General Purpose Financial Reporting - Free Samples to Students

Question: Discuss about the General Purpose Financial Reporting. Answer: Introduction A large company has a large number of stakeholders who are interested in the financial information of the affairs of the company. The shareholders are owners of the company and can be thousands of lakhs in numbers for any big company. Now it will be practically impossible for the company to provide a copy of financial information of the company to each and every shareholder of the company. Thus the financial statement is made available on the internet and various other public sources. The various another stakeholder of the organization that is interested in the financial information of the company is loan providers, creditors, and investors which want to know the financial position of the company for purpose of their various needs. The financial reporting requirement does not bind the company to present every business activities of the company. The company has to give the financial data of the company which will be helpful in predicting the future of the company. Any financial inform ation that reflects change in the assets and liabilities of the company or the future existence for the company should be considered as material and reflected separately in the financial statements(Walker, 2013). Objective of general purpose financial reporting and characteristic of financial information as per CF The qualitative characteristics help in differentiating the material aspect of the financial information with the non-material aspect. It helps in identifying that which financial data is important for the users of the financial information of the company so that that should be presented in the financial reporting requirement of the Useful financial information. The qualitative aspect applies to the general purpose financial statements well as financial information presented otherwise. The various characteristics of the financial information which determines the qualitative characteristic of the financial statements are as follows : Materiality: The materiality of financial information means that its capacity to influence the decision of the user of the financial statement. Relevance: the financial information presented should be related to the need of the users of the financial statements. It should not contain information that is not relevant to the users of financial information and making financial statement unnecessary long. Comparability: the information provided in the financial statements should be in the generally accepted format so that it can be compared with the financial information of other companies. Faithful representation: the financial information should be presented with integrity and should not contain fake data which can mislead the users. Ansell Limited is a healthcare company that provides healthcare service and manufacture and sells high-quality products for protection of human beings at the workplace. Ansell Limited mainly deals in providing protection equipment for the industrial workers from the accidents that can happen at the workplace while working. Ansell Limited also conduct time to time awareness programs for educating dentists, physicians, and nurses from in different hospitals. These programs are conducted to enhance the capability of these professionals and to aware them about the various new challenges that are emerging from time to time. The criteria of the disclosure requirements for PPE are defined in the AASB 116. It requires the company to disclose the information about the Property, Plant, and Equipment. The various information that is required to be disclosed as per AASB 116 is as follows : The depreciation method used. The base for measuring the gross amount of the asset. Useful lives of the asset. The gross value of the asset and the accumulated depreciation of the asset. Reconciliation of the gross value of the asset from the beginning of the period till the end. In the annual report of the Ansell Limited for the years ending 2016, all the requirements of AASB 116 have been met by the finance departments while preparing the financial statement of the company. The useful life of the assets of different blocks has been separately mentioned in the financial statement. The depreciation method used by the company is the straight-line method. The gross carrying amount is calculated by deducting the accumulated depreciation and adjusting any impairment loss or gain from the cost of the asset at the time of purchasing the plant or Equipment. the cost incurred afterward are either included in the assets or mentioned as separate assets and then depreciated accordingly. The depreciation is charged to the useful life of the asset as per straight-line method(Ansell, 2016). The extent to which the company has meet the regulation of PPE and recommendation of improvement As per the findings mentioned in the Answer B, the Ansell Limited has met the criteria of the AASB 116 reporting requirements. The discloser that is mentioned in the AASB 116 that is required to be disclosed by the company has been reported by the Ansell Limited. The method adopted for Calculation of depreciation and the method used to determine the carrying amount of the asset have been laid down in the annual report of the Ansell Limited(Deloitte, 2010). The Fundamental Qualitative Characteristics of the Financial reporting states that the financial statement of the company should be presented with full integrity and the financial data should be relevant to the users of the financial statement. Ansell Limited has stated the information of the assets in the Annual Report of 2016 as per the Disclosures laid down in the AASB 116. The Annual report of the Ansell Limited given all the relevant calculation and financial information with full integrity. The material aspect of the company has been shown in details in notes to account for the Financial Statements. The materiality concept of the fundamental Qualitative Characteristic of the general purpose financial statement is incepted into the AASB 116. Fixed assets of the company are a very important element of the organization and can seriously affect the decision of the users of the financial statement. False information of the assets can show the different financial position of the company(Accounting, 2014). The enhancing Qualitative characteristic states that the comparability of the financial information of the company should be made easily with the financial information of the other companies. The financial statement of Ansell Limited is prepared and presented in the general format which is used by the other companies listed on the ASX. This format will make it easy for the users of the financial statement of the Ansell Limited to compare the Data with other companies. The data Ansell limited can be compared with the previous year data as the Annual report contain data of previous as well as the present year. The disclosure on the Property, Plant and Equipment that are laid down by AASB 116 provide detail reporting of the financial information about the asset of the company. Assets are an important part of any organization and help in identifying the financial position of the company by various users of the financial statement. The AASB 116 complies fully with the objective of the general purpose financial reporting. As the object behind the general purpose financial reporting is to provide the users of the financial information about the financial position of the company and its affairs. The AASB 116 provides complete information about the assets of the company in the general purpose financial statement. The useful life of the asset over which the depreciation is to be apportioned (Bradbury, 2008). Conclusion The conclusion from the above discussion can be made that the AASB 116 (Property, Plant and Equipment) provide complete information of the plant, property etc to the users of the financial statement. The basic objective of the general purpose financial statement is to give true and relevant information to the users of the financial statement. Therefore it can be assumed that the basic objective of the financial statement is achieved by the AASB in the field of assets reporting of the company. For the further improvement of the AASB 116 with the scope of the objective of the general purpose financial statement, the block of assets of the company should be showing the list of the assets that are covered in the block. The change in method of depreciation should be reported and the effect of such change in the method on the financial statement should be reported by the company. Bibliography Accounting, A. (2014). Property, Plant and Equipment. Retrieved September 18, 2017, from Compiled AASB Standard AASB 116: https://www.aasb.gov.au/admin/file/content105/c9/AASB116_07-04_COMPjun14_07-14.pdf Ansell. (2016). Annual Report 2016. Retrieved September 18, 2017, from Ansell: https://www.ansell.com/-/media/Corporate/MainWebsite/About/Investor-Center/Annual-Report-2016/Annual-Report-to-Shareholders-2016.ashx?la=en Deloitte. (2010). Conceptual Framework for Financial Reporting 2010. Retrieved September 18, 2017, from Deloitte: https://www.iasplus.com/en/standards/other/framework Walker, R. G. (2013). Objectives of Financial Reporting. Retrieved September 18, 2017, from Wiley Online Library: https://onlinelibrary.wiley.com/doi/10.1111/j.1467-6281.2003.00137.x/full Bradbury, M.E., (2008). Fifty?seven Curious Defects in Haswell and Langfield?Smith (2008): A Comment.Australian Accounting Review,18(4), pp.287-293.