Contemporary Issues in Accounting: Analysis of AASB Conceptual Framework and Compliance of Cleanaway Waste Management Limited

This report analyzes the standards and principles of AASB conceptual framework and the compliance of Cleanaway Waste Management Limited. It covers recognition criteria, fundamental and enhancing qualitative characteristics, and more.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
Name of the Student
Name of the University
Author’s Note

1CONTEMPORARY ISSUES IN ACCOUNTING
Abstract
The aim of this report involves in the thorough analysis of the standards and principles of AASB
conceptual framework and Cleanaway Waste Management Limited is selected for the report.
Cleanaway Waste Management Limited follows all the principles and standards of the
conceptual framework of AASB and also follows Corporations Act 2001, IASB and IFRS
standards.

2CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction......................................................................................................................................3
Conceptual Framework Objectives..................................................................................................3
Recognition Criteria.........................................................................................................................9
Fundamental Qualitative Characteristics.......................................................................................13
Enhancing Qualitative Characteristics...........................................................................................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................17

3CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
In the business world of twenty-first centuries, business organizations all over the world
have been successful in registering impressive progress in gaining higher profitability and
business growth. Due to the presence of complex business operations, business entities have
been exposed to various kinds of issue related to their business operations. Accounting Issues
considered as one of them. There are many categories of accounting issues that the companies
are facing and many factors work behind the development of these accounting issues. In the
recent years, it has been seen that the non-compliance with the required accounting standards and
regulations is one of the major reasons for accounting issues. It is highly required for the
business entities all over the world to comply with the required financial standards and principles
and it is also the obligation on the Australian Security Exchange (ASX) listed companies to do
so. In Australia, all the required standards and rules of financial reporting can be found in the
Australian Accounting Standard Board (AASB) Conceptual Framework. It needs to be
mentioned that AASB has developed the accounting conceptual framework with the assistance of
International Accounting Standard Board (IASB) and all the ASX listed entities need to follow
these regulations (aasb.gov.au 2018). The aim of this report involves in the thorough analysis of
the standards and principles of AASB conceptual framework. For this report, Cleanaway Waste
Management Limited is considered due to the inclusion of the company in ASX
(cleanaway.com.au 2018).
Conceptual Framework Objectives
The above discussion indicates towards the obligation of the ASX listed companies to
comply with the standards and principles of conceptual framework of AASB. It needs to be

4CONTEMPORARY ISSUES IN ACCOUNTING
mentioned that AASB has certain objectives behind the introduction of accounting conceptual
framework for the Australian business entities. They are mentioned below:
For the determination of the current financial health of the business entities, the users of
financial information require information about the economic resources of the entities and these
resources are current assets, non-current assets, different liabilities and equity. For this reason,
AASB conceptual framework aims to deliver the financial statements containing information
about the above-mentioned resources for the determination of financial position (aasb.gov.au
2018).
In order to ascertain the financial performance of the companies, users need information
about the major financial factors like revenue, profit level, expenses and others for effective
decision-making. For this reason, it is the objective of the conceptual framework of AASB to
deliver the above-mentioned information (aasb.gov.au 2018).
For the purpose of effective decision-making, users need financial information helps
them in determining the change in financial performance of the organizations. It provides the
users with better understanding about the financial situation of the companies. Thus, the third
objective of AASB conceptual framework is to give change in financial position related
information to the users (aasb.gov.au 2018).
The following analysis shows the compliance of Cleanaway Waste Management Limited
with the above-discussed objectives of AASB conceptual framework:

5CONTEMPORARY ISSUES IN ACCOUNTING
(Source: cleanaway.com.au 2018)
As per the above figure, Cleanaway Waste Management Limited has released the
consolidated balance sheet with 2017 Annual Report. Information related to the financial
resources of the company can be seen in the above statements that can help the users in
determining the financial standing of the entity (cleanaway.com.au 2018).

6CONTEMPORARY ISSUES IN ACCOUNTING
(Source: cleanaway.com.au 2018)
(Source: cleanaway.com.au 2018)

7CONTEMPORARY ISSUES IN ACCOUNTING
As per the above figures, Cleanaway Waste Management Limited has released the
consolidated income statement and consolidated statement of comprehensive income in 2017
Annual Report. The users can get the necessary information about aspects like revenue, income,
expenses, profit and others from these statements and can determine the financial performance of
the company for better decision-making (cleanaway.com.au 2018).
(Source: cleanaway.com.au 2018)

8CONTEMPORARY ISSUES IN ACCOUNTING
(Source: cleanaway.com.au 2018)
As per the above figure, Cleanaway Waste Management Limited has published the
consolidated statement of change in equity and the consolidated statement of cash flow in the
2017 Annual report. The users can obtain information about the change in profit, sales and other
from these statements and can judge the financial performance of the company over the years
(cleanaway.com.au 2018).

9CONTEMPORARY ISSUES IN ACCOUNTING
The analysis of the 2017 Annual Report of Cleanaway Waste Management Limited
indicates towards the compliance of the company with the standards of Australian Accounting
Standards, AASB conceptual framework and Corporations Act 2001 for the preparation and
presentation of financial statements. In addition, it also shows the compliance of the company
with the standards of International Financial Reporting Standards (IFRS) and IASB for financial
reporting (cleanaway.com.au 2018). Moreover, the financial statements of Cleanaway Waste
Management Limited show various notes supporting the accounting treatments of different
factors. Thus, based on the above discussion, it can be said that Cleanaway Waste Management
Limited develops their financial statements by complying with all the objectives of AASB
conceptual framework (cleanaway.com.au 2018).
Recognition Criteria
Along with the above-discussed objectives, the conceptual framework of AASB has
provided some guidelines or criteria for the recognition of some of the major financial aspects;
they are assets, liabilities, equity, revenue and expenses (aasb.gov.au 2018). These are known as
AASB recognition criteria and all the ASX listed companies have the obligation to follow these
criteria for the recognition process. In this context, two major aspects need to be mentioned. The
management of the companies are needed to consider the information related with the important
financial aspects in the recognition process. After the consideration of all the important
information, it is needed for the business entities to ensure that all the financial information is
faithfully represented (aasb.gov.au 2018).
The following discussion shows the compliance of Cleanaway Waste Management
Limited with the above-discussed recognition criteria of AASB conceptual framework:

10CONTEMPORARY ISSUES IN ACCOUNTING
Assets: Cleanaway Waste Management Limited has different kinds of assets. Plant and
equipment is a major asset of the company and they are recognized in cost value after deducting
accumulated depreciation and impairment as per AASB 116. In addition, the landfill assets are
also recognized in the fait value basis (aasb.gov.au 2018).
(Source: cleanaway.com.au 2018)
Cleanaway Waste Management Limited recognizes goodwill on the basis of fair value
and the goodwill of the company is subject to amortization as per AASB 138 (aasb.gov.au 2018).
(Source: cleanaway.com.au 2018)
As per AASB 9, Cleanaway Waste Management Limited recognizes the trade and other
receivables on ongoing basis and they are measured at fair value. The settlement period of trade
receivable is 30 days (aasb.gov.au 2018).

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(Source: cleanaway.com.au 2018)
According to the standards of AASB 102, Cleanaway Waste Management Limited
recognizes their inventories at lower cost and net realizable value. In this process, the company
considers all the relevant costs involved with inventory (aasb.gov.au 2018).
(Source: cleanaway.com.au 2018)
Liabilities: Trade and other payable is a major liability for Cleanaway Waste Management
Limited and the company recognizes them as liability for goods and services provided. Their
payment is done within 45 days of the recognition as per AASB 9 (aasb.gov.au 2018).
(Source: cleanaway.com.au 2018)
In Cleanaway Waste Management Limited, borrowings is considered as another major
liability and the company recognizes them based on fair value after considering the cost of issue
(aasb.gov.au 2018).

12CONTEMPORARY ISSUES IN ACCOUNTING
(Source: cleanaway.com.au 2018)
The company recognizes their provision in the consolidated balance sheet when the
company has preset legal obligation due to any past event (aasb.gov.au 2018).
(Source: cleanaway.com.au 2018)
Equity: For the recognition of issued and paid capital, Cleanaway Waste Management Limited
use fair value measurement technique of the consideration received. In this process, the company
considers all the costs directly attributed towards the issue of shares as per AASB 1004
(aasb.gov.au 2018).
(Source: cleanaway.com.au 2018)
Revenue: According to the standard of AASB 118, Cleanaway Waste Management Limited
recognizes the amount considered as revenue based on fair value method on the consideration
received (aasb.gov.au 2018).

13CONTEMPORARY ISSUES IN ACCOUNTING
(Source: cleanaway.com.au 2018)
Thus, from the discussion, one aspect is clear that Cleanaway Waste Management
Limited follows the recognition criteria of AASB conceptual framework for the recognition of
their major financial aspects and it shows the full compliance with the AASB recognition
criteria.
Fundamental Qualitative Characteristics
Fundamental qualitative characteristics of financial reporting are another major
dimension of the conceptual framework of AASB for effective financial reporting. The inclusion
of these two fundamental qualitative characteristics provides usefulness in the financial
statements so that it can assist the uses in decision-making process. Relevance and Faithful
Representation are the two characteristics (Kulikova Grigoryeva and Gubaidullina 2014). In the
presence of relevance characteristic in the process of financial reporting, the users can get major
assist in the decision-making process. Apart from this, the presence of faithful representation
characteristic ensures that all the financial information is presented in the correct manner
(Bohušová 2014).
The presence of both of these characteristics can be seen in the financial reporting of
Cleanaway Waste Management Limited. The latest annual report of Cleanaway Waste
Management Limited contains the relevant statements like statement of financial position,

14CONTEMPORARY ISSUES IN ACCOUNTING
statements of profit and loss and others that contain all the relevant financial information able to
create positive effect on the decision-making process (cleanaway.com.au 2018).
(Source: cleanaway.com.au 2018)
According to the above statement, the auditors of Cleanaway Waste Management
Limited provided the opinion that all the financial statements of the company has been developed
and presented as per the standards of Australian Accounting Standard, AASB, IASB, IFRS and
Corporations Act 2001. Thus, it can be said that all the financial information is provided in
faithful basis (cleanaway.com.au 2018).
Enhancing Qualitative Characteristics
There are four enhancing qualitative characteristics of AASB conceptual framework that
help in the enhancement of the quality of financial statements for the ASX listed companies.

15CONTEMPORARY ISSUES IN ACCOUNTING
These characteristics are Comparability, Verifiability, Timeliness and Understandability
(Gebhardt, Mora and Wagenhofer 2014). Users of financial information can identify the
similarities and differences in the financial aspects in the presence of comparability (Yurisandi
and Puspitasari 2015). Users of financial information can verify the provided financial
information with the help of knowledge application (Sytnik 2014). The characteristic of
timeliness helps in the delivery of financial information to the users in the correct time (Nobes
and Stadler 2015). The characteristics of understandability helps to make the financial
statements user-friendly by providing understandability.
Comparability and verifiability has a positive connection with faithful representation.
Faithful representation helps Cleanaway Waste Management Limited to comply with the
standards of AASB conceptual framework. This faithful representation leads to the comparability
and verifiability of the financial statements of Cleanaway Waste Management Limited
(cleanaway.com.au 2018). Cleanaway Waste Management Limited releases their financial results
through financial statements at a particular time of the financial years so that the users can use
this information at the right time. Moreover, users of the financial information can easily
understand the provided financial information of Cleanaway Waste Management Limited in the
presence of reasonable financial knowledge (cleanaway.com.au 2018).
Conclusion
From the above discussion, it can be seen that Cleanaway Waste Management Limited
follows all the principles and standards of the conceptual framework of AASB. In addition, the
company also follows Corporations Act 2001, IASB and IFRS standards. Fair value accounting
is used for the measurement of the major financial aspects. For all these reasons, there is not any

16CONTEMPORARY ISSUES IN ACCOUNTING
significant accounting issue in the financial reporting of Cleanaway Waste Management Limited.
Thus, based on the above discussion, it can be concluded that the companies can avoid the
significant accounting issues by complying with all the required accounting standards.
Based on the discussion, some recommendations are provide below:
 It is highly recommended to all the ASX listed business entities to fulfil the recognition
criteria of AASB conceptual framework supported by IASB for the recognition of major
financial items.
 It is also recommended to the companies that they needs to achieve the conceptual
framework objectives by complying with the standards of AASB.
 On the overall basis, the companies are required follow the rules and regulations of
AASB, Corporations Act 2001, IFRS, and IASB for financial reporting.

17CONTEMPORARY ISSUES IN ACCOUNTING
References
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2018].

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[Accessed 16 Apr. 2018].
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