Question:
Prepare a Comprehensive report directed to an Australian ASX Top 100 listed corporation detailing a Critical analysis of the Effectiveness of the Corporation to meet the Obligations of the conceptual framework of accounting.
CSR Limited is considered as the major Australian company in terms of building and producing. Tomago aluminium smelter is further seen to be situated in Newcastle, New South Wales and responsible for publicly trading of Australian Securities Exchange. In 2012, the company is seen to be having approximately 3600 employees and total amount of after tax profit is discerned as $90.7 million. In addition to this, the company is discerned to having diversified shareholding with predominant Australian fund and retail owners. The building of the products with the creation of Sucrogen has been identified with the main production activity.
The report intends to identify whether the company needs the conceptual framework of this reporting. It further aims to recognise the criteria required for reporting Assets, Liabilities, Equity, Revenue and Expenses. In addition to this, the fundamental qualitative and has been characteristic has been seen with relevant and faithful representation. Some of the other right it has been also identified with recognising qualitative enhancing characteristics and whether this information is very viable, comparable and understandable (Kalkhouran et al. 2015).
“Australian Accounting Standards Board (AASB)” is identified as the main Australian government agency for developing and maintaining financial report and standards applicable to the entities in private and public sectors of the economy in Australia. AASB has been also seen with contributing role of financial reporting standards with “Australian securities and investment commission at 2001”. In December 2013, AASB included several revisions with a view to cover more areas in the existing conceptual framework network which has been discerned in form of better measurement, financial performance, presentation, de-recognition, reporting entity and disclosure. The information provided is further used to assess for meeting the objectives of financial reporting which helps in addressing management stewardship of entity resources (Spraakman and Jackling 2014).
As per the depictions made from financial report published in 2016 CSR Limited has “consolidated financial statements” prepared for general purpose financial reporting act for guidelines given by “Australian accounting standards (AASBs) which has been further seen to be adopted by Australian accounting standards board (AASB)”. The financial reports have further added to the conceptual framework as per “Corporation Act 2001”. The consideration of the financial statements has been further seen to comply with “International Financial Reporting Standards (IASB)”. It has been further depicted that the accounting policies set by the company are consistent during all periods of the consolidated financial statements and consistently applied across the group (Richardson et al. 2014). There has been no new revised standard interpretation which has been issued by AASB and not stated by the company. Some of the standards which has been issued by AASB but are yet to be adopted by the company includes “Financial Instruments (Revised AASB 9)”, “Revenue from Contracts with Customers (AASB 15)” and “Leases (AASB 16)” (Penman 2013).
The investment activities of the group comprise of “available for sale financial assets” which are being treated as a ASX listed securities. It has been further seen that the measurement is done “at a fair value and add value” market price. Such assets have been further categorised as Level I under fair value hierarchy of AASB 7. Revenue expenses and the assets has been further seen to be recognised with the net amount of the “goods and services tax (GST)” said in cases where the GST amount has not seen to be recoverable from the taxation authority. In these circumstances the GST amount is interpreted with cost of acquisition of the assets and the portion of expense (Ding, Hellmann and De Mello 2017). The various types of receivables and payable are seen to be stated with the amount of GST included. The net amount of the GST recoverable from payable is included with the current asset or liability statement of the financial position. Groups accounting policies and disclosures is determined with fair value for both non-financial assets and liabilities and financial. The fair value is assessed for measurement and disclosure of material assets such as PPE, intangible assets and inventory. The fair value of equity and debt is determined with reference to the quoted closing price paid at the reporting date. In order to generate a “true and fair view of the group’s financial position” on the consideration of the financial statements has been set out in pages 35 to 90 which are in accordance with “Corporations Act 2001”(Susmus and Demirhan 2013).
Based on the assessment of the information given in the annual report it has been discerned that the total board and committee meetings held in financial year and the meetings attended by the directors included relevant committee members. The group has been further able to attempt to mitigate the risk by a close monitoring of related development and including relevant regulatory bodies which are in compliance with the existing regulations. The faithfulness of the information has been further discerned in related interest of each director in the shares and opinions over such instruments issued by the company within the group and different types of other related bodies which has been addressed by the directors to the Australian Stock Exchange in accordance with “S205G (1)” of the “corporations act 2001” (Brouwer, Faramarzi and Hoogendoorn 2014).
The various types of costs incurred by the company including the insurance costs has incurred with relevant officers in defending proceedings which has been seen to be criminal, civil irrespective of the outcomes (Brouwer, Faramarzi and Hoogendoorn 2014).
The various types of costs excluding the expenditure is directly attributable with the acquisition of assets. The cost incurred for self-constructed assets has been seen to include cost of material, initial estimate and direct labour wherever relevant. The share baseband system disclosed as for performance rights has been seen to reflect fair value of each right identified with the number of rights granted to the individual shareholders (Schaltegger and Zvezdov 2015).
the comparability aspect of the financial information has been depicted with the using of several types of graphical representation. For instance, the results of operating result have been clearly segregated into EBITDA, NPAT, EPS, operating cash flow and dividends per share. In order to compare the date of the respective factors the data along with its unit has been clearly presented from financial year 2009 financial year 2016. The representation of the data in months shows that the qualitative characteristics of has been able to maintain the time factor (Schaltegger and Zvezdov 2015). In order to maintain the qualitative characteristics of reporting a customer growth factor has been shown on monthly basis using a stacked column chart to represent the data. As per the depictions given by the company the subscribers have been seen with a linear growth from January 2014 2 July 2016. The depictions of the same has been presented with a pie chart for an easy understanding of the data. As for the review of the financial results the company has broadly segregated the results of 2016 with prior year under respective subsections. For instance, the key elements of financial year 2016 has been shown by revenue increase or decrease in 2016 and compared revenue increase or decrease in 2015 (Ding, Hellmann and De Mello 2017).
Conclusions
The depiction based on Adherence to the objectives of the conceptual framework with its reporting has shown that the company complies with “Australian accounting standards (AASBs) which has been further seen to be adopted by Australian accounting standards board (AASB)”. The financial reports have further depicted with conceptual framework as per “Corporation Act 2001”. The consideration of the financial statements has been further seen to comply with “International Financial Reporting Standards (IASB)”. It has been further discerned that the group recognises assets as per Level I under fair value hierarchy of AASB 7 and revenues with net amount of the goods and services tax (GST) said in cases where the GST amount has not seen to be recoverable from the taxation authority. The qualitative characteristics has been prominent with using of comparison with previous year’s financial data and bar graphs.
References
Brouwer, A., Faramarzi, A. and Hoogendoorn, M. (2014) ‘Does the New Conceptual Framework Provide Adequate Concepts for Reporting Relevant Information about Performance?’, Accounting in Europe, 11(2), pp. 235–257. doi: 10.1080/17449480.2014.967788.
Ding, Y., Hellmann, A. and De Mello, L. (2017) ‘Factors driving memory fallibility: A conceptual framework for accounting and finance studies’, Journal of Behavioral and Experimental Finance, 14, pp. 14–22. doi: 10.1016/j.jbef.2017.03.003.
Kalkhouran, A. A. N., Rasid, S. Z. A., Sofian, S. and Nedaei, B. H. N. (2015) ‘A Conceptual Framework for Assessing the Use of Strategic Management Accounting in Small and Medium Enterprises’, Global Business and Organizational Excellence, 35(1), pp. 45–54. doi: 10.1002/joe.21644.
Penman, S. (2013) ‘Accounting Standard Setting: Thoughts on Developing a Conceptual Framework’, China Journal of Accounting Studies, 1(3–4), pp. 157–167. doi: 10.1080/21697221.2013.856256.
Richardson, P., Dellaportas, S., Perera, L. and Richardson, B. (2014) ‘Towards a conceptual framework on the categorization of stereotypical perceptions in accounting’, Journal of Accounting Literature, 35, pp. 28–46. doi: 10.1016/j.acclit.2015.09.002.
Schaltegger, S. and Zvezdov, D. (2015) ‘Expanding material flow cost accounting. Framework, review and potentials’, Journal of Cleaner Production, 108, pp. 1333–1341. doi: 10.1016/j.jclepro.2014.08.040.
Spraakman, G. and Jackling, B. (2014) ‘A conceptual framework for learning management accounting’, Accounting Perspectives, 13(1), pp. 61–81. doi: 10.1111/1911-3838.12024.
Susmus, T. and Demirhan, D. (2013) ‘Creative Accounting: A Brief History and Conceptual Framework’, Akademik Bakis Dergisi, (38), pp. 1–20.
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