In this article, an adamantine study has been prepared on the Australian company which is used in this report. This report contains all the reporting guidelines and accounting standards followed by Wesfarmers ltd. It is an Australian stock exchange company which has been running its business around the globe. It is evaluated that in order to avoid the reporting conflict, Wesfarmers Ltd has followed international reporting standards which has helped organization to comply with several AASB accounting rules and regulations. In this report, Wesfarmers Ltd has been taken into consideration for making research on accounting standard. Therefore, annual report of Wesfarmers Ltd has been evaluated for determining the true facts that whether company have been complying with all the international rules and regulations. This report depicts about the IASB, accounting standards, AASB, conceptual framework and IFSR which should be followed by organization for making effective reporting of its financial statement with stakeholders. In the end, annual report of Wesfarmers Ltd has been used to identify the possible drawbacks in annual reports of companies. After that a complete recommendation nd conclusion has been given regarding what changes Wesfarmers Ltd need to make in its reporting frameworks (Annual reports, 2016).
Annual report of company is coupled with all the financial and non-financial details which help investors to evaluate the business performance of company. There are various points and factors have been considered in this report e.g. whether Wesfarmers Ltd has followed complete disclosure of notes shown for the financial details of organizations and proper conceptual frameworks in its reporting frameworks. After evaluating the financial statement of Wesfarmers Ltd it has been evaluated that financial statement and other reports prepared have been recorded as per the rules and regulation given under IASB and FASB.
The extract of annual report of Wesfarmers has been prepared on the basis of accounting standards and IASB rules and regulations.
Wesfarmers Ltd has followed complete transparency rules given as per the GAAP accounting rules.
All the items shown in the balance sheet of Wesfarmers Ltd has been recorded at the historical value. However, reductions in the fixed assets have been made as per the written down value methods. In addition to this, goodwill has been recorded after implementation of impairment test as per IFRS accounting standards.
The annual report of Wesfarmers Ltd has been prepared on the basis of IASB rules and regulations.
Impairment provision has been applied on the company when it is recognized that there is evidence that company would be unable to collect amounts due and charged as general administration expenses
Carrying value of assessment of plant and equipment and other intangible assets have been recorded by following impairment test rules of IFRS. However, there are several differences in computing or methods followed in impairment test as per Australian accounting standard. However, Wesfarmers Ltd has put emphasis upon following IFRS rules and standards to mitigate the reporting issues in other countries.
All the amount in the financial statement has been shown as AUD $ million.
This extract of annual report is coupled with information that would be used by investors for their investment decisions. As per the conceptual model and frameworks followed with IFRS and AASB, Extract of annual report of Wesfarmers disclose independent Auditors report , all the notes to financial statement, directors reporting. Wesfarmers Ltd has followed all the international accounting standards and GAAP rules to establish harmonization in its reporting frameworks to avoid conflicts.
Wesfarmers Ltd has been following concept of prudence in recording all its liabilities and expenses in financial statement at the time of occurrence. In addition to this, Wesfarmers Ltd has been recording its profit amount at time when it is earned (IASB Framework, 2001). Wesfarmers Ltd has followed materiality and going concern concept in recording all its financial transaction in financial statement. The Conceptual framework for reporting of financial statement has been followed by company for reporting and handling all financial reporting issues. This concept of prudence allows Wesfarmers to meet with all the rules and regulation of international accounting standards in determined approach. It helps company to establish harmonization in its reporting frameworks.
Wesfarmers Ltd has complied with all the rules and regulations of AASB, IFRS and IASB concept in preparing financial statement. It is observed that company has been following corporation act 2001 for preparing its financial statements (ACCA Global, 2017). The main problem which has been faced by Wesfarmers ltd in related with the use of management representation letter. Company has not been using management representation letter for justifying its all the data shown in financial statement (McGregor and Street, 2007).
Wesfarmers Ltd has been reporting consolidating financial data with the reporting authority. It has been disclosing all its financial information as per the developed Australian accounting standard (Vollmer, Mennicken and Preda, 2009).
Company has recorded its fixed assets in balance sheet at historical cost by following written down value method. These reporting frameworks provide that Wesfarmers ltd recorded all of its assets either at book value or historical value (IFRS, 2008).
All the amount of current assets has been recorded by following materiality concept and going concern concept. Wesfarmers Ltd has been recording its all assets in different blocks and sub headings as per the IFRS rules and AASB standards (Bezemer, 2010).
Major problem in reporting frameworks of Wesfarmers
Wesfarmers Ltd has been following international financial reporting standard in reporting its financial statement with reporting authority. There are several problems which have been faced by company in establishment of harmonization in domestic and international reporting frameworks. For instance, methods and rules given for impairment test as per IFRS are different as compare to GAAP rules. In addition to this, Wesfarmers has faced problem in booking financial transactions in accounts of company (Chorafas, 2006).
In this report various facts and figure has been recommended which provides how well Wesfarmers Ltd has been following international conceptual frameworks to mitigate reporting problems. It is evaluated that Wesfarmers has several business around the globe. It has resulted into reporting of its consolidated financial statements in several countries. Wesfarmers has followed international financial reporting standards to align with its domestic and international reporting requirements. In addition to this, Wesfarmers have followed a proper standard and format to enhance the relevancy of the financial accounts of company (McGregor and Street, 2007). It is advisable for the Wesfarmers to use management representation letter to justify all the data shown in financial statement so company. In addition to this, company has also used impairment test to justify the market value of goodwill and other intangible assets. Company should follow only international accounting standard if there is difference between the amount computation and other test implementations then company could justify it by providing details regarding compliance and giving notes that accounts have been prepared on the basis of IFRS standards and rules (Jones, 2006).
Therefore, it is given that Wesfarmers Plc has followed all the rules and regulation of IFRS and GAAP standard and accounting rules for mitigating all domestic and international reporting problems.
Conclusion:
This report has taken into consideration all the AASB and IFRS rules and regulations which have been followed by Wesfarmers Plc. This report is consisted with the details of conceptual frameworks which have been followed by Wesfarmers plc. This conceptual framework prepared and followed by Wesfarmers plc has been modified with a view to establish harmonization in domestic and international reporting frameworks. Moreover, the main Wesfarmers Ltd has not been using management representation letter in its annual report. Therefore, it is required by company to use MRL in its extract to justify the entire amount shown in the balance sheet. It will increase the true and fairness of accounts as per the Accounting standards. Company has also prepared consolidated financial statement with a view to enhance the collective reporting with reporting authority as per the corporation act 2001. Therefore, it would be inferred that company has complied with all the possible rules and regulations in effective manner. Furthermore, it is observed that Australian accounting standards have been modified in such a way that it would result into contradiction with the international financial reporting standard of company.
References:
ACCA Global, 2017. Conceptual framework for financing activities. Retrieved as on 30th April 2017 from https://www.accaglobal.com/gb/en/student/exam-support-resources/fundamentals-exams-study-resources/f7/technical-articles/iasb-conceptual-framework-financial-reporting.html
Annual reports. 2016. Wesfarmers Plc. Retrieved as on 5 April 2017 from https://www.wesfarmers.com.au/docs/default-source/reports/2016-annual-report.pdf?sfvrsn=4
Bezemer, D. J., 2010. Understanding financial crisis through accounting models. Accounting, Organizations and Society, 35(7), 676-688.
Chorafas, D.N. 2006. IGRS, Fair Value and Corporate Governance: The Impact on Budgets, Balance Sheets and Management Accounts. Oxford: Elsevier Publishing
IASB. 2006. Summary of International Accounting Standards. International Accounting Standard Boards. Retrieved 20 January 2007 fromhttps://www.iasb.org/Home.htm
IASB. 2007. Fair Value Measurement. Part 2: SFA’s 157 Fair Value Measurements: Comments to be submitted. London: IASB
IFRS. 2008. International Financial Reporting Standards. London: IASB
ISAB Framework. 2001. Framework for the preparation and presentation of Financial Statements. International Standards Accounting Board
Jones, M. 2006. Financial Accounting. Chichester: John Wiley & Sons
McGregor, W., and Street, D. L., 2007. IASB and FASB face challenges in pursuit of joint conceptual framework. Journal of International Financial Management and Accounting, 18(1), 39-51.
Vollmer, H., Mennicken, A., and Preda, A., 2009. Tracking the numbers: Across accounting and finance, organizations and markets. Accounting, Organizations and Society, 34(5), 619-637.
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