Answers:
In November, a webinar has been conducted for sharing feedbacks during the session by Australian Accounting Standard Board (AASB). This webinar has taken place in Brisbane, Sydney and Melbourne. All the enhancements of any nature and kind have been investigated and taken into consideration (Aasb.gov.au, 2018).
The income which is obtained from licences that the public sector has issued contains a relevant portion of income which is related to the public sector companies. The accounting treatment of licenses under AASB 15 could be viewed as unclear in nature For providing more support to the public sector organisations of NFP for providing licences, amendments of ED 283 have been issued by AASB. With the introduction of the new standard, public sector enterprises have been able to differentiate between taxes paid and license amount. In addition to this, such distinction is useful in obtaining a clear overview of the obligations of the company, which are crucial to the arrangement of licensing in relation to enterprises which comes under the ownership of the Government. Hence, this can be useful to ascertain the nature which is related to the issuing of license and also the accounting treatment of the same as per regulations.
New standard Associated to australian accounting Framework
AASB has made numerous amendments in 2018-1 within the present Standards of Accounting which is there in AASB’s official website. With the introduction of the standard, the amendments are made considering the past-held interests within a joint operation relating to the amendments in AASB 11 AND AASB 3. (Guthrie & Pang, 2013). Besides this, the effects of income tax which is associated with classification of financial instruments in the form of equity as per “AASB 12 Income Taxes” (Kraal, Yapa & Joshi, 2015).
Submission of aasb: legislative review of ACNC
A Review of legislative laws in the beginning of March 2018 was submitted to ACNC by AASB which was on the opinion of Charitable Stakeholders. AASB and ACNC need to undertake the additional work which is required to be done after consulting with the sector. The reason is to ensure that a framework of reporting which is applicable can be created in relation to all the registered charities.
There are certain representatives present both in “Australian Accounting Standards and “Accounting Standards Board of Japan and they were involved in a meeting. Such a meeting was conducted for the first time between the two boards (AASB, 2014). The main discussions of the meeting were focused on updates in the fields of respective frameworks which were associated to financial reporting, operations and exchanged viewpoints on cooperation opportunities. Both AASB and ASBJ have agreements on various technical aspects which is associated to the implementations of certain standards which are issued by IFRS. The major problems in relation to accounts that was discussed in this meeting focused on the areas of impairment tests, intangibles for example patents, copyrights. (Kabir, Rahman & Su, 2017). Moreover, this takes into consideration the techniques which is used in equity accounting and computation of comprehensive income. As per the results of the meeting, both the boards have agreed on developing additional opportunities related to numerous beneficial projects. An understanding of the viewpoints of ASBJ could be favorable in the recommendation of internationally acceptable measures to various accounting concerns.
As per AASB 101 standard which is issued by the Australian Board deals with the preparation of financial statements. The standard states that the preparation of the financial statement should be in such a manner that it is consistent with the laws and regulations prevalent in the market (Hodgson & Russell, 2014). One of principles which the rules specially provides relates to general purpose financial statements which can be used to compare the current and past performance of the company. The standard specifies the primary requirements which are needed to be followed for the preparation of financial statements.
As per the financial statement of Blake limited which is provided in the case study, it is evident that the accountant of the company has failed to segregate items of financial statements in a correct manner (Overland, 2017). Moreover, the accountant has not appropriately classified the assets of the company. The assets of Blake ltd have not be divided into current assets and non-current assets. Similarly, the liabilities of the company have not been classified as current liabilities and non-current liabilities.
As per the provisions of Para 66-76 of AASB 101, the assets and liabilities of a company needs to be classified as Short term and long-term categories. Moreover, the inventory of the company which are related to finished products, WIP and raw materials are required to be depicted in a single head and the classification of account receivables is to be presented clearly as per the requirements. These transactions need to be taken into consideration as parts of the input goods which is an important part of the production process.
The transaction of investments has been wrongly recorded at cost in the books of Blake Ltd which is inherent in the statement of profit and loss account. As per para 54 of AASB 101, the measurement of investments should be done by applying equity method. The case study also shows that the deferred tax liabilities and current tax liabilities are taken in a combined manner. The account receivables should be classified as short-term receivables and long-term receivables as per the policies of the management. Therefore, effective segregation should be made of these liabilities which should be accompanied with appropriate disclosures. In addition to this, the financial statements should contain all the above elements in order to ensure that the financial statement is showing a appropriate picture of the financial statements (Wee, Tarca & Chang, 2014).
Another major error which is made by the accountant in the financial statements of Blake ltd is that the accumulated depreciation is shown in the in the liability side whereas the correct treatment of the same as per AASB 101 should show the accumulated depreciation in the asset side of the balance sheet.
References:
Guthrie, J., & Pang, T. T. (2013). Disclosure of Goodwill Impairment under AASB 136 from 2005–2010. Australian Accounting Review, 23(3), 216-231.
Kraal, D., Yapa, P. W. S., & Joshi, M. (2015). The Adoption of International Accounting Standard (IAS) 12 Income Taxes: Convergence or Divergence with Local Accounting Standards in Selected ASEAN Countries?.
Hodgson, A., & Russell, M. (2014). Comprehending comprehensive income. Australian Accounting Review, 24(2), 100-110.
Kabir, H., Rahman, A. R., & Su, L. (2017). The Association between Goodwill Impairment Loss and Goodwill Impairment Test-Related Disclosures in Australia.
Wee, M., Tarca, A., & Chang, M. (2014). Disclosure incentives, mandatory standards and firm communication in the IFRS adoption setting. Australian Journal of Management, 39(2), 265-291.
Overland, S. (2017). 20. FINANCIAL STATEMENTS.
Aasb.gov.au. (2018). Retrieved 4 April 2018, from https://www.aasb.gov.au/admin/file/content105/c9/AASB101_07-15.pdf
Aasb.gov.au. (2018). Retrieved 4 April 2018, from https://www.aasb.gov.au/News/New-Australian-Accounting-Standards?newsID=262502
