This report has been constructed in order to analyse the performance of an Australian company and evaluate each and every aspect of the company in association to the conceptual framework. Hence, in order to complete the report according to the requirements provided, Newcrest Mining Limited has been selected as the company that is operational in Australia and is related to the mining activities that is taking place in Australia and this company is even listed in the “Australian Stock Exchange”. This report would therefore assess several aspects of the company and one of the most key aspects has been concentrating on the assessment of the objectives of the conceptual framework in relation to Newcrest Mining Limited. The next aspect would address the assessment of specific element for identification, which has been explained in the conceptual framework in relation to the financial element of the company. The final segment of the report will therefore focus on analysing qualitative features of the conceptual framework for Newcrest Mining Limited. Lastly, the report will even focus on providing certain suggestions for the company that is taken into consideration with respect to the findings that will be attained.
The fundamental characteristics are helpful in enhancing the usefulness and the intentions of the financial data and these features have been explained in summarised manner.
The most significant fundamental qualitative feature of the company is inclusive of the relevancy and faithful representation. The company in order to maintain the relevancy of their financial reports, Newcrest Mining Limited has addressed all the demanded information for the year 2016 and 2017 with the help of which the stakeholders as well as the investors can collect fruitful information for the purpose of undertaking decisions related to the investment (Sutherland 2017). Furthermore, in order to make sure that the financial reports are disclosed in a precise and faithful manner, Newcrest Mining Limited has abided to the regulations that have been laid down by IFRS, Corporations Act 2001, AASB and IASB. This is an essential decision in order to make sure that fair and true explanation of the financial reports is undertaken.
The quality of the financial data can be improved by taking assistance of these features and they are inclusive of the comparability, timeliness, understandability and verifiability. It is seen that Newcrest Mining Limited has published their financial statements for the year 2016 and 2017 and this has become easier for the financial statement users to undertake a comparison of the financial reports with other mining companies. Furthermore, the financial information users acne even confirm the forecasts of accounting with the help of the financial notes and this ensures the element of verifiability (Bond, Govendir and Wells 2016). In addition, Newcrest Mining Limited even discloses quarterly, half yearly and yearly statement in order to ensure that access of information for the ones who require are available and therefore the aspect of time is maintained. The company has even given all the relevant justifications associated to the financial notes for gaining improved knowledge for the users.
It is seen that “Australian Accounting Standards Board” has declared the need for the framework for the companies that are functional in Australia and therefore it is essential for the companies to function according to these rules that have been disclosed in the framework (Perera and Chand 2015). The conceptual model constructed by the AASB has several aims and objectives that need to be maintained by the companies in order to construct their financial statement and the
The companies are accountable for publishing all the essential data that will be helpful to the stakeholders and the investors to have an overview of the financial scenario and performance of the companies at the current time period. It is due to this factor that is essential for the companies to publish all the data that are in relation to the financial resources that are inclusive of the assets and liabilities (Newberry 2015). By looking into the annual report that has been published by the Newcrest Mining Limited previously, it is seen that the company has disclosed their balance sheet that includes all the information that is required with respect to the resources of the company. The data is essential to the stakeholders in order to have an understanding of the present financial scenario of the firm. The report is provided as follows:
Table 1: Balance sheet statement of Newcrest Mining Limited for 2016 and 2017
(Source: Newcrest.com.au. 2018)
The conceptual model constructed by the AASB addresses that all the companies are accountable to publish their required data that would be helpful to the investors in ascertaining the performance of the company with respect to the financial aspect (Ball, Tyler and Wells 2015). This element has enhanced the accountability of the companies in addressing the data that is related to the profit, income, revenue and costs. This is even seen in the annual report published by Newcrest Mining Limited in the year 2017, as it is seen that the company has revealed all the data in relation to their financial performance with the help of the comprehensive income statement. This is shown in the figure below:
Table 2: Comprehensive income statement of Newcrest Mining Limited for 2016 and 2017
(Source: Newcrest.com.au. 2018)
It is seen that all the Australian companies are responsible to address any alterations in their financial performance and the liquidity scenario within their financial reports and this is a principle of the conceptual model of AASB (Laswad and Redmayne 2015). By assessing the annual report of Newcrest Mining Limited, it is seen that all the demanded information has been published in order to understand the alterations that are taking place in the financial performance by addressing the cash flow statement and the statement of changes in the equity. The reports have been shown as follows:
Table 3: Cash flow statement of Newcrest Mining Limited for 2016 and 2017
(Source: Newcrest.com.au. 2018)
By looking into the assessments that have been made earlier, there are extensive evidences with respect to the explanation of all the data from the aspect of Newcrest Mining Limited. The purpose has been to support the users of the financial reports in evaluating the real financial performance, financial scenario and any alterations in the performance in relation to the aims of the conceptual model.
Table 4: Statement of changes in equity of Newcrest Mining Limited for 2016 and 2017
(Source: Newcrest.com.au. 2018)
All the companies have to undertake idea identification of certain key financial elements, which comprises of the revenues, liabilities, equity, expenses and assets (Steenkamp and Steenkamp 2016). The conceptual model of AASB has several criteria, which Newcrest Mining Limited has to maintain while understanding the financial element and they are explained as follows:
Asset
In relation to the AASB conceptual model, Newcrest Mining Limited needs to conform with the “AASB 116 Property, Plant and Equipment” with respect to “Section 334 of the Corporations Act 2001” in order to understand the equipment, plant and property. Newcrest Mining Limited realises their plant, equipment and property within their balance sheet after subtracting the accumulated depreciation and impairment losses from their expenses (Chand, Patel and White 2015). In order to construct the accumulated depreciation, straight line method is used. The inventories are constructed by acknowledging the “AASB 102 Inventories” and they are constructed by the net realisable cost or value which of them is lower.
Table 5: Accounting treatment of property, plant and equipment of Newcrest Mining Limited
(Source: Newcrest.com.au. 2018)
Table 6: Accounting treatment of inventory of Newcrest Mining Limited
(Source: Newcrest.com.au. 2018)
The guiding principles of the conceptual model of AASB for any company has to comply with the “AASB 132 Presentation of the Financial Instruments” in order to understand the bonds that bear interest (Russell 2017). The annual report of Newcrest Mining Limited reveals that the company realises the financial instruments that are interest bearing at the notional value. Furthermore, the company abides to the AASB 16 and understand their leases with respect to the expenses that are related to the operational leases.
Table 7: Recognition of interest bearing financial instruments of Newcrest Mining Limited
(Source: Newcrest.com.au. 2018)
Table 8: Recognition of operating lease commitments of Newcrest Mining Limited
(Source: Newcrest.com.au. 2018)
Table 9: Recognition of provisions of Newcrest Mining Limited
(Source: Newcrest.com.au. 2018)
The conceptual model asks the companies to perform according to the AASB 132 Financial Instruments Presentation” in order to identify the equity (Tran 2015). Newcrest mining Limited takes care of the ordinary shares with respect to equity and this is shown as follows:
Table 10: Recognition of equity of Newcrest Mining Limited
(Source: Newcrest.com.au. 2018)
The conceptual framework constructed by AASB asks the companies to abide with the guidelines that have been published in “AASB 118 Revenues” in order to understand the revenue, at a precise consideration value, discounts and net of returns (Erb and Pelger 2015). This is shown as follows:
Table 11: Recognition of revenue of Newcrest Mining Limited
(Source: Newcrest.com.au. 2018)
The conceptual model asks the companies to disclose their costs when there are opportunities of outflow of the economic benefits against them. The key business costs for Newcrest Mining Limited have been sales cost, personal costs and other expenses that have been explained as follows:
Table 12: Recognition of expense of Newcrest Mining Limited
(Source: Newcrest.com.au. 2018)
Hence, it is seen that Newcrest Mining Limited discloses the essential financial elements in order to abide to the conceptual mode, of AASB.
Conclusion
The report has made is certain that Newcrest Mining Limited has taken care of the conceptual framework and their goals during the time of constructing their financial reports. It is even seen that the company has abided with the fundamental and development of the qualitative traits for enhancing the effectiveness of the financial reports to the stakeholders. hence, it is recommended that all the companies maintain their businesses with respect to the AASB regulations so that problems related to accounting in the financial reports can be restricted.
Reference List
Ball, F., Tyler, J. and Wells, P., 2015. Is audit quality impacted by auditor relationships?. Journal of Contemporary Accounting & Economics, 11(2), pp.166-181.
Bond, D., Govendir, B. and Wells, P., 2016. An evaluation of asset impairments by Australian firms and whether they were impacted by AASB 136. Accounting & Finance, 56(1), pp.259-288.
Chand, P., Patel, A. and White, M., 2015. Adopting international financial reporting standards for small and medium?sized enterprises. Australian Accounting Review, 25(2), pp.139-154.
Erb, C. and Pelger, C., 2015. “Twisting words”? A study of the construction and reconstruction of reliability in financial reporting standard-setting. Accounting, Organizations and Society, 40, pp.13-40.
Laswad, F. and Redmayne, N.B., 2015. IPSAS or IFRS as the Framework for Public Sector Financial Reporting? New Zealand Preparers’ Perspectives. Australian Accounting Review, 25(2), pp.175-184.
Newberry, S., 2015. Public sector accounting: shifting concepts of accountability. Public Money & Management, 35(5), pp.371-376.
Newcrest.com.au. 2018. [online] Available at: https://www.newcrest.com.au/media/annual_reports/Newcrest_Annual_Report_2017.pdf [Accessed 15 Aug. 2018].
Perera, D. and Chand, P., 2015. Issues in the adoption of international financial reporting standards (IFRS) for small and medium-sized enterprises (SMES). Advances in accounting, 31(1), pp.165-178.
Russell, M., 2017. Management incentives to recognise intangible assets. Accounting & Finance, 57, pp.211-234.
Steenkamp, N. and Steenkamp, S., 2016. AASB 138: catalyst for managerial decisions reducing R&D spending?. Journal of Financial Reporting and Accounting, 14(1), pp.116-130.
Sutherland, D.W., 2017. Independent audit report. Newsmonth, 37(3), p.19.
Tran, A., 2015. Can taxable income be estimated from financial reports of listed companies in Australia. Austl. Tax F., 30, p.569.
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