Congress European Accounting Association: Introduction, GPFR Objective, And AASB 116 Essay.

The GPFR’s Objective and Qualitative Characteristics of Useful Financial Information

Discuss About The Congress European Accounting Association?

The GPFR objective and the qualitative characteristics of useful information will be dispensed. Abacus Property Group Stapled has been chosen to aid in the analysis of how it has complied with GPFR (OB1-OB21 together with QC1 –QC39), AASB 116 disclosure (paragraph 73-79) and how it has satisfied fundamental as well as enhancing qualitative characteristics of useful info. A recommendation is then made for the company to improve based on its compliance with GPFR, and AASB in its reporting.

The foundation of the Conceptual Framework (CF) is the objective of the General Purpose Financial Reporting (GPFR). The qualitative characteristics of useful information also forms another key element of the Conceptual Framework as reflected in OB1. OB2 delves deep into the objective, usefulness as well as the limitation of the GPFR.

The primary purpose of GPFR is the provision of financial information regarding reporting entity as outlined in OB2. Such information has to be useful to both current and potential investors, lenders as well as creditors. These stakeholders require this valuable information to make a decision relating to the provision of resources to the entity. Some of this decision relate to selling, buying, holding equity as well as debt instruments (Góis 2013). The decisions also involve the provision or settling liabilities as well as other types of credits.

The qualitative characteristics of the useful financial information acknowledges the forms of the most likely useful information to the stakeholders mentioned above thus assisting them to make decision regarding reporting entity based on the financial information as reflected in QC1. The information regarding economic phenomena and explanatory information are useful.  A useful financial information has to be relevant as well as faithfully denote what it purports to display as reflect in QC4 that requires such information to be verifiable, understandable, and timely as comparable (Majdalany and Manassian 2012). 

QC5 identifies relevance and faithful information as the key fundamental of qualitative characteristics. The relevance information as outlined in QC6-QC11 has to make a distinction in the decision arrived at by the stakeholders by being predictive in value, confirmatory value as well as both. Such information must show materiality and hence should not omit or misstate information but rather provide an entity-specific element of relevance anchored on the magnitude or nature or both of the items denoted by the information. The information has to be faithfully represented as outlined in QC12-QC16 that require that the economic phenomena has to be has to be faithfully represented for it to be useful.

Extent to which Abacus Property Group Stapled Company Annual Report meets disclosure requirements for PPE as per AASB 116

The company’s latest annual report complies with disclosure requirements for PPE as outlined in AASB 116 (par. 73-79). The company’s financial statements has the requirements of disclose as outlined in paragraph 73(a to e). For instance, the measurement bases utilized when determining the gross carrying amount, methods of depreciation as well as useful lives as well as rates of depreciation have been disclosed. The firm has also disclosed the aggregated gross carrying amount and accumulated depreciation with the impairment loses at the start and the close of the trading period. A reconciliation of the carrying amount at the start and the end of the financial period have been disclosed clearly indicating additions classified as assets as sales entailed in the disposal category and acquisitions via business mergers.

The Abacus Property Group Stapled’s annual has also complied with the requirements of paragraph 74 (a to d) by disclosing the existence as well as amounts of limited on title as well as property, plant alongside equipment vouchsafed as liability security. The contractual commitment amount for acquiring the property, equipment as well as plant has been disclosed. Paragraph 75 (a and b) by disclosing depression as recognized in loss or profit as cost component of the asset during the trading period as well as the accumulated depreciation at the close of the financial year (Shil, Das and  Pramanik 2009).

The disclosure has satisfied the relevance and faithfulness of the items represented. Abacus Property Group Stapled has represented relevant economic phenomena information that is both relevant and faithful as required by QC17 and QC18 of GPFR. The company has, therefore, represented faithful information that helps the users to make rational decisions. The firm has also complied with the QC18 requirement on the application of the fundamental qualitative characteristics. The information disclosed shows economic phenomena with the potential to be useful to the stakeholders of the reporting entity’s information. The disclosure has also complied with the enhancing qualitative characteristics as outlined in QC19.

The information has met comparability which is the qualitative characteristics enhancing the usefulness of the information disclosed by Abacus Property Group Stapled (White 2010). For example, the information has complied with comparability as outlined in QC20- QC25. The Abacus Property Group Stapled has given useful information about since it can be compared with similar information regarding other companies listed on ASX 200 with similar information regarding Abacus Property Group Stapled for another period. Therefore, it is apparent from the information represented in Abacus Property Group Stapled financial report will help the stakeholders acknowledge as well as comprehend similarities in alongside variations among items.

Extent Disclosures on PPE Satisfies the Fundamental and Enhancing Qualitative Characteristics of Useful Financial Information

The major GPFR objective is the adherence to qualitative characteristics for the provision of accurate and relevant info on performance alongside economic-resources of the organization. The general principal matter in accounting for the property, plant and equipment are the recognizing assets, determining their carrying amounts as well as depreciation charges besides impairment losses to be recognized with respect to them. The report recognizes the and initially measures the cost of an item of property, plant as well as equipment as an asset if, and only if: (a) it is likely that future economic benefits linked to the item shall flow to entity; and (b) the cost of such item is measurable reliably (Ferguson and Leech 2007).

The report excludes the cost of day-to-day servicing of the asset in the carrying amount of asset but expensed when incurred. The report measures the item of property, plant and equipment which satisfies the criteria for recognition at a cost. The cost of item of the property, plant and equipment in the report entails (a) its purchase price; including taxes and duties, less trade rebates and discounts; (b) any costs attributable directly to bringing asset to location besides condition essential for it to be capable of operating in a way intended by management; and the original estimate of cost of dismantling as well as removing items alongside restoring site on which it is located, obligation for which the entity incurs either when item is acquired or as the consequence of having utilized item in the course of a given period for purposes except to produce inventories in the course of the period.  

The tangible PPE qualifies for recognition in the report as an asset and measurement at recognition at a cost using the cost model for each class of PPE or revaluation model of each class of PPE after recognition. The carrying value of PPE class is fair value at the date of revaluation minus consequent accumulated depreciation and accumulated impairment loss. Where the revaluation increase the carrying amount of the asset, it is directly recognized in other comprehensive income as well accumulated in equity under heading of Revaluation Surplus. Where revaluation decreases carrying value of the asset, PPE is recognized in profit or loss with an exception of case of reversing the past increase of similar asset past recognized in other comprehensive income.  

Abacus Property Group Stapled disclosure on PPE has aligned to the objective of GPFR as reflected in OB1-OB21 and QC1-QC39. The firm has provided the financial information regarding it which is useful to both existing as well as potential investors, other creditors and lenders in decision-making processes relating to the provision of resources to the firm. It has disclosed useful information regarding selling, buying and holding equity as well as debt instruments (AASB, 2004). The report has complied with OB12 since it clearly shows the financial position of Abacus Property Group Stapled regarding its economic phenomena alongside the information relating to the effects of transactions as well as other events which alter Abacus Property Group Stapled’s economic phenomena (Kabalski 2009).

Conclusion

The GPFR’s objective and the qualitative characteristics of useful information has been discussed. Abacus Property Group Stapled was chosen as the company listed in ASX 200 and its latest annual report analyzed and revealed that it has complied with GPFR (OB1-OB21 and QC1 –QC39) and AASB 116 disclosure (paragraph 73-79). The company has further satisfied fundamental and enhancing qualitative characteristics of useful information. A recommendation is made for the firm to improve its reporting by stressing on verifiability, understandability as well as timelessness for useful and applicable financial information.

References

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

Ferguson, I., and Leech, J., 2007. Forest valuation and the AASB 141 accounting standard. Australian Forestry, 70(2), 125-133.

Góis, C., 2013. Financial reporting quality and corporate governance: the Portuguese companies evidence. In Proceedings of the 32nd Annual Congress European Accounting Association.

Kabalski, P., 2009. Comments on the objective of financial reporting in the proposed new conceptual framework. Eurasian Journal of Business and Economics 2009, 2 (4), 95, 111.

Majdalany, G., and Manassian, A., 2012. April). Voluntary disclosure of intellectual assets and intellectual liabilities: a literature review. In European Conference on Intellectual Capital (p. 507). Academic Conferences International Limited.

Property, Plant and Equipment AASB 116, (30 October 2009) by the staff of the Australian Accounting Standards Board.

Shil, N. C., Das, B., and  Pramanik, A. K., 2009. Harmonization of accounting standards through internationalization. International Business Research, 2(2), 194.