Accg224 Financial Accounting And Reporting Assessment Answers

Answer:

Furthermore, the useful information provided should meet the qualitative aspects of the conceptual framework which includes the information should come timely such that the decision is not delayed, it should be relevant to the circumstances of the case, and it should be understandable and interpretable by the users of the financial statements. All the material data should be disclosed. The auditors report should also disclose that whether the financials prepared are compliant of the rules and regulations mentioned in the law and on the basis of all the above mentioned observations, reasonable assurance needs to be given to the users. Besides this, 2 other qualitative characteristics should be sufficiently met which includes comparability of the information and its verifiability which helps the users to better understand the issues.

The relevant standard on PPE warrants for the following disclosure requirements :

As per this, the company is required to disclose the bifurcation of the asset classes, the basis on which the same has been done, the depreciation rates used, the estimated useful lives of the different classes of the assets, the basis on which the gross block, the accumulated depreciation and the net block has been disclosed in the financials, the depreciation method being used, the changes in the block of the assets based on the purchase and sale value of the assets during the year, the exchange rate fluctuation on account of the changes in the exchange rate of Gross block, the effectof changes in the policies and estimates by the management of the company and the basis of the same. The company should comply with all the above mentioned disclosure requirements. (Visinescu, et al., 2017).

In the case of Telstra incorporation, the company has complied with almost all the requirements in the annual report prepared by the management. It has mentioned the class of the assets used, the depreciation policy used, the rates of the depreciation, the estimated useful lives, the carrying amount and gross block both at the start as well as at the end of the financial year, the borrowing cost being capitalised in the value of the assets, the impairment on the assets along with the factors leading to the impairment, etc. An extract of the annual report has been attached as a reference. Thus, the company has satisfied the needs of the conceptual framework. (Werner, 2017)

(c) The qualitative characteristics of financial reporting framework give the basis on which the valuation of the assets needs to be done and basis this, the company can even estimate the future cash flows and revenues of the company. All this not only helps in knowing the financial position but the overall operations of the company. (Linden & Freeman, 2017) All this forms an integral part of reporting and thus helps the users in knowing the growth and development of the company. Moreover, it also helps the users to identify that the company is in line with the expected results and help to take decision whether to invest or divest in the same. In the given case study, Telstra has almost met all the requirements of the mandatory disclosure of policies w.r.t. to the PPE in the annual report alongwith the exceptions and the management estimates and judgements.The company has made the faithful representation of the books of accounts basis which the users are informed and can take the appropriate decisions. (Kew & Stredwick, 2017)

The company has ensured that all the qualitative characteristics are met. It has mentioned all the figures w.r.t. depreciation, the gross block, net block, etc for the last year as well in order to enable comparability of the data by the users and let them know the delta in the same alongwith the appropriate reasons. It has tried to keep the data relevant and published the annual report timely so that the users can take the decision at the right time. All in all, it has tried to satisfy the requirements w.r.t. the disclosure and maintain utmost transparency as possible. Thus, it has satisfied both the fundamental requirements for the PPE as well as the enhancing qualitative characteristics of useful financial information. (Dichev, 2017) 

(d) Based on the above information and analysis on the financial statements being prepared by the company Telstra w.r.t. PPE, it has complied in almost all the respects with the financial reporting framework and thus, the annual report gives the true and fair view of the company’s affairs of business and transparent in all the other aspects. (Alexander, 2016) The necessary and sufficient information that is reqd. w.r.t. the PPE like the depreciation policy being followed, the method, the quantum of depreciation, the class of the assets, the major procurements and the sale, the estimated useful lives of the assets, etc have been properly disclosed with the relevant assumptions and management estimates and judgements. For the given company Telstra, all such requirements are in sync with the reporting and requirements of the standards and internal control being maintained. The company has tried to justify the relevancy of the standards that are prescribed by the board and how it helps the end users to rely on the financial statements and take their decisions. (Belton, 2017)

The board has made it mandatory to follow some of the standards whereas some others are just recommendatory. It takes the views of the members to ensure continuous improvements in the quality of data being made available to the end users. They bring it through new standards or amendment in the existing standards. In case of Telstra, the management should further try to simplify the presentation of the data rather than keeping it complicated and highly technical. This will ensure understandability of the users and they will be able to interpret the data better. (Abbott & Kantor, 2017) This will also ensure the transparency of the data and help in uniformity of the disclosures all over the financial arena. These are few of the suggestions which can make the financial statements free from error and more relevant and increase the qualitative aspect.

Bibliography:

Abbott, M. & Kantor, A., 2017. Fair Value Measurement and Mandated Accounting Changes: The Case of the Victorian Rail Track Corporation. Australian accounting Review.

Alexander, F., 2016. The Changing Face of Accountability. The Journal of Higher Education, 71(4), pp. 411-431.

Belton, P., 2017. Competitive Strategy: Creating and Sustaining Superior Performance. London: Macat International ltd.

Bromwich, M. & Scapens, R., 2016. Management Accounting Research: 25 years on. Management Accounting Research, Volume 31, pp. 1-9.

Dichev, I., 2017. On the conceptual foundations of financial reporting. Accounting and Business Research, 47(6), pp. 617-632.

Kew, J. & Stredwick, J., 2017. Business Environment: Managing in a Strategic Context. second ed. London: Chartered Institute of Personnel and Development.

Linden, B. & Freeman, R., 2017. Profit and Other Values: Thick Evaluation in Decision Making. Business Ethics Quarterly, 27(3), pp. 353-379.

Trieu, V., 2017. Getting value from Business Intelligence systems: A review and research agenda. Decision Support Systems, Volume 93, pp. 111-124.

Visinescu, L., Jones, M. & Sidorova, A., 2017. Improving Decision Quality: The Role of Business Intelligence. Journal of Computer Information Systems, 57(1), pp. 58-66.

Werner, M., 2017. Financial process mining - Accounting data structure dependent control flow inference. International Journal of Accounting Information Systems, Volume 25, pp. 57-80.