Compliance Analysis: 3D Resources Limited Essay

Alter ray have cnosen a company pease commerce yo analysis.You should renew the copy of the conceptual framework which is n mooches you can also review week 5 slides these va hero. 
You need to look at the annual report of your company and amen Mese questions. 
1. Has the company complied with the measurement requromenis of the conceptual framework
2. Have they complied with the fundamental qualitative characteristics
3. Have they complied with the ennanctng qualitative chatacterishcs

4. Aro the users 01 lateral& repot.* (investors/potential investors:enders:other creditors) able to use the repent to make decisons. 
5. The conceptual framework says users only reed a boslc knovAedge of accounts, do they need more than the to an&yse your company. 
6. Have they net the reautrements fq general purpere financial reporting.You need to use screen pints from the rontal mead to support your onotenonts as welt as academic arguments etc. Renamesr this* a report and must have all the usual recturements. 

The company which has been selected for analysis is 3D Resources Limited and the annual report which is being analyzed is for the period ended 30^th June 2018. This is a company which is targeting the discovery of minerals in the provinces and states of Western Australia. It extracts minerals like zinc, lead, gold, copper, nickel and is looking for advanced mineral projects which can help the company in becoming the mineral producer in Australia. It represents the high risk high return investment avenue as the areas which are being investigated for minerals now have been explored moderately in the past. The company is listed on the Australian Stock Exchange as options.

The report is a highlight of if the company has followed the mandated guidelines and is understandable and usable by the stakeholders or it calls for further improvement (Arnott, et al., 2017). The conceptual framework and the accounting standards introduced by the IASB encourages company to use the standards and ensure that the qualitative aspects like timeliness, reliability, verifiability, etc. is being followed. The conceptual framework also aims towards ensuring the comparability of the financial statements across the world so that the financial status and performance of the companies can be compared globally (Belton, 2017).

Discussion and Analysis

Requirements of the conceptual framework

The presentation of the financial statements in terms of the balance sheet and the profit and loss account is the responsibility of the management and it needs to be in line with the guidelines and standards prescribed by IASB. For correct application of the same, proper knowledge is required and it needs to be seen if the company has done the valuation of assets and liabilities correctly and that they have presented the same in the correct fashion (Alexander, 2016).

In case of the 3D Resources Limited, we can see that even though the financial statements have been prepared as per the conceptual framework but the company can still improve upon the valuation methods being used and the disclosures being given. Most of the important policies have all been presented in notes on accounts and the screen print of the same is given as a conclusive evidence of the same.

Fundamental Qualitative characteristics

There are two fundamental qualitative characteristics which needs to be reflected by the companies in the financial statements, they are faithful representation and the relevance. It is very critical that the information that is being presented in the financial statements is true and fair and is free from errors, omission and biasness (Dichev, 2017). It should be relevant in the circumstances of the case and should faithfully present the information which it purports to present for the given period.

Fundamental Qualitative Characteristics

There should not be any fraud on the part of the company in the financial statement and this is the very objective of the conceptual framework such that the stakeholders get the correct and appropriate information on the company. As per the fundamental qualitative characteristics any threat which is pertinent to the company from the perspective of materiality should be highlighted by management in the Directors Report and by the auditors in the Auditors report of the company.

Enhancing Qualitative characteristics

There are four major qualitative characteristics which needs to be followed by the company. The same has been explained below:

1. Comparability: It is very important and critical that the data is presented in a fashion that it is comparable with the past years as well as with the other companies across the globe. This can be ensured only if the standardized format and process is being used for reporting. The conceptual framework plays a very important role here as they helps the financials to be prepared accordingly so that the users can compare the data and then take decisions based on that(Jefferson, 2017).
2. Verifiability: the financial statements of the company as a whole should be free from errors and misstatement and should not be a part of the fraud or else it would lead to wrong decision making. It is the responsibility of the management of the company to ensure the same and that the data presented is backed by adequate supporting and back up and whatever assumptions is being taken is clearly shown in the notes on accounts and disclosures. All the significant policies and methods of accounting and the material facts and figures should be highlighted in the annual report. In the given case, the company has adhered to the requirements(Vieira, et al., 2017).
3. Timeliness: the annual report should be prepared and presented to the shareholders and the other stakeholders on time such that the decisions are being taken timely. The information which is being reported in the annual report should pertain to the current relevant period and all the events that affect the company materially should be shown completely. It is thus clear that the information should be timely or else it is of no use and is just a redundant information. The company has presented the information timely in the given case.
4. Understandability: the information which is presented in the financial statements should be understandable to the users and they should be able to interpret the same and take the necessary decisions. The users are expected to have only basic knowledge of accounting and so the management should present the information in the language that is clear and free from ambiguity. It should be user friendly and simple to interpret(Meroño-Cerdán, et al., 2017).

Users of financial Reports

The financial statements of the given company have followed all the enhancing qualitative characteristics and the management has followed all the guidelines and principles required for presenting information in the financial statements. The company has shown the data of the last year, has shown adequate notes on accounts as well as disclosures and has presented all the material information and hence can be said to have followed the enhancing qualitative characteristics (Marques, 2018). The investors as well as lenders, debtors as well as creditors, employees as well as the other stakeholders can retrieve the information from the annual report based on their needs and requirements. The annual report has been prepared in such a way that it meets the information needs of all the user group.

Basic Knowledge of accounting

The users of the financial statements do need to have more than the basic knowledge of accounting as there are several information which are not understandable and interpretable prima facie and therefore the expertise in the field of accounting is required for proper analysis of the same. It can therefore be said that only the basic knowledge of accounting is not sufficient enough to analyse the company and make the investment decisions (Kachelmeier, et al., 2018).

Requirements of General Purpose Financial Reporting

Directors Report

The directors of the company have declared in the annual report that the same has been prepared following the conceptual framework and the Australian Accounting Standards and the Corporation Act, 2001. They have also declared that they have presented all the material information in the annual financial statements and have presented the true and far view of the state of affairs. They see that the company is a going concern in the future and has reasonable ability to pay off its debts in time (Kuhn & Morris, 2016). Under all these declaration, it can be said that the company has adhered with the required standards of reporting.

Enhancing Qualitative Characteristics

Auditor’s Report

The auditor’s report gives a reasonable assurance to the users of the financial statements that the same has been prepared as per the minimum required standards and that they are following the generally accepted accounting principles (Choy, 2018). They review the financials end and end and then give a view as to if the financials are free from errors and frauds. In the given case the auditor has given a clear view on the financials and thus the users can refer to the annual report and take investment decisions accordingly.

Conclusion

From the above discussion and analysis we can see that the company in question has complied with the conceptual framework and has complied with the requirements of the fundamental and enhancing qualitative characteristics (Raiborn, et al., 2016). It has followed the accounting standards while financial statements preparation and has also met the legal requirements. The same is evident from the screenshots which has been shown in the report. However, there is still a chance for improvement in terms of valuation and other policies of the company. The company also needs to have a disclosure on the sustainability accounting and the corporate governance.

References

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

Arnott, D., Lizama, F. & Song, Y., 2017. Patterns of business intelligence systems use in organizations. Decision Support Systems, Volume 97, pp. 58-68.

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

Choy, Y. K., 2018. Cost-benefit Analysis, Values, Wellbeing and Ethics: An Indigenous Worldview Analysis. Ecological Economics, p. 145.

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

Jefferson, M., 2017. Energy, Complexity and Wealth Maximization, R. Ayres. Springer, Switzerland. Technological Forecasting and Social Change, pp. 353-354.

Kachelmeier, S., Schmidt, J. & Valentine, K., 2018. The disclaimer effect of disclosing critical audit matters in the auditor’s report. SSRN, 2(1), pp. 1-39.

Kuhn, J. & Morris, B., 2016. IT internal control weaknesses and the market value of firms. Journal of Enterprise Information Management, 30(6).

Marques, R. P. F., 2018. Continuous Assurance and the Use of Technology for Business Compliance. Encyclopedia of Information Science and Technology, pp. 820-830.

Meroño-Cerdán, A., Lopez-Nicolas, C. & Molina-Castillo, F., 2017. Risk aversion, innovation and performance in family firms. Economics of Innovation and new technology, pp. 1-15.

Raiborn, C., Butler, J. & Martin, K., 2016. The internal audit function: A prerequisite for Good Governance. Journal of Corporate Accounting and Finance, 28(2), pp. 10-21.

Vieira, R., O’Dwyer, B. & Schneider, R., 2017. Aligning Strategy and Performance Management Systems. SAGE Journals, 30(1).