Contemporary Issues in Accounting

The paper intends to analyse the different conceptual framework aspects in the context of Aeeris Limited. The report evaluates the compliance of the organisation with the measurement needs and qualitative characteristics of the framework. It also sheds light on the reliability of the financial statements and the knowledge required for analysis.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
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1CONTEMPORARY ISSUES IN ACCOUNTING
Executive Summary:
The paper intends to analyse the different conceptual framework aspects in the context of Aeeris
Limited. The first section has evaluated the compliance of the organisation with the measurement
needs of the conceptual framework. The second section has emphasised on assessing the
conformity of the organisation to the qualitative characteristics of the framework. The next
section reflects the reliability of the financial statements of the organisation so that the users
could make sound decisions. Finally, the report has shed light on dissecting whether the users
require above the basic accounting knowledge in order to evaluate the financial reports of the
organisation.

2CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction:....................................................................................................................................3
Compliance with measurement needs of the conceptual framework:.............................................3
Compliance with the fundamental qualitative characteristics:........................................................6
Compliance with the enhancing qualitative characteristics:............................................................8
Ability of the users in using the report to undertake decisions:....................................................10
Knowledge required for company analysis:..................................................................................14
Compliance with the requirements for general purpose financial reporting:................................15
Conclusion:....................................................................................................................................15
References:....................................................................................................................................16

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Introduction:
All business organisations are needed to comply with the accounting regulations when
they carry out their financial reporting activities. In this way, it becomes possible to avoid issues
related to accounting and financial reporting in business operations. The situation is similar for
ASX listed organisations, since they require complying with the necessary guidelines of the
conceptual framework. In Australia, there is presence of conceptual framework for financial
reporting, which is provided on the part of IFRS and all organisations need to adhere to these
standards. The objective of this report is to assess the degree of adherence with various
accounting segments of the conceptual framework by Aeeris Limited, which is an ASX listed
organisation.
Compliance with measurement needs of the conceptual framework:
All organisations need to consider the measurement needs in their financial reporting
process in accordance with the conceptual framework and Aeeris Limited is needed to consider
the same as well. This framework mandates that all organisations are needed to report their assets
and liabilities by using two measurement bases, which include fair value and historical cost
(Macve 2015). The conceptual framework states that assets could be considered in the form of
resources, which are controlled by the business organisations and they form owing to the
historical events and future economic benefits. On the contrary, liabilities could be defined in the
form of current obligations for the organisations owing to historical events resulting in outflow
of resources (Aasb.gov.au 2018). Equity could be taken into account in the form of residual
interest in the assets of the organisation after all liabilities are deducted.

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Similarly, the organisations are required to consider the recognition of the components of
financial statements. The organisations need to consider two specific conditions when the
elements of the financial statements are recognised. Initially, they are required to be realised, if it
is likely that any future benefit related to the item would flow from the business organisation.
Secondly, these items require recognition, if they have a particular cost value that could be
gauged reliably (Abbott et al. 2016).
After evaluating the annual report of Aeeris Limited in 2018, the organisation has utilised
historical cost as well as fair value in order to gauge its assets and liabilities.

5CONTEMPORARY ISSUES IN ACCOUNTING
As evident from the above figures, Aeeris Limited has used fair value as well as historical
cost to gauge its assets and liabilities depending on business needs. Under the historical cost
process, the organisation has gauged its assets and liabilities in a manner, which provides
monetary information regarding income, expenses, assets and liabilities during the transaction
events (Aasb.gov.au 2018). Conversely, in fair value, the organisation has gauged some of its
assets and liabilities depending on the present value providing monetary information at the date
of measurement.
However, Aeeris Limited needs to consider other aspects as well when selecting
measurement bases. One such factor is relevance, which could be observed from the annual
report of the organisation, as it has disclosed financial information for 2017 and 2018. Moreover,
it has adhered adequately to AASB, IFRS and Corporations Act 2001, which assure faithful
representation of its disclosed financial information.

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Compliance with the fundamental qualitative characteristics:
The conceptual framework states two fundamental qualitative characteristics, which are
described briefly as follows:
Relevance:
If the provided financial information is relevant, there would be positive effect on the
users in order to undertake decisions. Therefore, it is necessary both confirmatory and predictive
values are present in financial information (Francis et al. 2015). When the predictive values are
present, the users could estimate future outcome. From the annual report of Aeeris Limited in
2018, the users could be able to estimate its future performance by analysing its financial
performance in 2017 and 218 (Aeeris.com 2018).

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Moreover, there is confirmatory value in financial information when the users have the
ability to provide feedback regarding the past accounting incidents. As observed from the annual
report of Aeeris Limited in 2018, it is possible to obtain financial information for the users for
the previous year, which is 2017.
Faithful representation:
When the financial information is faithful, the users could undertake sound decisions. For
ensuring such faithful representation, the financial information needs to be neutral, error-free and
complete (Garrett, Hoitash and Prawitt 2014). In accordance with the latest annual report of
Aeeris Limited, adequate adherence is ensured with respect to IFRS, Corporations Act 2001 and
AASB. As these aspects are complied effectively, the financial information of the organisation is
represented faithfully.

8CONTEMPORARY ISSUES IN ACCOUNTING
Compliance with the enhancing qualitative characteristics:
As per the conceptual framework, the financial information contains four enhancing
qualitative characteristics, which are discussed as follows:
Verifiability:
When this particular characteristic is present, the financial information users could use
their independent observations as well as their knowledge to arrive at a consensus (Gigler et al.
2014). Such verification could be either direct or indirect. As per the latest annual report of
Aeeris Limited, adequate disclosures have been made in the form of notes to the financial
statements. This has assisted the users in using their knowledge directly or indirectly for
verifying the accounting information of the organisation.
Comparability:
When this particular characteristic is present, it becomes easier for the users in
understanding and detecting the similarities and variations related to the various financial items
of the business organisations. As observed from the annual report Aeeris Limited in 2018, it has
disclosed all financial information for 2017 and 2018 in table formats. This has helped the users

9CONTEMPORARY ISSUES IN ACCOUNTING
in contrasting the financial information of Aeeris Limited with other similar companies and
similar timeframes of the same organisation.
Understandability:
With the help of this characteristic, it assists the organisations in categorising and
representing financial information in a concise and clear manner for better understanding of the
users (Gomariz and Ballesta 2014). The annual report of Aeeris Limited states that all needed
financial information is disclosed in a simple format. Moreover, it has provided the necessary

10CONTEMPORARY ISSUES IN ACCOUNTING
clarifications and justifications of the different accounting treatments to be disclosed in the form
of financial footnotes. These aspects have increased the understandability of the users.
Timeliness:
This characteristic assures the delivery of the needed financial information when useful
decisions are undertaken. The previous information is less effective at the time of undertaking
decisions. It could be observed that the organisation has provided required financial information
for the latest years 2017 and 2018.
Ability of the users in using the report to undertake decisions:
Before using the financial statements for undertaking decisions, it is necessary that they
need to conform to the significant objectives of conceptual framework. According to the first
objective, all ASX listed organisations are needed to deliver the users with necessary information
regarding economic resources and financial position, which could be found from the balance
sheet statements.

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The above table clearly indicates the disclosure of such information from Aeeris Limited
in its 2018 annual report as balance sheet statement.
The next conceptual framework objective needs the organisations to disclose information
regarding the changes in their financial performance and economic resources.

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The above tables clearly indicate that Aeeris Limited has disclosed financial information
associated with the financial performance as income statement and statement of change in equity
(Aeeris.com 2018).
The final objective of the conceptual framework is to disclose necessary information
associated with the cash flows of the organisations in their annual reports.

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The above table makes it evident that Aeeris Limited has provided all information
associated with their cash flows. This implies that all necessary financial information is disclosed
adequately by the organisation by publishing different financial statements. Therefore, it could
be stated that the financial statement users of Aeeris Limited could use information for
undertaking decisions.
Knowledge required for company analysis:
The conceptual framework needs the users to have basic accounting knowledge in order
to understand the financial statements of the organisations. The latest annual report of Aeeris

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Limited makes it clear that all financial information is disclosed in a simple format by adhering
to the essential guidelines and principles. Moreover, they have disclosed needed clarifications
and explanations regarding the significant items of the financial reports as financial footnotes. As
all these aspects are present in the annual report of the organisation, it is deemed to be adequate o
evaluate the financial condition of the organisation (Wahlen, Baginski and Bradshaw 2014).
Compliance with the requirements for general purpose financial reporting:
According to Nobes (2014), general purpose financial reporting includes the financial
statements throughout a particular accounting period issued by an organisation for aiding the
creditors and investors so that they could undertake sound decisions. These statements include
income statement, cash flow statement, statement of change in equity and balance sheet
statement. As evaluated, Aeeris Limited has disclosed all these statements in its annual report by
complying with the necessary accounting standards and thus, it has complied effectively with the
requirements effectively for general purpose financial reporting.
Conclusion:
The above discussion makes it apparent that Aeeris Limited has complied with the
necessary measurement needs in accordance with the conceptual framework. Moreover, it has
been analysed that the organisation has adhered appropriately to the all qualitative characteristics
of the framework in its financial reporting process. Finally, it has disclosed the necessary
financial information by publishing different financial statements, which have assisted the users
to use the same for undertaking decisions.

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References:
Aasb.gov.au., 2018. [online] Available at:
https://www.aasb.gov.au/admin/file/content102/c3/SAC2_8-90_2001V.pdf [Accessed 5 Dec.
2018].
Aasb.gov.au., 2018. Conceptual Framework for Financial Reporting. [online] Available at:
https://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf [Accessed 5 Dec.
2018].
Abbott, L.J., Daugherty, B., Parker, S. and Peters, G.F., 2016. Internal audit quality and financial
reporting quality: The joint importance of independence and competence. Journal of Accounting
Research, 54(1), pp.3-40.
Aeeris.com., 2018. aeeris - annual reports. [online] Available at: http://www.aeeris.com/annual-
reports.html [Accessed 5 Dec. 2018].
Aeeris.com., 2018. aeeris - Our Story. [online] Available at: http://www.aeeris.com/about-
us.html [Accessed 5 Dec. 2018].
Francis, B., Hasan, I., Park, J.C. and Wu, Q., 2015. Gender differences in financial reporting
decision making: Evidence from accounting conservatism. Contemporary Accounting
Research, 32(3), pp.1285-1318.
Garrett, J., Hoitash, R. and Prawitt, D.F., 2014. Trust and financial reporting quality. Journal of
Accounting Research, 52(5), pp.1087-1125.

17CONTEMPORARY ISSUES IN ACCOUNTING
Gigler, F., Kanodia, C., Sapra, H. and Venugopalan, R., 2014. How frequent financial reporting
can cause managerial short‐termism: An analysis of the costs and benefits of increasing reporting
frequency. Journal of Accounting Research, 52(2), pp.357-387.
Gomariz, M.F.C. and Ballesta, J.P.S., 2014. Financial reporting quality, debt maturity and
investment efficiency. Journal of Banking & Finance, 40, pp.494-506.
Macve, R., 2015. A Conceptual Framework for Financial Accounting and Reporting: Vision,
Tool, Or Threat?. Routledge.
Nobes, C., 2014. International classification of financial reporting. Routledge.
Wahlen, J., Baginski, S. and Bradshaw, M., 2014. Financial reporting, financial statement
analysis and valuation. Nelson Education.