1a) Purpose of a entity Reporting entity ANZ Bank (2011) defines a reporting entity as a company or other organisation which

is obliged to prepare general-purpose financial reports complying fully with accounting standards. This obligation arises when users of financial information (say, investors or suppliers) are dependent on the reports for the information they need in making financial decisions and are unable to command specific information from the organisation. 'Non-reporting entity', ANZ Bank (2011) states that a non reporting entity is a company that is not bound to prepare complying financial statements. E.g. a small company where the owners are the managers.

The Australian Corporations Act 2000 defines an entity as:

(a) a body corporate; (b) a partnership; (c) an unincorporated body; (d) an individual; (e) for a trust that has only 1 trustee--the trustee; (f) for a trust that has more than 1 trustee--the trustees together.

AIM Textbook (2011) defines a Disclosing Entity as an entity which 'issues securities that are quoted on stock market or made available to the public via a prospectus.

b) Rights of the stakeholders of an entity Stakeholders are also known as external users (AIM Textbook 2011). They include 'employees, investors, suppliers, banks, consumers, taxation authorities, regulatory bodies and lobby groups which all have their own individual need of information from the entity. They are stakeholders as they have a 'stake' otherwise known as an 'interest'in the performance of an entity. Corporate social responsibity (CSR) and the stakeholer theory are apart of the rights of stakeholders. Shareholders have the right to give 'power to the directors to make decisions and to act on their behalf. Shareholders vote at annual general meetings and choose the directors. The Stakeholder theory states that the entity must represent the good of all stakeholder groups and not focus too much on maximising profits

2) Legal duties that directors have to their company (in Australia) Many companies are responsible for the well being and safetly of their staff. Due to CSR responsibilities include the lifecycle of a product or service, consideration of employees, the impact of the entity generally on society and the environment, and the need to report such effects both positive and negative.

Directors have a positive obligation to inform themselves about the companys affairs and where necessary obtain proper advice; otherwise, apart from penalties, they face personal liability for the companys debts and liabilities (Beehan Legal 2010). E.g. Fast food outlets (Mc Donalds) must ensure that staff follows all legislations such as food and health, hygiene, OH&S etc. b) Example of a director that has not fully complied with these legal duties and penalties involved. Environment

Reference Links http://www.anz.com/edna/dictionary.asp?action=content&content=reporting_entity http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s9.html http://www.behanlegal.com/KnowledgeCentre/CompaniesCorporationsLaw/DirectorsDutiesRespon sibilities/tabid/149/Default.aspx http://www.lawlink.nsw.gov.au/lawlink/supreme_court/ll_sc.nsf/pages/SCO_speech_austin_26110 2

http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/Directors_responsibilities_August2006.p df/$file/Directors_responsibilities_August2006.pdf