Contemporary Important Accounting Business â€Myassignmenthelp.Com

Question: What Are The Contemporary Issues Important Accounting Business? Answer: Introduction The organizations in the current scenario need to adhere to the policies and regulations framed by the statutory boards. This helps the company in projecting the information that is correct and helps to create a positive impact. Moreover, disclosure leads to creation of goodwill and enable a higher level of transparency. Going by the level of complexity, it can be seen that the companies need to provide information to the stakeholders and both the financial, as well as non-financial information needs to be provided to the related parties (Deegan, 2011). Further, the information is assessed considering the concept of prudence, substance, materiality etc. Hence, it is of utmost importance that the statement must adhere to the conceptual framework. The same is indicated in the report through the selection of Woolworths and Qantas both listed on the Australian Stock Exchange. The disclosures by both these companies are studied in an effective manner and various concepts are studied in th e light of these two selected companies. Adherence to AASB standards and conceptual framework requirements The AASB (Australian Accounting Standards Board) is an organization whose prime work is maintenance and development of reporting standards that are applicable to entities in both private and public sector of the Australian economy. It utilizes a conceptual framework in order to analyze and develop accounting standards. In addition, based on the Australian Accounting Standards, it is mandatory for such previously mentioned companies to comply with the conceptual framework (Titman et. al, 2011). Nevertheless, the qualitative characteristics of helpful financial information apply to financial information offered in the financial statements. Taking into account the compliance and concepts, Woolworths Ltd and Qantas Airways have been selected, and their annual reports have been discussed in a thorough manner. Based on the materiality concept, information can be considered as material if misstating it or omitting it can influence decisions. Therefore, from the annual reports of both companies, it can be seen that they have complied with the ASX recommendations and principles of corporate governance in order to comply with conceptual framework requirements. Secondly, based on the faithful representation concept, both the companies have complied with the same qualitative characteristic (Zeff, 2007). This can be proved by the fact that both companies have offered a written declaration of their respective directors stating the fact that their annual report presents a true and fair view of their performance. Both companies have also adhered to section 295A of the Corporations Act 2001 to give evidence of the same. Similarly, both the companies have also adhered to the relevance characteristic of the conceptual framework in their annual reports. This can be proved by the fact that both have prov ided both financial and non-financial details in their reports that are relevant in nature or have a potential to influence the decisions of users. For example, Woolworths Ltd has provided a separate section under its remuneration report stating the particulars of their directors interests in performance rights and shares of the company. Similarly, Qantas Airways have also offered relevant details regarding their non-audit services provided during the year in addition to other statutory duties (Woolworths, 2016). The company has also certified that such non-audit services provided by the company are in compliance with the Corporations Act 2001. Lastly, both companies have also given due preference to a reliable characteristic of the conceptual framework so that users can make appropriate decisions based on the same. For example, Woolworths has offered material facts associated with their departure from Home Improvement and segregation of EziBuy and BIGW with each other. Despite knowing the fact that disclosure of such details can affect its financial performance, the company has not hesitated in disclosing the same. In the same way, Qantas has provided reliable information by proving how its earnings had enhanced. It had depicted that due to minimization in ex-fuel unit costs and revenue advantages from Qantas Transformation Program, the company had attained benefit in terms of revenues (Qantas, 2016). It can also be observed from the annual report of Qantas that its items of PPE (Plant, Property, and Equipment) are measured at cost minus impairment losses and accumulated depreciation. Besides, such items are initially recorded at fair value of the amount offered in addition to any incidental expenses incurred with the acquisition. In contrast to this, the PPE of Woolworths is recorded at cost less impairment losses and accumulated amortization. Moreover, there is one similarity betwixt the depreciation method of both the companies. It can be witnessed that even though the PPE of both companies is recorded on a different basis, yet their depreciation method is same. The depreciation method of both companies is done through a straight-line basis method (Spiceland et. al, 2011). Conceptual framework revision to remove disparities in corporate reporting The concept of prudence can be utilized as a synonym for conservatism concept. Everyone in his or her day-to-day life uses this concept. In simple words, prudence means to avoid unwanted outcomes or consequences by being careful or cautious (Fields, 2011). In accounting, this concept has long been regarded as one of the most significant concepts in the determination of time for recognition of revenue. Based on the prudence rule, gains must not be expected unless their realization is immensely probable. However, recent revision in the Generally Accepted Accounting Principles has resulted in an accusation from academic critics to the IASB for abandoning the concept back in the year 2010 (Ibrahim et, al, 2013)). This proves the fact that such revision was being made because there were various deficiencies in the conceptual framework for financial reporting The prudence concept can be easily witnessed in the annual reports of both the companies. Since its revision in the year 2015, companies have adhered to the conceptual framework by fulfilling every qualitative characteristic in order to be more transparent to its users. In relation to Woolworths Ltd, the basic engagement of AASB 9 can be witnessed in the affairs of the company. The specific engagement of the accounting standard guidelines plays a key role in offering an option for measuring every investment in equity instruments at their fair value, thereby assisting in identifying the probable alterations in the form of other comprehensive gains of the company. The impairment losses of the companys intangible assets are measured in their upcoming levels and are analyzed at regular intervals in order to make sure that the amortization figures are not overstated (Samaha Dahaway, 2010). Similarly, in relation to Qantas Airways, this concept of prudence can be easily observed in its se ction of Notes to Financial Statements (Qantas, 2016). In this section, it can be seen that the company has implemented a prudent vision wherein it will raise a provision for operating leases on premises and other customer contracts. The reason behind such step is the costs that are overcoming the contractual obligations of financial benefits intended to be achieved (Davies Crawford, 2012). Hence, with the help of such step, it can avoid its revenue figures from being overstated. Considering all these scenarios, it can be stated that prudence assists in recognition of revenue in the proper sense. In the absence of prudence, assets and income will become exaggerated and liabilities and expenses will be degraded (Melville, 2013). These can create various disparities in corporate reporting that can break the trust and reliance of users on the companys financial statements, as it will result in a material misstatement, thereby resulting in bad decisions on the part of such users (Horngren, 2013). Comparison and contrast between Qantas and Woolworths There are various similarities and dissimilarities between the annual reports of both companies. Firstly, both companies are listed on the ASX and adhere to the corporate governance principles of the ASX. Secondly, both companies have adhered to section 295A of the Corporations Act 2001. Thirdly, the depreciation method followed by the companies is similar in nature. The only key difference is that Qantas does not take into account freehold land while computing its depreciation. Fourthly, both companies have taken an opportunity to disclose their corporate governance statements on their respective websites. Lastly, both the companies implement due care while providing material information to their users. This is because both believe in safeguarding the integrity and morality of corporate financial reporting (Graham Smart, 2012). While Qantas achieves a maximum portion of its revenues from the airline industry, Woolworths attains its revenues from liquor retailing. Furthermore, while Woolworths intends to enhance priority and inclusion culture to gain control over its rivals (Woolworths, 2016), Qantas, on the other hand, intends to advance its strategies in order to maximize shareholder value. It also aims to drive tourism and trade, serve many communities, assist small businesses, etc. Lastly, the provisions made by both companies are distinct in nature. While both make a provision for onerous contracts, other provisions are not similar. Woolworths make their other provisions for employee benefits and self-insured risks, and Qantas make their other provisions for leased assets and insurance or legal risks (Qantas, 2016). Recommendation Due to various complications in the current market, the disclosure of material information has become very vital. It is recommended that companies must prioritize relevant information in their financial statements and discard immaterial information because it cannot influence the decisions of users. Moreover, in order to maximize shareholder value, companies must provide them accurate and timely information so that they can place their trust upon the company. Besides, transparency must be implemented between the company and its stakeholders so that issues can be easily taken into consideration through proper communication channels. Nevertheless, compliance with AASB standards and conceptual framework for corporate reporting is the most significant in order to thrive in the market Conclusion From the previously mentioned analysis of both the companies, it can be concluded that compliance with the AASB standards and conceptual framework is very significant to reach desired goals and objectives. This can be possible if proper and timely disclosures are made available to the users of financial statements. Moreover, companies must also be prudent enough to avoid material misstatements in their financial statements, as it can, in turn, hamper the decisions of users. Hence, both the conceptual framework and disclosure measures are vital for the success of a company, as these can balance and ease their performance, thereby maximizing their goodwill in the market. Nevertheless, Qantas and Woolworths have not disappointed in fulfilling such requirements References Davies, T Crawford, I 2012, Financial accounting, Harlow, England: Pearson. Deegan, C. M 2011, In Financial accounting theory, North Ryde, N.S.W: McGraw-Hill. Fields, E 2011, The essentials of finance and accounting for nonfinancial managers, New York: American Management Association. Graham, J Smart, S 2012, Introduction to corporate finance, Australia: South-Western Cengage Learning. Horngren, C 2013, Financial accounting, Frenchs Forest, N.S.W: Pearson Australia Group. 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