This particular study is based on Seek Limited that is enlisted in the Australian Securities Exchange (ASX) listed. As per the objective, the report inspects whether the company has necessary compliance with the required accounting standards and conceptual framework.
The main focus of the business operations of Seek Limited is to facilitate the matching between the employment opportunities and jobseekers with the aim to provide assistance in hiring candidates for advertised roles. The company was founded in the year of 1997 and it is headquartered at Melbourne, Australia. Seek Limited has its operation in the vast regions of Australia and New Zealand along with China, India, Brazil, Nigeria, Bangladesh and others (seek.com.au 2018).
In case of the accounting works, the ASX listed firms are needed to follow the standards and guiding principles of Conceptual Framework provided by Australian Accounting Standard Board (AASB) and International Accounting Standards Board (IASB). The main objectives of Conceptual Framework is provide the firms with the regulations and guiding principles for the preparation and presentation of financial statements (aasb.gov.au 2018).
There are certain elements or components of Conceptual Framework that the firms are needed to consider in financial reporting; they are assets, liabilities, equity, income and expenses. General purpose financial reporting is a crucial component of Conceptual Framework that put the obligation on the firms to provide financial information about them that is useful for the existing and potential investors for investment decision-making (aasb.gov.au 2018).
The presence of many theories can be seen and one of them is the Stakeholder Normative Theory. As per this theory, stakeholders of the companies have legitimate interest of the business activities of the firms and it is the responsibility of the managements of the firms to address these interests (Hasnas 2013). The application of this theory can be seen in the business of Seek Limited. For example, existing as well as potential investors are one major stakeholder group of the company who are interest in investing in the company for gaining healthy return on their investments. Thus, Seek Limited addresses this interest of these stakeholders by making financial information of their business available for them through financial statements so that they can make effective investment decisions (Hasnas 2013).
It needs to be mentioned that there is not any major accounting issues in Seek Limited that has been published in news in the recent time (seek.com.au 2018). However, in the recent months, major drops in the share prices of Seek Limited can be observed from the above figure and it can be considered as a major financial issue for the company and for their major stakeholders as well. As per the 2018 Annual Report, Seek Limited registered major drop in the profit for the year that is $91 million in 2018 from $352 million in 2017; and it can be considered as one of the reasons for the drops in the share price of the firm (seek.com.au 2018).
According to the Conceptual Framework, it is needed for the firms to use variety of measurement base due to the varying combination of financial statements. Historical cost, current cost, fair value and net realizable value are the available measurement bases for the firms as per the Conceptual Framework (aasb.gov.au 2018).
According to the 2018 Annual Report of Seek Limited, historical cost and fair value are the two measurement bases that the firm has used for measuring the financial statement elements. It can also be observed from the 2018 Annual Report of Seek Limited that the company has used these two measurement bases as per the measurement requirements. For example, revenue has been measured at fair value but intangible assets have been measured either at historical cost or fair value method as per their acquisition (wcsecure.weblink.com.au 2018).
The fundamental qualitative characteristics are Relevant and Faithful Representation.
Relevance: The provided financial information by the companies must be relevant to the necessity of the users for creating positive impact on decision making process. According to the 2018 Annual Report Seek Limited, the company has disclosed the detailed information of the financial statement elements that includes both the natural as well as numerical description. These aspects lead to better understanding of the users (Barth 2013).
Faithful Representation: There must not be any error in the financial information and they needs to be complete and neutral as well; thus, they need to be faithfully represented by reflecting the transactions, events, underlying assumptions and estimates. As per the 2018 Annual Report of Seek Limited, the company has provided detailed information about the elements of financial statements supported by further explanation as well as clarification through the notes to the financial statements (Henderson et al. 2015).
The enhancing qualitative characteristics are Comparability, Verifiability, Timeliness and Undestandability.
Comparability: Users must be able to compare the financial information of the firms with the other companies and other period of the same company (Zeff 2013). In case of Seek Limited, users can compare the financial information where the firm has exhibited the numerical figures; and it can also be compared with information of 2017.
Verifiability: In case of Seek Limited, the users can apply their accounting knowledge and free reflexion for the verification of the accounting methods and techniques that have been used for preparing and presenting the financial statements (Rodgers, Choy and Guiral 2013).
Timeliness: Firms must not delay the financial reporting process as it makes the financial information older that is not useful for the users. In case of Seek Limited, users can access the quarterly, half yearly and annual report of the firm from their official website (Warren, Reeve and Duchac 2013).
Understandability: Financial information must be readily understandable for the users that is clear and concise information. Seek Limited has disclosed their financial information in the annual report with the support of reduced clarification and justification in the notes to the financial statements that makes it easier for the users in understanding (Vernimmen et al. 2014).
For the purpose of decision-making, the user must be able in the utilization of the financial statements to acquire the relevant information. As per the 2018 Annual Report, all the required financial statements are present in the report.
It can be seen from the above that users can obtain information on how Seek Limited has performed from the income statement, current financial standing of the company from balance sheet, flows of cash from cash flow statement and deviation in financial performance from the statement of change in equity. Users can use this information for investment decision-making (wcsecure.weblink.com.au 2018).
As per one major objective of Conceptual Framework, firms have the responsibility to disclose the financial information in such a manner that the users can understand them in the presence of the basic accounting knowledge. According to the 2018 Annual Report of Seek Limited, one can observe that there are all the required documentation, justifications, clarifications and explanations that support the accounting and financial works of the firms. In the presence of all these, the users of financial reports can easily understand the financial as well as accounting works with their basic accounting knowledge (wcsecure.weblink.com.au 2018).
There are certain requirements of general purpose financial reporting. According to the requirements of general purpose financial reporting, it is needed for the firms to disclose information about their economic, resources, claims, changes in resources as well as claims and the information related to the use of the economic resources (iasplus.com 2018). According to the 2018 Annual Report of Seek Limited, Seek Limited has disclosed all these information with the help of the financial statements such as income statement, comprehensive income statement, balance sheet, and statement of change in equity and cash flows statements. In addition, Seek Limited has also provided the required notes to the financial statements with the aim to comply with the requirements of general purpose financial reporting (iasplus.com 2018).
Based on the above whole discussion, certain recommendations are provided below:
Conclusion
The above discussion indicates that Seek Limited has full compliance with all the requirements of Conceptual Framework. More specifically, the firm has complied with the measurement requirement of conceptual framework that is not to adopt a single measurement base for the elements of financial reports. In addition, the presence of qualitative characteristics can be seen in the financial information of Seek Limited. Moreover, the users of financial reports can obtain the required financial information from the annual report of the company with the aim to make effective decisions.
References
Aasb.gov.au., 2018. [online] Conceptual Framework for Financial Reporting. Available at: https://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf [Accessed 15 Dec. 2018].
Barth, M.E., 2013. Measurement in financial reporting: The need for concepts. Accounting Horizons, 28(2), pp.331-352.
Hasnas, J., 2013. Whither stakeholder theory? A guide for the perplexed revisited. Journal of business ethics, 112(1), pp.47-57.
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting. Pearson Higher Education AU.
Iasplus.com. 2018. Conceptual Framework for Financial Reporting 2018. [online] Available at: https://www.iasplus.com/en/standards/other/framework [Accessed 15 Dec. 2018].
Rodgers, W., Choy, H.L. and Guiral, A., 2013. Do investors value a firm’s commitment to social activities?. Journal of business ethics, 114(4), pp.607-623.
Seek Limited. 2018. Annual Report 2018. [online] Available at: https://wcsecure.weblink.com.au/pdf/SEK/02040158.pdf [Accessed 15 Dec. 2018].
Seek Limited. 2018. About SEEK. [online] Available at: https://www.seek.com.au/about/ [Accessed 15 Dec. 2018].
Seek Limited. 2018. Share Price. [online] Available at: https://www.seek.com.au/about/investors/share-price/ [Accessed 15 Dec. 2018].
Vernimmen, P., Quiry, P., Dallocchio, M., Le Fur, Y. and Salvi, A., 2014. Corporate finance: theory and practice. John Wiley & Sons.
Warren, C., Reeve, J.M. and Duchac, J., 2013. Financial & managerial accounting. Cengage Learning.
Zeff, S.A., 2013. The objectives of financial reporting: a historical survey and analysis. Accounting and Business Research, 43(4), pp.262-327.
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