Accounting Standards and Practice

This document discusses the application of professional judgement in accounting policies and the measurement of Property, Plant and Equipment (PPE) for FY2019. It critically evaluates whether the professional judgement applied in accounting estimates and policies of PPE is appropriate and reflects the qualitative characteristics of the Conceptual Framework. The document also compares the accounting practices of CSR Limited with its competitor, Boral Limited.

Running head: ACCOUNTING STANDARDS AND PRACTICE
Accounting Standards and Practice
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Table of Contents
Executive Summary:..................................................................................................................2
a) Discussing how professional judgement is applied to the accounting policies and the uses
to measure Property, Plant and Equipment (PPE) for FY2019:.................................................2
b) Critically evaluating and discussing whether the professional judgment applied in
accounting estimates and policies of PPE:.................................................................................4
c) Critically evaluating and discussing whether the policies of PPE reflects the qualitative
characteristics of Conceptual Framework:.................................................................................5
References and Bibliography:....................................................................................................8
Appendix:...................................................................................................................................9
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Executive Summary:
The overall assessment aims in evaluating the accounting policies of CSR Limited for
the financial period of 2019. The relevant information of Property, Plant and Equipment
(PPE) for FY2019 has been evaluated for determining the accounting policies that have been
used for finalising the financial report of the organisation. The further analysis has been
conducted for detecting the level fairness in the judgement that has been deployed by the
professional of CSR Limited, while applying the relevant accounting policies for their PPE.
Lastly, critical evaluation has been conducted for determining whether the accounting
policies are in lieu with the Conceptual Framework that is used by the organisation, while
preparing their financial report.
a) Discussing how professional judgement is applied to the accounting policies and the
uses to measure Property, Plant and Equipment (PPE) for FY2019:
The financial report of CSR Limited during 2019 has been prepared in accordance
with the relevant accounting policies that has been estimated for measuring its Property, Plant
and Equipment. In addition, the organisation has depicted in the annual report the relevant
information regarding the Recognition and measurement of Property, Plant and Equipment.
Figure 1: Recognition and measurement used by CSR Limited
(Source: Csr.com.au 2019)
The above figure provides information regarding the recognition and measurement of
Property, Plant and Equipment, which has been evaluated for understanding fair value of the
asset. In addition, the evaluation would essentially help in determining the judgment of the
expert made for the organisation, while supporting all the accounting policies. Schaltegger
and Burritt (2017) indicated that with the help of accounting polices companies are able to
determine the fair value of their assets, which can be depicted in their financial report.
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The professional judgments applied by the organisation directly helps in formulating
the Property, Plant and Equipment, which formulate the measures that has been conducted for
detecting the actual fixed assets of the organisation. The professional judgment that is
associated with Property, Plant and Equipment is the detection of depreciation, impairment,
and type of assets used in the PPE. The analysis of the annual report of CSR Ltd has mainly
indicated that the organisation has used the professional judgement, where adequate discloser
is conduct on accounting amortization/depreciation, accounting measurement and
depreciation used for their PPE.
The relevant Judgment/Estimation has been conducted regarding the asset impairment
of CSR ltd, which helps in determining the overall impairment cost. The judgement mainly
allows the group to test the property, plant and equipment for detecting the levels of
impairments, as it ensures that it is not carried above the recoverable amounts. The judgment
followed by the organisation is limited to the following conditions
 at least annually for goodwill and trade names with indefinite lives; and
 where there is an indication that the assets may be impaired (which is assessed at least
each reporting date).
Therefore, the organisation is using AASB 136 Impairment of Assets to determine the
correct value of Building Products and Glass segment. Moreover, the deprecation years of 10
to 40 years have been used for plant and equipment conditions, as it helps in portraying the
correct financial strength of their assets in the annual report. Thus, CSR does not depreciate
Land, goodwill and trade names, as their values tends to change over the period of time.
Therefore, the depreciation levels between 10 to 40 years would ensure that the cost of
depreciation is smoothly spread out to reduce the impact on their profitability conditions.
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b) Critically evaluating and discussing whether the professional judgment applied in
accounting estimates and policies of PPE:
Figure 2: Recognition and measurement used by Boral Limited
(Source: Boral.com 2019)
The information in the above figure mainly indicates about the recognition and
measurement that have been used by Boral Limited, who is one of the competitors of CSR
Limited, as it falls under the same industry. The professional judgement that is estimated and
assumed in Boral is fairly similar with the judgment made in CSR Ltd. The depreciation
method of the Boral Ltd has a percentage ranging from 1-33.3%, while CSR had a
deprecation rate ranging from 10% to 40%, which is higher than the competitor. In addition,
Boral Ltd conducts the impairment expense on yearly basis to ensures that the cost is not
carried above the recoverable amounts.
The Property, plant and equipment conditions of Boral Limited is similar to the
measures that have been taken by CSR Limited in their financial report. the treatment of the
fair value is adequately conducted by the professional of Boral Limited, where the assets are
valued at cost of the asset, minus accumulated depreciation and impairment losses. Therefore,
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it could be understood that the measures that was taken by CSR limited for analysing their
Property, plant and equipment in their financial report is appropriate and is in accordance
with the accounting policies that are used by different companies. In addition, the subsequent
costs in relation to replacing property, plant and equipment are capitalised, where carrying
amount of the item is probable for future economic benefits that can be measured reliably.
Therefore, the treatment of the replacement cost that is conducted by Boral is similar to the
CSR limited, which indicates that the professional has taken similar actions, while treating
their assets in the financial report. The annual report.
c) Critically evaluating and discussing whether the policies of PPE reflects the
qualitative characteristics of Conceptual Framework:
Figure 3: Conceptual framework
(Source: Ifrs.org 2019)
The above figure provides information regarding the recognition and derecognition of
assets that can be sued by the organisation for determining the accurate level of financial
performance. The Conceptual Framework mainly indicates that the organisation needs to
realise and recognise the asses that is being purchased for supporting the relevant operations.
The conceptual framework indicates that faithful presentation needs to be conducted for the
company financial assets in the annual report for depicting the accurate financial conditions
of an organisation. Drew and Dollery (2015) indicated that with the help of faithful
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representation the organisation is mainly able to determine the accurate financial position of
the company.
The analysis of the CSR Limited’s annual report has mainly stated that about the
relevant measures that have been taken into consideration by the professionals while
preparing the annual report. The annual report of CSR Limited adequately supports the
measures that have been listed in the Conceptual frame work, where appropriate information
regarding the Property, Plant and Equipment has been displayed in the annual report. The
presentation of the annual report directly states adequate assumption regarding the
recognition of Property, Plant and Equipment, as an appropriate asset. The company has
appropriately presented the faithful representation of their Property, Plant and Equipment by
utilising the historical cost method. The company also utilises the measures indicated by the
conceptual framework, which directly states that the accounting estimates and policies of
Property, Plant and Equipment reflects the qualitative characteristics of financial information
according to the Conceptual Framework (Lamb, Erskine and Fletcher 2015).
Figure 2: Property, Plant and Equipment by CSR Limited
(Source: Csr.com.au 2019)
The information in the above figure states about the Depreciation and impairment
expenses that have been incurred by the company in 2019. The evaluation has indicted that
Depreciation – continuing operations has declined from 6.23 million in 2018 to 57.7 million
in 2019, which was supported by the reduction in Depreciation - discontinued operations
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from 14.1 million in 2018 to 10.8 million in 2019. The overall depreciation and amortization
value of Property, Plant and Equipment has mainly declined from 1086.4 in 2018 to 937.8 in
2019. The calculation has stated about the decline in Impairments - continuing operations,
which increased from 1.7 million in 2018 to 6.2 million in 2019. In the similar process, the
impairments - discontinued operations only occurred in 2019 with a total cost of 26.7 million.
The AASB 136 Impairment of Assets has been used by the organisation for detecting the
impairment losses that incurred from their assets.
Therefore, the accounting professional of CSR Limited have appropriately followed
the Conceptual Framework while depicting the faithful representation of the assets by
utilising the depreciation and historical cost method system. Therefore, CSR Limited has
improved the level of clarity in valuing their Property, Plant and Equipment in the financial
report, where all the relevant transactions have been used for detecting the correct valuation
in their financial report. CSR limited has used the disclosure level of AASB standards for
depicting about their financial performance.
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References and Bibliography:
Boral.com. 2019. [online] Available at:
https://www.boral.com/sites/corporate/files/media/field_document/Boral-Annual-Report-
2018.pdf [Accessed 12 Sep. 2019].
Camfferman, K. and Zeff, S.A., 2015. Aiming for global accounting standards: the
International Accounting Standards Board, 2001-2011. Oxford University Press, USA.
Csr.com.au. 2019. [online] Available at:
https://www.csr.com.au/-/media/corporate/files/annual-reports/2019_csr_annual_report.pdf
[Accessed 12 Sep. 2019].
Drew, J. and Dollery, B., 2015. Inconsistent depreciation practice and public policymaking:
Local government reform in New South Wales. Australian Accounting Review, 25(1), pp.28-
37.
Ifrs.org. 2019. [online] Available at: https://www.ifrs.org/-/media/project/conceptual-
framework/fact-sheet-project-summary-and-feedback-statement/conceptual-framework-
project-summary.pdf [Accessed 12 Sep. 2019].
Lamb, D., Erskine, P.D. and Fletcher, A., 2015. Widening gap between expectations and
practice in A ustralian minesite rehabilitation. Ecological Management & Restoration, 16(3),
pp.186-195.
Rana, T., Hoque, Z. and Jacobs, K., 2019. Public sector reform implications for performance
measurement and risk management practice: insights from Australia. Public Money &
Management, 39(1), pp.37-45.
Schaltegger, S. and Burritt, R., 2017. Contemporary environmental accounting: issues,
concepts and practice. Routledge.
Sugahara, S. and Watty, K., 2016. Global convergence of accounting education: An
exploratory study of the perceptions of accounting academics in Australia and Japan. Asian
Review of Accounting, 24(3), pp.254-273.
Van Akkeren, J., Buckby, S. and Tarr, J.A., 2016. Forensic accounting: Professional
regulation of a multi-disciplinary field. Australian Business Law Review, 44, pp.204-2015.
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Appendix:
PPE of CSR Ltd:
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PPE of Boral Ltd:
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