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A critical analysis of CSR’s financial reporting disclosures Essay

Table of Contentss

Executive Summary

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1.Introduction

2.The Conceptual Framework for Financial Reporting

2.1.The aim of general intent of fiscal coverage

2.2.The qualitative features of utile fiscal information

3.A critical reappraisal of the revelations of Property, Plant and Equipment

3.1.The construct of the revelation of fiscal information

3.2.The revelation for PPE in CSR

3.3.The revelations of PPE and the qualitative features of utile fiscal information

4.Conclusion and recommendations

5.List of mentions

6.Appendix

Executive Summary

The primary purpose of this study was to find whether the revelation demands for Property, Plant and Equipment ( PPE ) in the latest one-year study in CSR were satisfied and whether it was qualified as utile and relevant fiscal information. At first, the object of general purpose fiscal coverage ( GPFR ) and the qualitative features of utile fiscal information were exhaustively reviewed. Then, the revelations of PPE in the fiscal statements were critically analysed based on AASB116. Under the thorough probe, it was found that the demands of the revelations of PPE in CSR were sufficiently satisfied and it was qualified as utile fiscal information, though a certain feature may non hold been included. Meanwhile, the significance that the utile fiscal statement must be qualified based on both the revelations demands by AASB116 and The Conceptual Framework for Financial Reporting by IASB were highlighted in the undertaking. Besides, a possible recommended action for an addition in the dependability of the revelation of PPE in CSR was provided.

1. Introduction

Fiscal studies are by and large prepared by entities to supply information that is important to extra users to do concern determinations. The Conceptual Framework for Financial Reporting ( CFFR ) is critically of import for the users who are trusting on the entity’s fiscal studies. Unlike Australian Accounting Standard Board ( AASB ) , CFFR may non mandatory regulations for all entities ; nevertheless, it is likely the important tool for AASB to publish accounting criterions and regulations. As an addition in the users demand for the fiscal studies that must be utile and dependable, CFFR is the rule that an entity can non disregard. In order to fulfill the demand, the aim of General Purpose of Financial Report ( GPFR ) and the qualitative features of utile fiscal information should be reviewed and applied. Meanwhile, to show the dependable and faithful representation of the fiscal studies, it is of import to analyze whether the revelation demands for Property, Plant and Equipment ( PPE ) are adequately met. This study will specify the aim of GPFR and the qualitative features of utile fiscal information. Besides, this will analyze whether the company fulfil the revelation demands for PPE based on AASB116, whether it is qualified as utile fiscal information and discuss methods to run into the standards.

2. The Conceptual Framework for Financial Reporting

2.1. The aim of general intent of fiscal coverage

The aim of general intent of fiscal coverage ( GPFR ) is to supply utile and relevant fiscal information for bing users: investors, loaners and other creditors who are trusting on the information ( IFRS Foundation 2010 ) . The users will be able to make up one’s mind whether to put, which company to corporate with, and where to sell and purchase a certain resources. While its significance, it is stated that the users can non straight require an administration to supply the fiscal studies for their peculiar demands and therefore they need to trust on GPFR ( IFRS Foundation 2010 ) . This could take an entity to be just to all bing users in markets. Besides, GPFR requires an entity to provides the information about a alteration in economic resources resulted from the past minutess and events, which helps users to measure an entity’s liquidness and solvency ( IFRS Foundation 2010 ) . The revelation of entity’s fiscal public presentation throughout periods would significantly impact on user’s fiscal determinations.

2.2. The qualitative features of utile fiscal information

In order to be qualified as utile and relevant fiscal information, there are by and large certain features that should be included in the fiscal studies. As shown the figure1 below, the features are divided into two parts ; viz. , cardinal qualitative features: relevancy and faithful representation and heightening qualitative features: comparison, verifiability, seasonableness and comprehensibility.

Figure 1: The qualitative features of utile fiscal information

Features

Description

Cardinal qualitative features

Relevance

Relevant fiscal information is relevant to do determinations.

Faithful representation

All available information is dependably represented without mistakes.

Enhancing qualitative features

Comparison

Users should be able to compare the information to its in different periods or companies.

Verifiability

The information can be represented dependably by sing economic phenomena and other fortunes.

Seasonableness

The latest information could be more utile than the older.

Comprehensibility

Clear and concise representation of information is apprehensible.

Beginning: IFRS Foundation 2010

In following subdivision, the construct of the revelation of fiscal information will be mentioned before the representation of the chief issue, which is whether the company satisfy the revelation demands for PPE based on AASB116. Above the qualitative features of utile fiscal information will besides be utilised to measure the revelation of PPE as the utile fiscal information may be needed to carry through both the revelation demands and the above features.

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3. A critical reappraisal of the revelations of Property, Plant and Equipment

3.1. The construct of the revelation of fiscal information

Before showing the rating of the revelation of PPE in CSR, it is cardinal to get the equal degree of understanding in the construct of the revelation of the fiscal information.

As mentioned earlier, fiscal information is provided by an entity to help users in doing fiscal determinations and the revelation demands could better its utility and quality. While the revelation of fiscal information is non addressed in the current CFFR discussed in old subdivision, it is provided in IASB and AASB ( IFRS Foundation 2013 ) . Disclosure is defined as ‘the procedure of supplying utile fiscal information about the coverage entity to users’ and an entity is required to supply the primary fiscal statements and the notes to the fiscal statements ( IFRS Foundation 2013, p137 ) . Fiscal statements shown in the tabular array below are required to unwrap by an entity.

Figure 2: Required fiscal statements to unwrap by an entity

The primary fiscal statements

  1. The statement of fiscal place
  2. The statement of net income or loss and the statement of comprehensive income
  3. The statement of alterations in equity
  4. The statement of hard currency flows

The notes to the fiscal statements

  1. Information about coverage entity
  2. Information about sums shown in the primary fiscal statement
  3. Information about assets and liabilities non recognised in the primary fiscal statements
  4. Information about hazards that an entity are confronting and how these are overcome
  5. Information about methods, estimations and determinations

Beginning: IFRS Foundation 2013

3.2. The revelation for PPE in CSR

The old subdivision demonstrated how of import the revelation of fiscal information to do the fiscal statements utile to users and peculiar information that should be included in the fiscal statements. This subdivision will measure the revelation of a certain country: PPE of the fiscal statements in CSR based on AASB116.

An entity is required to supply the revelation of PPE that shows a broad scope of information about an entity’s investing on touchable assets. This includes, respects as depreciation: the methods, the rates, residuary values, utile lives, the accrued depreciation sum and transporting sum: beginning and stoping sum, add-ons, acquisitions, reappraisal, impairment losingss and other alterations occurred during the period ( AASB 2013 ) .

This shall get down with to measure whether CSR unwrap adequately the depreciation method, rates, utile lives, accumulated depreciation. The method used was highlighted as ‘Depreciable assets are depreciated at rates based upon their expected economic life utilizing the straight-line method’ ( CSR Limited 2013, p. 49 ) . Besides, the utile lives: 10 to 40 old ages for edifices and 2 to 40 old ages for works and equipment and accumulated depreciation: 58.1 and 47.4 ( $ Million ) in 2013 and 2012 severally were provided in figure 3.

Figure 3: The revelation of PPE in CSR in March 31, 2013

( $ MILLION )

2013

2012

Land and edifices

At cost or written down value

359.7

417.6

Accumulated depreciation

( 58.1 )

( 47.4 )

Entire land and edifices

301.6

370.2

Plant and equipment

At cost or written down value

1281.7

1403.4

Accumulated depreciation

( 702.0 )

( 653.3 )

Entire works and equipment

579.7

750.1

Entire

881.3

1120.3

  1. The economic life over which assets are depreciated is edifices – 10 to 40 old ages ; and works and equipment – 2 to 40 old ages. The mean life of edifices is 18 old ages ; and works and equipment is 14 old ages.

Beginning: CSR Limited 2013

Following parts that shall be assessed are the presentation of the transporting sum at the beginning and the terminal of the period, add-ons, disposals sum and the net exchange differences occurred by interpreting the fiscal statements between states.

By detecting figure 4 below, it can be seen that all these required information were stated, that indicates that most of the revelation demands in paragraph 73to 76 were adequately satisfied.

AASB ( 2013 ) requires an entity to supply the information of damage losingss and the reappraisal of PPE if revalued sum is stated, which stated in paragraph 76. This could be besides satisfied as note ( * ) in the figure 4 shows the information when the write downs and damages were occurred and its cause.

Figure 4: The revelation of PPE in CSR in March 31, 2013

( $ MILLION )

Note

Land AND BUILDINGS

Plant AND EQUIPMENT

Balance at 1 April 2012

Capital outgo

Disposed

Depreciation and amortization

Write downs and impairments*

Foreign currency interlingual rendition

Reclassifications

Transferred ( to ) intangible assets

Transferred ( to ) from stock lists and other assets

Balance at 31 March 2013

370.2

0.4

( 3.4 )

( 13.1. )

( 45.5 )

2.4

( 9.4 )

301.6

750.1

50.1

( 1.9 )

( 72.6 )

( 142.9 )

0.1

( 2.4 )

( 1.5 )

0.7

579.7

Balance at 1 April 2011

385.9

748.6

Capital outgo

10.2

87.7

Disposed

( 4.0 )

( 1.7 )

Depreciation and amortization

( 13.2 )

( 71.8 )

Write downs and impairments**

( 2.0 )

( 2.3 )

Foreign currency interlingual rendition

0.4

1.7

Reclassifications

0.8

( 0.8 )

Transferred from intangible assets

0.4

Transferred ( to ) from stock lists and other assets

( 6.0 )

4.4

Assetss acquired on purchase of concern

7

1.6

Assetss disposed on sale of concerns

( 1.9 )

( 17.7 )

Balance at 31 March 2012

370.2

750.1

* Valuation of the Viridian concern ( Glass section ) as at 31 March 2013 resulted in plus write downs and damages of belongings, works and equipment of $ 184.7 million. Mention to Note 3 for farther inside informations. In add-on, write downs of $ 3.7 million of works and equipment have been recorded in the Building Products concern.

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** During the twelvemonth ended 31 March 2012, plus write downs and damages of $ 4.3 million related to site closings in the Building Products concern.

Beginning: CSR Limited 2013

3.3. The revelations of PPE and the qualitative features of utile fiscal information

As discussed in subdivision 3.1 and 3.2, it is understood that the aim of the revelation of PPE is to help users to understand an entity’s investing, their hazards and chances by supplying the information of depreciation, impairment losingss and a alteration in transporting sum during the period. Besides, it could be concluded that CSR could adequately content the demands for the revelation of PPE. To better its utility, it is rather of import to measure whether the revelation of PPE has included the qualitative features: relevancy, faithful representation, comparison, verifiability, seasonableness and comprehensibility, which were mentioned in subdivision 1.

The revelations of PPE in CSR may hold satisfied at least two cardinal qualitative features: relevancy and faithful representation and three heightening qualitative features: comparison and seasonableness and comprehensibility. First, the information is likely relevant and faithful as it is utile for users to do determinations about puting resources to an entity and it was dependably represented without mistakes. Besides, the revelation of PPE provided both the current period and the old period that could enable users to compare the entity’s public presentation throughout the periods. Furthermore, this information is up to informations and briefly written that could fulfill seasonableness and comprehensibility. However, verifiability is the characteristic that is rather hard to be assessed accurately and therefore it could non confidently be stated that it was fulfilled. Although the Numberss or measures may hold been presented without mistakes, it is about impossible for the entity to absolutely predict hereafter hard currency flows ( Maines & A ; Wahlen 2003 ) . While this is a dissatisfactory world, actions for sweetening should be taken. The revelation of the information about implicit in economic factors is considered to be important to better the dependability of accounting information ( Maines & A ; Wahlen 2003 ) . This could allow users to obtain more dependable information from the revelation of PPE for their hereafter investing due to its sweetening in transparence.

4. Decision and recommendations

This paper demonstrated the importance of certain features that should be included in the fiscal statements to supply utile and dependable fiscal information for users. This besides significantly linked to the aim of GPFR: to supply utile and relevant fiscal information for external and bing users and therefore it helps user’s to do concern determinations. Besides, this world could sufficiently recommend that the construct of the function of CFFR is to help Accounting Standard Board to put accounting criterions and regulations. Through thorough analysis on the revelations of PPE in CSR, it can be concluded that the revelation demands for PPE were sufficiently satisfied. However, since there may be the restriction in truth of supplying the information about future net hard currency flows by analyzing the current economic fortunes, at least one of qualitative features: verifiability may hold non been contented. Hence, notwithstanding the revelations of PPE in CSR is considered to be utile and dependable, the information about implicit in economic premise could be provided to heighten its verifiability.

5. List of mentions

Australian Accounting Standards Board 2012,Glossary of Defined Footings,Australian Accounting Standards Board, viewed 18 April 2014, & lt ; hypertext transfer protocol: //www.aasb.gov.au/admin/file/content102/c3/AASB_Glossary_30_September_2012.pdf & gt ;

Australian Accounting Standards Board 2013,Property, Plant and Equipment, Australian Accounting Standards Board, Melbourne.

CSR Limited 2013,CSR Limited Annual Report 2013, CSR Limited, North Ryde, viewed 18 April 2014, & lt ; hypertext transfer protocol: //www.csr.com.au/Investor-Centre-and-News/Annual-Meetings-and-Reports/Documents/CSR % 20Annual % 20Report % 2031 % 20Mar % 202013.pdf & gt ;

IFRS Foundation 2010,Conceptual Framework for Financial Reporting 2010, ISBN 978-1-907026-69-0, IFRS Foundation Publications Department, London.

IFRS Foundation 2013,A Review of the Conceptual Framework for Financial Reporting, ISBN: 978-1-909704-04-6, IFRS Foundation Publications Department, London.

Pine tree states, L, & A ; Wahlen, J 2006, ‘The Nature of Accounting Information Reliability: Inferences from Archival and Experimental Research ‘ ,Accounting Horizons, vol. 20, no. 4, pp. 399-425.

6. Appendix

Amortization

The depreciable sum of an plus that is consistently allocated over its utile life.

Transporting sum

The sum of an plus recognised after infering accrued depreciation and amortization and impairment losingss.

Cost

The sum of hard currency payment occurred when geting an plus.

Depreciation

The depreciable sum of an plus that is consistently allocated over its utile life.

foreign currency dealing

A dealing that requires transition in a foreign currency.

Impairment loss

The extra sum occurred by deducting the recoverable sum from the transporting sum.

Property, works and equipment

Tangible assets that are held for administrative intent and expected to utilize over one period.

Reappraisal

The procedure of repeating the value of assets and liabilities.

Useful life

The period of an plus that is expected to be useable.

Table 1: Variables chiefly used in the revelations of PPT

Beginning: Australian Accounting Standard Board 2012

Table 2: Abbreviations

AASB

Australian Accounting Standard Board

CFFR

Conceptual Framework for Financial Reporting

GPFR

General Purpose of Financial Report

IASB

International Accounting Standard Board

PPE

Property, Plant and Equipment

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A critical analysis of CSR's financial reporting disclosures Essay
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Table of ContentssExecutive Summary1.Introduction2.The Conceptual Framework for Financial Reporting2.1.The aim of general intent of fiscal coverage2.2.The qualitative features of utile fiscal information3.A critical reappraisal of the revelations of Property, Plant and Equipment3.1.The construct of the revelation of fiscal information3.2.The revelation for PPE in CSR3.3.The revelations of PPE and the qualitative features of u
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A critical analysis of CSR's financial reporting disclosures Essay
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