ACC303 Contemporary Issues in Accounting

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. Consideration of the Conceptual Framework Objective, Recognition Criteria, Fundamental and Enhancing Guidelines is essential.

The main objective of this report is to focus on the conceptual framework of IASB for the purpose of financial reporting and to find out whether the selected company that is Acacia Coal Limited is following the required conceptual framework or not while preparing their financial statement. The report will take into consideration whether the recognition criteria is met by the company while reporting various items like revenues, expenses, equities, liabilities and assets. The report will further state whether the report represents the true and fair manner and whether it is compatible for verifying, understanding and comparing. Acacia Coal Limited is the public limited company that is involved in the exploration of coal and development of mine. The company mainly operates in coal segment under the resource industry in Queensland, Australia (Acacia Coal 2017).  

Adherence to the objectives of conceptual reporting framework

Acacia Coal Limited falls under resource sector and the financial statement of the company is comprised of the subsidiaries and the company and referred as group. As per the conceptual framework the company prepares its report in accordance with the AASs (Australian Accounting Standards) adopted by AASB (Australian Accounting Standard Board) and as per the Corporation Act 2001 (Bebbington and Larrinaga 2014).

The financial report is also complied with the IFRS adopted by the IASB. Further, while preparing the consolidated statement, the company made the assumptions, judgements and estimates and reported the amount for expenses, incomes, liabilities and expenses in compliance with the requirements of AASB. Moreover, the company applied the required amended standards that are relevant for the ongoing operation of the company and that are applicable for the current period. Moreover, the disclosure related to auditor’s remuneration presented under the directors report are complied with the AASB 124 on related party disclosures and corporation regulations 2001. As per the report, the directors of the company are held with the responsibility for preparing the financial statements in compliance with reporting requirement and the conceptual framework and the auditors are required to form their opinion based on the audited financial statements.

Recognition criteria with regard to the reporting of Assets, Liabilities, Equity, Revenue and expenses

The company presents various assets and financial instruments at fair values and any changes with regard to the fair values is recognized and analysed by taking into considerations the required Australian accounting standards. Further, changes in the values of the liabilities or assets, if any, are carried out at the fair values and are recognized under the profit and loss statement (Frias?Aceituno, Rodriguez?Ariza and Garcia?Sanchez 2013). The revenues are measured at fair values of consideration receivable or received. Amount that is disclosed in the profit and loss statement as the revenue are net of the trade allowances, returns, rebates and any amount that is collected on behalf of the third parties.

Further, under the comprehensive statement the stated revenue is the revenue from continuing operations. Revenues reported are net of the GST except where the GST amount is unrecoverable from taxation authority. For reporting the expenses any expenses generated from the intra-group transactions are not taken into consideration while preparing the financial statement. The company applies AASB 118 for reporting the revenue and interpretation 131 for revenue barter transactions that involve the advertising services (Noon, Blyton and Morrell 2013). The main objective behind that was to recognise the revenues for depicting the transfer of the promised goods or the services to the customers at the amount that reveals the consideration that the entity expects to get entitled in exchange of the services or goods.  

Further, as per the requirement of the conceptual framework the assets section of the statement of financial position are segregated into current assets and non-current assets and the liabilities section is segregated into current liabilities and non-current liabilities. As per the IASB requirement, the financial assets that are available for sale are measured at the fair value (Li 2013). The equity section is inclusive of the reserves, contributed equity and the accumulated losses from the income statement. The financial reports have been prepared on going concern basis that assumes that the business will continue its normal activities and the assets realisation and liabilities settlements will be under the ordinary courses of the business.

Adherence to relevancy and faithful representation

As per the director’s opinion, the financial statement and the related notes presented below the financial statements are in compliance with the Corporation Act 2001 and give the true and fair view of financial position of the entity and the group entities and regarding their performances as on the closing of the accounting period (Griffith, Hammersley and Kadous 2015). Further, the directors have been given the declarations by the chief financial officer and the executive chairman as per the requirement of section 295A of Corporation act 2001.  

Presentation of the report in comparable, timely, verifiable and understandable manner

As per the requirement of the conceptual framework of IASB, the financial statements of the company reveal the position of two consecutive years.

The above figure states that the financial statements are presented for 2 years that assists in easily comparing the results of current year with the previous year. Therefore, the basic aspect of comparability is in accordance with the compliance by the company (Francis, Hasan and Wu 2013).   

The above figure states the changes in the stock price of the company over the period of last 5 years that can help the investor to understand the changes very clear manner and compare and verify the stock price of the company to take decisions (Cheng et al. 2014). Therefore, the information of the company is fairly presented in a timely manner to understand, verify and compare.

Conclusion 

As per the above discussion, it is concluded that the financial statement of the company is prepared in compliance with the Australian Accounting Standards as well as the required Conceptual framework. Various items like expenses, revenues, equities, liabilities and assets are recognised in the financial statements as per the Australian Accounting Standard AASB 139 Financial Instruments: Recognition and Measurement. Further, the reports have been prepared in true and fair manner as the requirement of IASB. Moreover, the data is presented in such a manner that helps the uses to understand, compare and verify the data easily.

Reference  

Acacia Coal., 2017. Home - Acacia Coal. [online] Available at: http://acaciacoal.com.au/ [Accessed 12 Dec. 2017].

Bebbington, J. and Larrinaga, C., 2014. Accounting and sustainable development: An exploration. Accounting, Organizations and Society, 39(6), pp.395-413.

Cheng, M., Green, W., Conradie, P., Konishi, N. and Romi, A., 2014. The international integrated reporting framework: key issues and future research opportunities. Journal of International Financial Management & Accounting, 25(1), pp.90-119.

Francis, B., Hasan, I. and Wu, Q., 2013. The benefits of conservative accounting to shareholders: Evidence from the financial crisis. Accounting Horizons, 27(2), pp.319-346.

Frias?Aceituno, J.V., Rodriguez?Ariza, L. and Garcia?Sanchez, I.M., 2013. The role of the board in the dissemination of integrated corporate social reporting. Corporate Social Responsibility and Environmental Management, 20(4), pp.219-233.

Griffith, E.E., Hammersley, J.S. and Kadous, K., 2015. Audits of complex estimates as verification of management numbers: How institutional pressures shape practice. Contemporary Accounting Research, 32(3), pp.833-863.

Li, J., 2013. Accounting conservatism and debt contracts: Efficient liquidation and covenant renegotiation. Contemporary Accounting Research, 30(3), pp.1082-1098.

Noon, M., Blyton, P. and Morrell, K., 2013. The realities of work: Experiencing work and employment in contemporary society. Palgrave Macmillan.