a) The conceptual framework of reporting and financial accoungting was introduced to give a basis to the companies for preparing and presenting their financial statements such that the company can maintain the uniformity all across the world as per the relevant accounting standards and IFRS’s. This also aims to provide the solution to day to day problems while accounting and other issues in the normal course of the business. The main aim of these frameworks is to provide the user with the relevant and reliable information with the help of which major financial and operational decisions can be taken.(Kew & Stredwick, 2017) The company’s internal users include the employees, the customer, the debtors, the creditors, etc whereas the external users include the government, the banks, the financial institutions, the tax authorities, etc. All of them require the information to take major economic and investment decisions (Trieu, 2017). The financial statements should be presentated in such a fashion that it represents the definition, the measurement, the recognition and the disclosure criteria. The users don’t only need the information of the resources of the company but on how well they are being optimally utilised and what the change and reason of change in them over the past year. General purpose financial statements should also aim at disclosing the major claims of the company and what are the changes in it which can have a forebearing on the decision being taken by the stakeholders. It also aims at ascertaining the cash flow of the company through the cash flow statement and the statement of comprehensive income. The company also needs to present the qualitative information besides the quantitative information which can have an impact on the company’s decision (Visinescu, et al., 2017).
Qualitative information being provided is equally impoartant for the company to disclose in order to help the users make the correct decision. Information is only useful and can be put to use in case it is timely, comparable, understandable and verifiable. The information disclosed should be free from errors and misstatement and must meet the criteria of the transparency and faithful representation of the information on which the users can rely. Also, it should be complete in all the respects and should be given at the right time in order to enable the timely decisions by the users. If at all, it comes at the last moment, it loses its relevance (Kew & Stredwick, 2017). It should be made in such a way that it is comparable from the past year data, the data for other company from the same industry and also the budgeted and estimated data. The 3rd aspect being verifiability of the financials depicts that the financials should present the data which it purports to represent and which gives the users a reasonable assurance on the status of the company (Linden & Freeman, 2017). The 4th qualitative aspect must also be taken care such that the data is easy to read and understand and convenient to interpret. It should be simple to a person who has lack of technical knowledge and not complex and complicated. (Jones, 2017) It should not be misleading and hence it should be prepared by a personal having reasonable knowledge of accounts.
b) In the given case of Telstra the management of the company has followed the basic principles and methods that has been set by the International Framework of reporting and has prepared their statements on the basis of the same(Jones, 2017). The company has followed the AASB 18 for the valauation and calculation of the amount related to the property plant and equipment. The necessary disclosures are also provided in relevance to the said standard. The users finds it very useful to make effective analysis when the companies follow these standards. In case the companies deviate from the same then they are penalised for the same. In the given case also the Telstra company has followed the standard and has done the valuation of the asset accordingly.
As per the standards of the PPE , following are the relevant disclosures that the companies must abide with-
- The various classes of assests and the basis of bifurcation of the assets in those classes.
- The method of depreciation and amortisation that is followed, the useful life of the asset that is taken into consideration, the rate of depreciation that is applied, the cost of any addition or deletion made in the classess of asset during the said period(Werner, 2017).
- The total carrying amount of the assets and the method of calculation of the same. Any impairment loss that might occur must also be recognised and proper disclosure must be given(Dichev, 2017).
- The exchange rate fluctuations that had affected the overall value of the assets, and the policies of the management of the company that ahd affect on that assets must be taken into cosndierations. All the relevant facts and figures that are related to these points must be properly disclosed by the companies. It must be support by proper documentations and effective amount of precision must be maintained in case of the same(Belton, 2017).
In the given case we see that the Telstra Corporation has made all the necessary disclosures. The management of the company has stated briefly about all the assets of the company, all the necessary disclosures regarding amortisation and depreciation is given. The impairment cost of the assets and all the other points that have been stated above have been taken care of. The management of the company and the directors have clearly stated that the accounts of the company are in sync with the relevant standards and all the necessary notes to accounts have been given in brief (Bromwich & Scapens, 2016).The auditors have also supported this view of the management and have stated the same in their audit report. Brife extracts from the annual reports of the company are attached here under to give a clear idea about the policies of the management and how they have done the same.
c)One of the most important aspect of financial reporting framework is that it gives absis on which the companies can prepare their reports that are free from errors and are useful for the people who are dependant on the same. It is one of the most important aspect of reporting and it helps the management in the long run to take important decisions (Abbott & Kantor, 2017). The users of the financial statements of the companies that includes the various investors and the shareholders knows that the accounts of the company are free from errors and they can take important decisions by relying on the same. In case of Telstra the company has abided with all the requirements of the IFRS and have presented all the information very clearly that can be helpful for the investors and the other stakeholders. The previous year figures with relation to the gross block and net block and the over all valuation of the assets and the other liabilities was also stated. It helps in making effective comparison with the basis of which the investors can judge whether the company is growing or not. Hence it helps in lending one of the most important characteristics to the financial statements that is of comparability. It will help in making important decisions with more precsision.
d)On the basis of the given facts and figures it can be said that the company has effectively complied with all the necessary requirements of these standards and has made the specific disclosure. It has presented a clear and transparent position of the overall accounts of the company with the help of the reporting framework policies. All the necessary figures that are related to the cost of the asset, the overall depreciation, the effect of the management decision everything is stated in clear terms. The company ahs helped in justification of the fact as in why these standards must be used by the companies and how useful they can be to the end users.
The international standards framing bodies considers the view point of both the users and the companies while framing these standards and make the necessary changes in the same accordingly.While making amnemdnets the feedbacks from all parties are taken and then applied.In case of Telstra, the management of the company can reduce the overall complication and make the application of these standards more easy so that base level users can understand.The international bodies can also opt for maintaining uniformity in the standards that are overall appliacbel to only one type of company and should not be open for all the companies. These are the few ways in which the board can improve the quality of the financial reporting and also reduces the errors that might be involved in the same (Alexander, 2016).
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.
Jones, P., 2017. Statistical Sampling and Risk Analysis in Auditing. NY: Routledge.
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.