Discuss About The Australian Disclosures In Corporate Sector?
The report is aimed to highlight on the main users of “General Purpose Financial Reporting (GPFR)” along with the rationale for the same. It also defines the qualitative characteristics mentioned as per the standard. The next section of the report has anyone related to what extent the latest and will report for a company listed under ASX 300 Index has been able to meet the criteria for disclosure requirement for “AASB 116”. It has been particularly ensured that the company is having 30th June as the year-end. In order to perform the analysis, Monash Ivf Group Limited has been selected. Based on the analysis on the disclosures compliance the report has been able to suggest on two qualitative enhancing characteristics for the selected company. The latter part of the report has been able to critically discuss on the disclosures on meeting the PPE criteria for the primary users.
Citizens of a country are identified as the primary users of GPFRs. The legislature or a alike body along with Parliament member or alike representatives are also considered as an important user for GPFR. Citizens are regarded as primary users of GPFR as they receive and provide service at the same time to the government and other public sector entities, henceforth they need to rely on GPFRs for the necessary information which aides in decision-making purposes and accountability (Cnc.min-financas.pt. 2017).
As per OB 5 to OB 10, the “qualitative characteristics” of functional information as per the “Conceptual Framework for Financial Reporting” states that several existing potential investors and lenders along with additional creditors cannot require the reporting entities for providing information directly to them and should consistently rely on the requirements for general purpose reports. Based on QC-1 to QC-39 some of the fundamental qualitative characteristics as for the conceptual framework has been identified in terms of relevance, materiality, faithful representation, verifiability, timeliness, understandability and consideration of cost constraint. The same has been represented in the “Appendix 1” of the study. The faithful representation aspect of the financial information has been identified in terms of potential to make a difference in decisions depiction of complete, neutral and error free report. The main objective of the board has been seen in terms of maximising the quality as much as possible (Fasb.org. 2017).
Based on the depiction of annual report of “Monash Ivf Group Limited” published in the year 2016, it has been discerned that the clarification for the acceptable method of depreciation and amortisation are done based on “Amendments to AASB 116 and AASB 138”. Another important application of “Amendments to AASB 116 and AASB 141” has been evident with agricultural bearer plants.
Under “Section 30” of “AASB 116” (Cost model), the management of recognition under the cost model states that after recognising an asset such as PPE, the total amount should be carried as per the cost less any accumulated reduction and impairment losses. In a similar way, “Monash Ivf Group Limited” has performed the key estimate and judgement for equipment by depreciating/amortising over its useful economic life. In addition to this, the depreciation amount has been substituted for cost, less its residual value. The depreciation method for the company has been further identified with profit or loss on “straight-line basis” over the estimated useful life of PPE. This is indirectly seen in terms of compliance with depreciation method stated under “Section 62” of “AASB 116” (Annualreport2016.monashivfgroup.com.au 2017).
In addition to this, the company has duly complied with “Section 3b” of “AASB 116” which is associated to biological assets linked with agricultural activity. Similarly, the company is clearly stated that its agricultural bearer plants are in compliance with Amendments to “AASB 116” and “AASB 141”. The aforementioned findings have been clearly presented in “Appendix 2” section of the study (Deegan 2013).
Among the several types of “qualitative characteristics” useful for financial information as per “conceptual framework for financial reporting”, “relevance” and “understandability” has been identified as the two main qualitative characteristics for “Monash Ivf Group Limited”.
The adherence to “relevance” quality characteristics for the company has been evident in operating segment, taxation, earnings per share and dividends. The segment EBITDA has been able to measure the performance with most relevant results of segments in relation to the entities which operates in the industry of healthcare. In addition to this, the segmented PBT has been incorporated in the internal management and duly reviewed by Group’s CODM. It has been used as a measure of performance as the management is of the notion that such information in evaluating the financial result is relevant to their respective segments in relation to various types of other entities which are operating in the same industry. The impairment testing for the amount to be recovered has been estimated to be high than the usual carrying amount and responsible for relevant assumption with reasonable possible change to the relevant inputs and such input shall not result in any recoverable amount being lesser than the actual amount of carrying. The company has been further observed to adhere to long-term obligations with relevant market changes for the corporate bonds which are having graduated eighth approximating the terms of obligation of the group. Therefore, it can be clearly seen that the financial information has the capability of making a difference in decisions made by users. It has been further observed that the information published by the company has confirmatory value and predictive value which directly complies with “relevance” quality aspect under QC 6 to QC 10 duly stated in “Conceptual Framework for Financial Reporting” (Cheng et al. 2014).
The “understandability” quality aspect has been duly maintained by the group through the organising the notes to the financial statements into several sections which will help the users in better understanding the performance of the group. In addition to this, the changes proposed by the group has been able to provide the users with a clearer understanding for the factors which drive the financial performance, financial position for the group thereby suggesting on better alignment of group strategy and complying with the provisions of “Corporations Act 2001”. Therefore, it can be said that the company is able to classify, characterise and present the information in a clear and concise manner which makes it understandable to the user. In addition to this the financial reports have been prepared even for users having a reasonable knowledge of economic and business activities. Due to the aforementioned factors it can be stated that is able to adhere to “understandability” quality as per conceptual framework (Abeysekera 2013).
The company has been able to recognise the PPE values in the balance sheet with utmost “relevance” to the prescribed guidelines. It has been further able to identify the percentage change in property expenses for both present and previous financial year. The relevant values for the payments for “property plant and equipment” have been duly noted in the “net cash flows generated from the operating activities” (McNeil, Frey and Embrechts 2015).
The important “understandability” factor has been covered with concisely segregating the PPE values for the present and previous year in the annual report. The “understandability” aspect has been duly maintained by clearly stating about the contractual commitment for the acquisition of PPE. In 30 June 2016, the parent entity of Monash Group was not seen to have any capital commitment associated to acquisition of PPE (Wahlen, Baginski and Bradshaw 2014).
The company needs to take several improvements which are associated to improve the financial reporting by including the scope base types of materiality aspects in the financial report. There is also no cost constraint on useful financial reporting which has been provided in the financial report. It has been further seen that that there has been several drawbacks associated to comparability aspect of the financial reporting which should have been shown with the changes adopted along with eye of IFRS.
Abeysekera, I., 2013. A template for integrated reporting. Journal of Intellectual Capital, 14(2), pp.227-245.
Annualreport2016.monashivfgroup.com.au. (2017). AnnualReport. [online] Available at: https://annualreport2016.monashivfgroup.com.au/ [Accessed 30 Sep. 2017].
Cheng, M., Green, W., Conradie, P., Konishi, N. and Romi, A., 2014. The international integrated reporting framework: key issues and future research operations. Journal of International Financial Management & Accounting, 25(1), pp.90-119.
Cnc.min-financas.pt. (2017). [online] Available at: https://www.cnc.min-financas.pt/pdf/IPSAS_Janeiro_2013.pdf [Accessed 30 Sep. 2017].
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
Fasb.org. (2017). [online] Available at: https://www.fasb.org/resources/ccurl/515/412/Concepts%20Statement%20No%208.pdf [Accessed 30 Sep. 2017].
McNeil, A.J., Frey, R. and Embrechts, P., 2015. Quantitative risk management: Concepts, techniques and tools. Princeton university press.
Wahlen, J., Baginski, S. and Bradshaw, M., 2014. Financial reporting, financial statement analysis and valuation. Nelson Education.
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