Wesfarmers limited is a public company and belongs to the conglomerate industry. It is having its headquarters in Perth, Western Australia. The company is serving various areas such as Australia, Bangladesh, Ireland, New Zealand and United Kingdom. The company is basically dealing in chemicals, mining of coal, fertilizers and other products related to safety. It was founded in the year 1914. The key people engaged in operations of the company are Michael Chaney and Richard Goyder. The company is the largest employer in Australia and is employing around 220000 employees in its company. It is also having various subsidiaries such as Bunnings Warehouse, Coles supermarkets etc. This report is basically being prepared in order to analyze the impact of IFRS on the financial statements and also the impact of IFRS on the qualitative characteristics of financial statements.
The important qualitative characteristics of financial reporting are as follows:
As per the article, the international accounting standards are rendered unusable from the point of view of the investors. The international financial reporting standards lead to misinterpretation of accounts as the reporting standards require a lot of professional training and the lack of knowledge may lead to misleading results from the financial reports. Some of the international financial reporting standards are not consistent with the accounting aspects and still the professionals and accountants are still using them. The members of the board are constantly using them as they feel there is no substitute for the international financial reporting standards. (Gjerde, O., Knivsfla, K., & Saettem, F. 2008)
There are various negative issues that are connected with the implementation of the international financial reporting standards:
The areas which have been benefited by the application of IFRS and thus the qualitative and enhancing qualitative characteristics are present are as follows:
The areas which show that IFRS had not satisfied the qualitative characteristics of the financial information are as follows:
The other problems that have been found during the analysis of the annual report of the Wesfarmers limited are as under:
Literature review on impact of IFRS on financial statements of the company
The IFRS is having different impacts which include both the positive and negative impacts on the financial statements of the company which are as follows:
The above analysis had shown that IFRS is having different negative impacts on the society and investors but it depends on the perception of the investors and it can be beneficial in the following ways in the following manner:
Wesfarmers had used international reporting financial standards in the preparation of the financial statements and the annual report that is being issued to different interested users of the company. The company is facing various kinds of negative issues after implementation of the international financial reporting standards in the preparation of the financial statements of the company. The company is getting various issues due to problem of provisions, earnings and amounts of impairment on the intangible assets.
Thus I agree that the issues raised by CEO are genuine and the implementation of IFRS in the financial statements of the company may lead to problem of misrepresentation of the position of the company. But the company can come out of the adverse issues connected with the implementation of IFRS by influencing the investors to properly read the financial statements. The investors should be given information that the financial statements prepared by the company are adequate. The financial statements will be having the competitive advantage if they are prepared after proper guidance in regard to the preparation of the financial statements. The complexity in the financial statements prepared as per IFRS can be easily solved by properly y examined understanding the concepts related to IASB conceptual framework. IFRS requires use of the judgment by various managers in regard to the accounting concepts. The judgments and accounting estimates should be clearly disclosed in the financial statements of the company so that the investors are having clear and complete information in regard to preparation of the financial statements of the company. Thus they will be able to understand the statements in an effective manner. The rules specified in regard to the requirements of IFRS should be proper examined so that there is no misunderstanding in relation to interpretation and it will not lead to misleading results.
Thus the contention of CEO was correct while evaluating the results of implementation of IFRS. Hence IFRS needs to be very carefully used in the preparation of the financial statements as they require a code of conduct and training needs to be given to the employees, managers and investors so as to achieve successful results. Wesfarmers limited will also be able toa chive desired results on overcoming the negative issues.
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