The company which has been selected for analysis is 3D Resources Limited and the annual report which is being analyzed is for the period ended 30th June 2018. This is a company which is targeting the discovery of minerals in the provinces and states of Western Australia. It extracts minerals like zinc, lead, gold, copper, nickel and is looking for advanced mineral projects which can help the company in becoming the mineral producer in Australia. It represents the high risk high return investment avenue as the areas which are being investigated for minerals now have been explored moderately in the past. The company is listed on the Australian Stock Exchange as options.
The report is a highlight of if the company has followed the mandated guidelines and is understandable and usable by the stakeholders or it calls for further improvement (Arnott, et al., 2017). The conceptual framework and the accounting standards introduced by the IASB encourages company to use the standards and ensure that the qualitative aspects like timeliness, reliability, verifiability, etc. is being followed. The conceptual framework also aims towards ensuring the comparability of the financial statements across the world so that the financial status and performance of the companies can be compared globally (Belton, 2017).
Discussion and Analysis
Requirements of the conceptual framework
The presentation of the financial statements in terms of the balance sheet and the profit and loss account is the responsibility of the management and it needs to be in line with the guidelines and standards prescribed by IASB. For correct application of the same, proper knowledge is required and it needs to be seen if the company has done the valuation of assets and liabilities correctly and that they have presented the same in the correct fashion (Alexander, 2016).
In case of the 3D Resources Limited, we can see that even though the financial statements have been prepared as per the conceptual framework but the company can still improve upon the valuation methods being used and the disclosures being given. Most of the important policies have all been presented in notes on accounts and the screen print of the same is given as a conclusive evidence of the same.
Fundamental Qualitative characteristics
There are two fundamental qualitative characteristics which needs to be reflected by the companies in the financial statements, they are faithful representation and the relevance. It is very critical that the information that is being presented in the financial statements is true and fair and is free from errors, omission and biasness (Dichev, 2017). It should be relevant in the circumstances of the case and should faithfully present the information which it purports to present for the given period.
There should not be any fraud on the part of the company in the financial statement and this is the very objective of the conceptual framework such that the stakeholders get the correct and appropriate information on the company. As per the fundamental qualitative characteristics any threat which is pertinent to the company from the perspective of materiality should be highlighted by management in the Directors Report and by the auditors in the Auditors report of the company.
Enhancing Qualitative characteristics
There are four major qualitative characteristics which needs to be followed by the company. The same has been explained below:
Users of financial Reports
The financial statements of the given company have followed all the enhancing qualitative characteristics and the management has followed all the guidelines and principles required for presenting information in the financial statements. The company has shown the data of the last year, has shown adequate notes on accounts as well as disclosures and has presented all the material information and hence can be said to have followed the enhancing qualitative characteristics (Marques, 2018). The investors as well as lenders, debtors as well as creditors, employees as well as the other stakeholders can retrieve the information from the annual report based on their needs and requirements. The annual report has been prepared in such a way that it meets the information needs of all the user group.
Basic Knowledge of accounting
The users of the financial statements do need to have more than the basic knowledge of accounting as there are several information which are not understandable and interpretable prima facie and therefore the expertise in the field of accounting is required for proper analysis of the same. It can therefore be said that only the basic knowledge of accounting is not sufficient enough to analyse the company and make the investment decisions (Kachelmeier, et al., 2018).
Requirements of General Purpose Financial Reporting
Directors Report
The directors of the company have declared in the annual report that the same has been prepared following the conceptual framework and the Australian Accounting Standards and the Corporation Act, 2001. They have also declared that they have presented all the material information in the annual financial statements and have presented the true and far view of the state of affairs. They see that the company is a going concern in the future and has reasonable ability to pay off its debts in time (Kuhn & Morris, 2016). Under all these declaration, it can be said that the company has adhered with the required standards of reporting.
Auditor’s Report
The auditor’s report gives a reasonable assurance to the users of the financial statements that the same has been prepared as per the minimum required standards and that they are following the generally accepted accounting principles (Choy, 2018). They review the financials end and end and then give a view as to if the financials are free from errors and frauds. In the given case the auditor has given a clear view on the financials and thus the users can refer to the annual report and take investment decisions accordingly.
Conclusion
From the above discussion and analysis we can see that the company in question has complied with the conceptual framework and has complied with the requirements of the fundamental and enhancing qualitative characteristics (Raiborn, et al., 2016). It has followed the accounting standards while financial statements preparation and has also met the legal requirements. The same is evident from the screenshots which has been shown in the report. However, there is still a chance for improvement in terms of valuation and other policies of the company. The company also needs to have a disclosure on the sustainability accounting and the corporate governance.
References
Alexander, F., 2016. The Changing Face of Accountability. The Journal of Higher Education, 71(4), pp. 411-431.
Arnott, D., Lizama, F. & Song, Y., 2017. Patterns of business intelligence systems use in organizations. Decision Support Systems, Volume 97, pp. 58-68.
Belton, P., 2017. Competitive Strategy: Creating and Sustaining Superior Performance. London: Macat International ltd.
Choy, Y. K., 2018. Cost-benefit Analysis, Values, Wellbeing and Ethics: An Indigenous Worldview Analysis. Ecological Economics, p. 145.
Dichev, I., 2017. On the conceptual foundations of financial reporting. Accounting and Business Research, 47(6), pp. 617-632.
Jefferson, M., 2017. Energy, Complexity and Wealth Maximization, R. Ayres. Springer, Switzerland. Technological Forecasting and Social Change, pp. 353-354.
Kachelmeier, S., Schmidt, J. & Valentine, K., 2018. The disclaimer effect of disclosing critical audit matters in the auditor’s report. SSRN, 2(1), pp. 1-39.
Kuhn, J. & Morris, B., 2016. IT internal control weaknesses and the market value of firms. Journal of Enterprise Information Management, 30(6).
Marques, R. P. F., 2018. Continuous Assurance and the Use of Technology for Business Compliance. Encyclopedia of Information Science and Technology, pp. 820-830.
Meroño-Cerdán, A., Lopez-Nicolas, C. & Molina-Castillo, F., 2017. Risk aversion, innovation and performance in family firms. Economics of Innovation and new technology, pp. 1-15.
Raiborn, C., Butler, J. & Martin, K., 2016. The internal audit function: A prerequisite for Good Governance. Journal of Corporate Accounting and Finance, 28(2), pp. 10-21.
Vieira, R., O’Dwyer, B. & Schneider, R., 2017. Aligning Strategy and Performance Management Systems. SAGE Journals, 30(1).
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download