Conference On Information Systems Shanghai: Understanding The Audit Report And Financial Statement Essay.

Changes in the audit reporting format

Discuss About The Conference On Information Systems Shanghai?

The audit report is the opinion given by the auditor on the fairness of the financial statements constructed by the management of organisation. The organisational management is responsible for the construction of the financial statement for the financial year showing the business activities and the position of the company in the financial term. The audit report should be prepared with integrity and subjectivity. The main motive of the audit report is only to give an opinion over the truthfulness and fairness of the financial statement. The audit report prepared by the auditor should be easy to understand by the general public and investors. The audit report should state the responsibility of the auditors while conducting the audit of the financial statement and then the opinion of the auditor is given (Pilcher, 2009).  The audit report should be specific and does not indicate two meanings. The diversification in the audit reporting requirement is done with a motto to provide a better transparency in the audit report provided by the auditor of the company after analyzing the financial statement of the company. The following changes are made in the audit reporting format:

These matters are same as introduced but these matters are identified by the auditor of the company independently (Kim, et. al., 2011).  These Critical Audit Matters are used by the PCAOB to identify the important areas of the financial statement that are important for the audit. The financial statement of the company is prepared as per the going concern concept. Going concern implies that the company will engage in the operations of the business till foreseeable future as can be seen by the management of the company.

With the increasing complexities of the organizations came the recognition of the growing need and importance of reporting of financial statements. The simple and clear motto of the general reporting on financial statements is to give the best available information of financial statements to the lenders, other creditors, potential and existing investors about the reporting entity in making the decision for providing assets, resources, and capital to the entity (White, et. al., 2005). Qualitative characteristics that are required to provide important, functional and required information of financial statements are distinguished by the framework

• Enhancing and growing characteristics like understandability, verifiability, comparability and timeliness.
• Basic and fundamental characteristics which are faithful representation and relevance

Relevant and important financial information is having an ability of creating a contrast to the decision on the financial statements taken by the users. But in order to make a difference in the decisions by the users, information of financial statement has value of conformity, predictive value or both. Faithful and trustworthy representation substitutes the formerly existing term ‘reliability’ from when the board identified there is a absence of usual and mutual reliability comprehension (Williams & Wilmshurst, 2009).  Information of the financial statement of the organization that loyally and trustworthily represents economic phenomenon is having three features as follows:

• It is free from error
• It is complete
• It is neutral

Qualitative characteristics required in financial reporting

Name of the company: AGL Energy Limited Disclosure requirement as per AASB 116: The financial statement of accounts should disclose, for every category of property, plant, and equipment:

Method of depreciation used by the company,

Rate of depreciation used or the useful lives,

Bases for measurement used for analyzing and determining carrying amount which is to be grossed,

The carrying amount which is grossed and the collected depreciation at the beginning and at the termination of time; and

Reconcilement of the amount of carrying at starting and at the termination of time showing:

Assets determined as held for sale purpose or comprised in a class of disposal identified as held for sale in relation to AASB 5 and another disposal. In the AGL Director’s opinion there were no recognizable changes in the statement of affairs that occurred during the financial year other than those comprised in Directors report (AASB, 2010);

Losses of impairment identified in other identified as profit and loss in relation to AASB 5 and other disposals;

As per AASB 136, losses of impairment reverted in gains or loss.

As per the context of AASB 136, Raise or reducing in resulting from assessing under the paragraphs 31, 39, AUS 39.1, 40 AUS 40.1 and AUS 40.2 and by losses of impairment identified or reverted in other inclusive revenue.

The dissimilarity of net exchange arising from the rendering the financial statements from the useful currency into a diverse currency of presentation, comprised of the metaphrasing of action into the presentation of currency of the enterprise which is reporting; and

The statements of final accounts must state the information regarding the following parts -
(a) A number of expenditures identified in the property, plant, and equipment’s amount of carrying of an item of in the way of its erection;
(b) If separately it is not mentioned while taking into account income statement, the money that is received by way of compensation from the external third party route for the items of PPE that were adrift, given up or impaired that is comprised of profits and losses (Yao, et. al., 2015).  
(c) The agreed commitment that is made on the legal contract terms amount for the taking over of PPE in the business of its erection.
(d) Existence and amounts of property, plant, and equipment and restriction on title undertaking as security for liabilities.

According to the conceptual framework, information relating to the financial statement is important when it represents faithfully and is relevant what it pretends to represent.

AGL Energy Limited reporting as per AASB 116

The importance of financial statements is intensified when it is verifiable, comparable, understandable and timely.

The fundamental qualitative characteristics of the economics reporting convey that the accounts in the financial statement of the company should be showcased with prior dignity and integrity (Walker, 2003). The financial data should be adequately relevant to the users of the financial statement. AGL Energy Limited has explained the data of the assets in the annual report 2016 as per the disclosure laid down in AASB 116 (AGLenergyLTD, 2016).

AGL Energy Limited has met the criteria of the AASB 116 reporting requirements as per the findings in answer 2. Disclosure requirement that is mentioned in the AASB 116 has been reported timely by the AGL Energy Limited.

Critical analysis of extent the disclosure on Plant, property, and equipment fulfil the basic and fundamental:

Additional qualitative characteristics of Functional Information of Financial Statement:

Comparability: Comparability authorizes users of the financial statements to identify and discover resemblance and dissimilarity among units, both between diverse time within a combination of financial statements and across diverse reporting organization or business units. Usage of techniquess to construct financial statements assists to attain comparability should be followed consistently.

Timeliness: One of the qualitative characteristics of prevailing framework is Financial statement should be representing on time (AASB, 2004).  However, preferably than stressing the stability between reporting on time and information which is reliable, the framework which is revised allude more wide to timeliness as being able to affect makers of decision.

Verifiability: It is totally and entirely a new concept in the revised framework. Financial information when enables independent and knowledgeable observers to arrive at an agreement or assent on whether a distictive portrait of a transaction or an event is a trustworthy, faithful and independent representation then only it said to be verifiable.

Generally, the motto of reporting is to provide relevant data of financial statements about the organisation of reporting that is functional to the investors which are potential and existing, lender and other trade payables in the formulation of decisions about providing the support to the business unit (Walker, 2003). The AASB 116 complies efficiently with the general purpose financial reporting’s objective. The AASB 116 provides detailed and relevant data about the assets of the company in general purpose financial statement. AASB 116 is also providing detailed and complete information about the useful life of assets over which the depreciation is to be apportioned.

Conclusion

From the above discussion the analyst had drawn a conclusion that AASB 116 provides the detailed information of PPE to the users of the accounts of the financial statement of the company. The basic motive of the general financial statement is to give true and fair financial information to the users of accounts of financial statements of the company. The analyst presumed that the basic motto of financial statement is grabbed by AASB in reporting of assets of the company. As an improvement company should also report the change in method of depreciation and result of such change in the financial statement accounts of the company. The block of assets of the company must show the assets included in the assets list covered by the same block.

References:

AASB, A. S. (2004). Presentation of Financial Statements. Balance Sheet, 68, 73.

AASB. (2010). Property, Plant and management. Retrieved from https://www.aasb.gov.au/admin/file/content102/c3/AASB116_07-04_ERDRjun10_07-09.pdf

AGLenergyLTD. (2016). AGL 2016 Annual Report. Retrieved from https://agl2016.annual-report.com.au/

Haswell, S., & Langfield?Smith, I. (2008). Fifty?Seven Serious Defects in ‘Australian’IFRS. Australian Accounting Review, 18(1), 46-62.

Kim, S., Poon, S. K., & Young, R. (2011). Issues around firm level classification of IT investment. In Thirty Second International Conference on Information Systems Shanghai,. Disponible en: https://rp-www. cs. usyd. edu. au/∼ spoon/publications. html [consultado 4 Nov 2011].

Pilcher, R. (2009). Deconstructing local government performance and infrastructure measurement. Asian Review of Accounting, 17(2), 163-176.

Walker, R. G. (2003). Objectives of financial reporting. Abacus, 39(3), 340-355.
White, G. L., Sondh, A. C., & Fried, D. (2005). Analysis of Financial Statement. Analysis.

Williams, B. R., & Wilmshurst, T. (2009). The achievability of sustainable reporting practices in agriculture. Corporate Social Responsibility and Environmental Management, 16(3), 155-166.

Yao, D. F. T., Percy, M., & Hu, F. (2015). Fair value accounting for non-current assets and audit fees: Evidence from Australian companies. Journal of Contemporary Accounting & Economics, 11(1), 31-45