According to (Mentz, Barac & Odendaal, 2018), each for-profit organization must operate according to specific accounting standards; these standards provide relevance, reliability, transparency, comparability, and ease of analysis worldwide. There are two well-known systems; the first is GAAP, which is used in the United States, and the second is IFRS, which is used in more than 120 countries around the world; since AECOM is a company listed on the American Stock Exchange, its accounting records operate according to the GAAP system.
AECOM Accounting Standards and Audit Manuals:
The financial auditor uses audit evidence to assess the organization's compliance with financial accounting standards; AECOM uses Generally Accepted Accounting Principles (GAAP); this is shown in the previous discussion when analyzing its financial statements, we find more adherence to GAAP financial rules, it's like using first in first out last (LIFO) and Revenue recognition, balance sheet, and outstanding equity measurements and treat development cost as an expense and strictly prohibit inventory reversal, the ultimate goal of GAAP is to ensure that companies' financial statements are complete, consistent, and comparable (Van Tendeloo & Vanstraelen, 2005).
Update and revise AECOM's Financial Model:
According to (Kienitz & Wetterau, 2013), to update a financial model and make it achieve future profitability goals, the intended goal must be established from the outset; for example, the goal is to reach profits and revenues in the coming years, and accordingly, the financial model is built according to expenses, also reduce the assumptions on which the financial model is built so that the model is less complex and easier to understand and implement, planning the form from the start saves time and effort, this is done by setting inputs, processing and outputs. Finally, using tests and developing possible scenarios leads to obtaining more reliable results for the financial model (Fridson & Alvarez, 2022).
Strategies Recommended to the AECOM Board of Directors:
I see that the best thing to do is to review and compare the financial statements of organizations working in the same field; this is to avoid its shortcomings, do the best that can be done, and obtain the best practices, analyzing current and future risks in the market is one of the most essential tasks that the Board of Directors must discuss, liquidity analysis, asset management, profitability, and debt coverage. Also, the board of directors must make reasonable assumptions for the company's future, and some corporate boards set fanciful expectations that will make the company falter. Finally, the Board of Directors must consider approaches to assessing the company's market value, especially if it is a company whose shares are traded on the stock exchange (Ikram & Ahmed, 2020).
Conclusion
The most critical area to enhance financial management is to have a clear action plan for the company's financial position and monitor this financial situation first, ensure collections and maintain updated financial records, and control operating expenses, especially with companies working in services such as AECOM. Finally, fulfilling tax benefits and disclosing all the company's activities is essential without manipulating the financial records (Higgins, Koski & Mitton, 1995).
References
Fridson, M. S., & Alvarez, F. (2022). Financial statement analysis: a practitioner's guide. John Wiley & Sons.
Higgins, R. C., Koski, J. L., & Mitton, T. (1995). Analysis for financial management (No. s 53). Chicago: Irwin.
Ikram, K., & Ahmed, A. (2020). The Role of Accounting Information in the Company's Decision-Making Process. International
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Kienitz, J., & Wetterau, D. (2013). Financial modeling: Theory, implementation, and practice with MATLAB source. Joh Wiley & Sons.
Mentz, M., Barac, K., & Odendaal, E. (2018). An audit evidence planning model for the public sector. Journal of Economic and Financial Sciences, 11(1), 1-14.
Rezaee, Z. (2002). Financial statement fraud: prevention and detection. John Wiley & Sons.
Van Tendeloo, B., & Vanstraelen, A. (2005). Earnings management under German GAAP versus IFRS. European Accounting Review, 14(1), 155-180.