The company that has been selected is Alliance Aviation Service Ltd, it deals in providing air carter services for various fields that includes tourism, resources, education, government, corporate, sporting needs etc. The company provides services in Australia and in and around it to many other countries. The annual report of the company has been downloaded and analyzed to see whether it conforms with the basics of conceptual framework while preparing the financial statements or not. It is seen whether the statements are prepared in such manner that they can fulfil the needs of the people who are dependent on it to take important decisions regarding the company and its financials (Kaufmann, 2017).
The financial statements of the company have been prepared following the basis of preparation of the same based on conceptual framework that defines the various methods based on which the assets and liabilities should be valued so that it gives the clear picture to the people about the true financial position of the company in very way. There is a single method that is followed for the valuation of the assets and liabilities that helps in enhancing the quality of relevance and accuracy (Kusolpalalert, 2018).
The fundamental characteristics will involve features like relevance and faithful representation and that is very important as part of the framework that has been presented by the IASB. It highlights the importance of being true to the financials also discourages the attempt of fraud and error that might pull people to perform such activities that might provide a wrong picture to the shareholders. The stakeholders depend on these financial statements to take important decision regarding the company and hence their relevance is very important. In case of the given company it can be seen based on the director’s report and the auditor’s report that the company has imbibed these characters and the information and data that has been provided has a lot of character and is free from errors (Norberg, 2018). The management has made sure that these features are there in the financial statements. An extract from the same has been presented below-
It is important that financial statements should be prepared in such a way that it caters to a global audience so that in case the stakeholders require they can compare the information on a global level. Thus, this conceptual framework has been introduced to make sure that there is uniformity in case of the information that is provided. In case of the given company, it has many competitors like TEX Rail, Fort Worth Transportation etc. The users can compare the data of the given company and then decide which company they want to invest it or not.
The data has been analyzed to make sure that the information that has been provided is correct and is free from all kind of errors. In case of the given company they have provided various disclosures in the notes of the financial statements to support their position. An extract from the annual report has been attached (Shimamoto, 2018).
The stakeholders can check these notes and then can see whether the company has done their financials without any errors. They can also refer to the guidelines that has been issued by the IASB to compare and take their decisions.
It is important that information should be related to the period for which the financials are being prepared and there are certain events that happens after the date of the balance sheet and in case they are material the users’ needs to be informed about the same. It is important relevant disclosures for the same must be given (Vieira, et al., 2017). In case of the given company they have provided all the necessary information and so it is useful for the users.
It is important that the data that has been given in the statements is easily understandable and users should be able to relate to it. Thus, information should be clear and there should not be any ambiguity associated with it. This will help in increasing the confidence of the users in the financial statements and the management of the company and they can take decisions accordingly.
So, on many grounds the company has been able to imbibe all the features of the preparation of the financial statements in their annual report and has also been able to follow the conceptual framework very nicely. The IASB has done a great job in the preparation of this framework has it is very user friendly and help in attaining uniformity between various countries. The users should also refer to the guidelines that have been provided by the IASB and take decisions accordingly on whether they want to invest in company or not. They can also give opinion on how IASB can improve these features (Wellmer, 2018). Following the conceptual framework is important and mandatory and in case they fail they should be held liable for the same and they can be punished for the same.
The directors report includes a declaration from the directors of the company that have prepared the statements to the best of their ability and there are no issues involved with regards to the same. The directors in the given case have stated that the company has followed the basic principles of IASB with relation to preparation of the financial statements of the company (Williams & Adams, 2013). It is a validation from the company that have followed the basic principle of preparation of the financial statements and it is true and correct and there are no issues involved with the same.
The aim of the auditor of the company is to analyze the financial statements of the company and comment on the validation of the same. In case there are any issues involved they need to state the same in their audit report, in the given case also the auditors have done the same. The aim of the auditor to help the users, they can depend on the audit report to decide whether the financials of the company are correct and whether the management of the company have done their duty properly. In the given case the auditors of the company have given a declaration that the books of the company have been prepared based on principles of the Australian Accounting Standards and the Corporations Regulations 2001 and is giving a true and fair view of the company and its financial (Boghossian, 2017). The company has given a qualified opinion, that the company has been correct in their approach and there are no issues involved and the stakeholders can depend on the financials of the company, and give their opinion based on the same.
Based on the given opinion it can be said that the statements do not include any kind of errors and there are no issues involved with the same. So, we see that the companies should follow the financial statements as per the conceptual framework as that would help in making their financial statements better (Delone & Mclean, 2004).
Based on the overall analysis, it can be said that the company has followed all the principles and have been correct on their approach. These qualitative and quantitative characters help in improving the quality of the financial statements of the companies. Few areas in which the company can make it better is by providing more details with regards to few elements of the financial statements of the company. The aim should be that it makes the experience of the user better so that the user is able to make proper decisions based on the information that is provided. Overall the company has complied with all the requirements and have been correct in their overall approach that is required of them.
Boghossian, P., 2017. The Socratic method, defeasibility, and doxastic responsibility. Educational Philosophy and Theory, 50(3), pp. 244-253.
Delone, W. & Mclean, E., 2004. Measuring e-Commerce Success: Applying the DeLone & McLean Information Systems Success Model. International Journal of Electronic Commerce, 9(1).
Kaufmann, W., 2017. The Problem of Regulatory Unreasonableness. First ed. New York: Routledge.
Kusolpalalert, A., 2018. The relationships of financial assets in financial markets during recovery period and financial crisis. AU Journal of Management, 11(1).
Norberg, P., 2018. Bankers Bashing Back: Amoral CSR Justifications. Journal of Business Ethics, 147(2), pp. 401-418.
Shimamoto, D., 2018. Why Accountants Must Embrace Machine Learning. [Online]
Available at: https://www.ifac.org/global-knowledge-gateway/technology/discussion/why-accountants-must-embrace-machine-learning
Vieira, R., O’Dwyer, B. & Schneider, R., 2017. Aligning Strategy and Performance Management Systems. SAGE Journals, 30(1).
Wellmer, A., 2018. The Persistence of Modernity: Aesthetics, Ethics and Postmodernism. fourth ed. UK: Polity Press.
Williams, S. & Adams, C., 2013. Moral accounting? Employee disclosures from a stakeholder accountability perspective. Accounting, Auditing & Accountability Journal, 26(3), pp. 449-495.
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