should abide by IFRS rules and AASB accounting norms while reporting its consolidated financial statements with regulatory authorities (Bodle, et al. 2016)

Reflection on the case of BP

In this study, BP had gone through several penalties and charges because its Deep water Horizon Oil Spill. Company has charged these expenses as revenue expenses from its profit and loss account. Other side, as per IFRS and AASB 137 standards if company has made high amount of expenses and investment which is high in amount and related to capital expenditure then it should be charged under Capital expenditure. BP has charged all its losses from the profit and losses which shows high amount of losses in its business operations. However, BP had chargedthese transactions asrevenue expenditure with a motive to save tax from the governments. Further it has been analyzed that BP had to make total disclosure of all its financial statements to its stakeholders. BP became insufficient to make proper disclosure to its stakeholders which had made company in default abide with its accounting and financial regulatory system. It has been seen that BP haven’t  disclose the total details on eco-system services and other environmental system which could be used by company to rationalized the negative impact of its business operations. Deep water Horizon Oil Spill had bring out thenegative impact on the financial positions of the organization.According to the analysis it was observed that in 2009 BP’s total profit was around $ million 6947 which was drastically reduced and had loss to the company around $ million 11071. As a result, it shows that BP has not followed proper level of norms and disclosure requirements. In respect to that, ineffective business functioning of BP has resulted into great level of losses. The subject matter reflected that BP needs to make changes in its reporting frameworks and should work on its transparency issues in determined approach (Gutierrez, et al. 2013). In addition to this, if BP wants to make changes in its business conditions and brand image then it should invest its money in establishment of more effective eco system.

Conclusion

This case shows the neglecting of BP in its accounting and financial regulatory system. The respective report on Deep water Horizon Oil Spill has been evaluated which reflects how management department had brought up with monetary implication of BP’s responses to Deep water Horizon Oil Spill. Furthermore, there are other failure which have been disclosed that BP had made in its financial reporting. Stakeholders were unsatisfied with the information and made claim that company did not disclose proper information in its annual report. Moreover BP had charged all of its expenses as revenue expenses. In respect to that, the organization has suffered a huge loss due to its negative business functioning. If BP wants to recreate its brand image then it will have to pay off its all charges and establish an effective eco-system.  In the end it would be concluded that accountant and financial managers required to analysis all IFRS norms and accounting standards before creating financial statement of BP. In respect to this, the Deep water Horizon Oil case, government of Mexico should make alterations as mandatory requirement of ecological and sociological services used by all the companies. Ultimately, this will increase the health safety requirements and also increase the transparency in discloser of financial and accounting details to its stakeholders (Liu, et al. 2016). Now in the end it would be inferred that if BP wants to create its strong brand in gulf countries then it needs to make high level of investment in establishment of eco system.

References

Bodle, K.A., Bodle, K.A., Cybinski, P.J., Cybinski, P.J., Monem, R. and Monem, R., 2016. Effect of IFRS adoption on 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.

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