Part I - Research based report
As a new accounting graduate you have recently joined the accounting department of an ASX listed company. To complete this assignment you will need to select a suitable company yourself that meets the following criteria:
- The company must be a constituent of the S&P/ASX 300 index (www.asx300list.com);
- The companycannotbe in the 'Financial' sector;
- The company must publish audited annual financial reports in English, fully complying with IFRS or AASB standards;
- The company must have a 30 June year end.
The Chief Financial Officer (CFO) approaches you with your first task. In their last meeting, the Board of Directors of your company discussed the importance of ensuring that their financial reports meet the objective of general purpose financial reporting and qualitative characteristics of useful financial information as outlined in the IASB September 2010 'Conceptual Framework for Financial Reporting' (CF). Board members are concerned about the company's reputational standing in the market relating to deviations from these objective and qualitative characteristics, specifically in the area of Property, Plant and Equipment (PPE).
Therefore, the Board decided to have a review of the relevant disclosures in the company's latest annual report pertaining to PPE and whether these disclosures are aligned with the CF's objective and qualitative characteristics.
You have been asked to undertake some research and prepare a report for presentation at the next board meeting, to be held on 1 Oct 2017. Your report must address each of the following:
a) Explain in your own words 1) who the primary users of general purpose financial reporting (GPFR) are and why they are regarded as the primary users; and 2) the qualitative characteristics of useful financial information according to The Conceptual Framework for Financial Reporting (covering OB5-OB10 and QC1-QC39).
b) Critically analyse to what extent the latest annual report of your company meets the disclosure requirements for PPE as per AASB 116.
c) Based on your findings in part b, critically analyse to what extent the disclosures on PPE satisfy the fundamental and at least two of the enhancing qualitative characteristics of useful financial information.
d) Based on your findings in part c, critically discuss to what extent the disclosures on PPE meet the information needs of primary users of general purpose financial reporting and, as a conclusion, recommend actions for improvement.