Contemporary Issues in Accounting

This report discusses about different aspects of the general purpose financial reporting of Mayne Pharma Limited (Mayne Pharma). This report sheds light on the measurement as well as recognition requirements. In addition, it discusses about both the fundamental as well as enhancing qualitative characteristics of financial reporting. Lastly, the requirements and objectives of general purpose financial reporting is also considered.

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

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Executive Summary
This report discusses about different aspects of the general purpose financial reporting of
Mayne Pharma Limited (Mayne Pharma). This report sheds light on the measurement as
well as recognition requirements. In addition, it discusses about both the fundamental as well
as enhancing qualitative characteristics of financial reporting. Lastly, the requirements and
objectives of general purpose financial reporting is also considered.

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Table of Contents
Introduction................................................................................................................................3
Measurement Requirement........................................................................................................3
Fundamental Qualitative Characteristics...................................................................................5
Enhancing Qualitative Characteristics.......................................................................................6
Use of General Purpose Financial Reports................................................................................8
Knowledge Required for Analysing the General Purpose Financial Reports..........................11
Requirements of General Purpose Financial Reporting...........................................................11
Conclusion................................................................................................................................11
References................................................................................................................................13

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Introduction
Business organizations develop the General Purpose Financial Reporting with the aim
to provide their key stakeholders with the financial information of their businesses to aid in
the decision-making process. At the time of preparing these general purpose financial reports,
the obligation on the companies is to comply with the required financial reporting standards
and principles for avoiding different financial reporting issues. In Australia, it is required for
the ASX listed companies to comply with the financial reporting standards of the Australian
Accounting Standard Board (AASB) for the preparation and presentation of the general
purpose financial reports. At the same time, it is also needed for these companies to comply
with the standards of the Conceptual Framework of AASB and the International Financial
Reporting Standards (IFRS). This report aims at the analysis of different aspects of general
purpose financial reporting of Mayne Pharma.
Measurement Requirement
The AASB puts the obligation on the ASX listed companies to comply with the
measurement as well as recognition requirements of Conceptual Framework in their financial
reporting. According to the conceptual framework of AASB, the companies are needed to
adopt between the provided measurement bases; they are Historical cost and Current Value.
Two measurement bases under current value are Fair value and Value-in-use (aasb.gov.au,
2019).
In addition, it is also obligation on the companies to comply with the recognition
criteria provided by AASB Conceptual Framework for the recognition of assets, liabilities,
equity, income and expenses. Two specific requirements need to be considered for the
recognition of assets, liabilities and others. First, there is probability that the future economic
benefit associated with the financial item will flow to or from the entity. Second, the item has

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a cost or value and it can be measured on reliable basis (aasb.gov.au, 2019). Now, it needs to
ascertain whether Mayne Pharma has complied with these measurement and recognition
criteria or not.
The 2018 Annual Report of Mayne Pharma shows the use of both historical cost and
fair value by the company (maynepharma.com, 2019). Some examples from 2018 Annual
Report is provided below:

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(Source: maynepharma.com, 2019)
It can be seen from the above information that the company has used both the fair
value and historical cost process for the measurement as well as recognition of their business
assets based on the nature and composition of those assets (maynepharma.com, 2019).
(Source: maynepharma.com, 2019)
The above information indicates towards the fact that Mayne Pharma has used
amortized cost basis for the measurement as well as recognition of their business liabilities.

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In this context, it needs to be mentioned that amortized cost is the historical cost process
(maynepharma.com, 2019). Thus, the above discussion indicates that Mayne Pharma has
complied with the measurement as well as recognition requirement of AASB Conceptual
Framework for the purpose of general purpose financial reporting.
Fundamental Qualitative Characteristics
As per the AASB conceptual framework, there are two fundamental qualitative
characteristics of financial reporting; they are Relevance and Faithful Representation.
Relevance – Relevance financial information has the capability of making a difference in the
decision-making process of the users (Barth, 2013).
Faithful Representation – In order to become useful, financial information must not only be
relevant, they must be faithfully represented (Adrian-Cosmin, 2015).
Application of these fundamental qualitative characteristics is important for the
entities and there is no exception of this for Mayne Pharma. There are three steps in the
appropriate application of these characteristics. First, the company needs to identify an
economic phenomena crucial for the decision-making process of the users such as non-
current assets of Mayne Pharma. Second, it is needed to identify the type of information
related to the non-current assets that is most relevant in case they are available and faithfully
presented such as the values, measurement process, recognition criteria, depreciation and
impairment (maynepharma.com, 2019). Third, it is needed to determine whether this
information is available and can be faithfully represented. Mayne Pharma has recorded their
non-current assets in their Consolidated Statement of Financial Position. In addition, the
company has disclosed all the relevant information about these assets in Note. 7, 13 and 14
within the Notes to the Consolidated Financial Statements. Like these non-current assets, the

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company has disclosed all the relevant information about their economic phenomena of their
financial statements (maynepharma.com, 2019).
Enhancing Qualitative Characteristics
Like fundamental qualitative characteristics, there are four enhancing qualitative
characteristics; they are Comparability, verifiability, Timeliness and Understandability. It
needs to be mentioned that these enhancing qualitative characteristics cannot make financial
information useful in case they are not relevant and faithfully represented.
Comparability – As per this characteristic, financial information is more useful to the users
when they can be compared to the similar information of the other entity or same entity’s
different timeline (Palea, 2013). In the 2018 Annual Report, Mayne Pharma has disclosed
information of the previous year so that the users can compare them to other entities or
previous year (maynepharma.com, 2019).
Verifiability – Verifiability assists the users in assuring that the financial information
faithfully represents the economic phenomena it significances to represent (Wang, 2014). It is
not possible for Mayne Pharma to provide direct verification of certain financial information.
Thus, to maintain verifiability, Mayne Pharma has disclosed all underlying assumptions for
their general purpose financial reporting in the Notes to the Consolidated Financial
Statements (maynepharma.com, 2019).
Timeliness – This characteristic implies having financial information available to the
decision-makers in time for influencing the decision-making process (Kim, Kraft and Ryan,
2013). Hence, older information is less relevant for the users. The 2018 Annual Report of
Mayne Pharma includes the current information for 2018 and 2017. In addition, Mayne
Pharma publishes their financial reports in timely manner for assisting the users in decision-
making (maynepharma.com, 2019).

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Understandability – This characteristic classifies, characterise and present the financial
information in clear and concise manner for making it understandable (Carraher and Van
Auken, 2013). Mayne Pharma has ensured the exclusion of complex financial information
from the financial statements to make them understandable to the users of the financial
statements (maynepharma.com, 2019).
Use of General Purpose Financial Reports
There are three objectives of the general purpose financial reporting; these are to
provide information about the financial position of the entities, financial performance of the
entities and cash flows of the entities useful in the decision-making process (Lawrence,
2013).

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(Source: maynepharma.com, 2019)

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(Source: maynepharma.com, 2019)

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(Source: maynepharma.com, 2019)
It can be seen from the above that Mayne Pharma has published the Consolidated
statement of profit or loss and other comprehensive income, Consolidated statement of
financial position and Consolidated statement of cash flows that provides the users with the
necessary financial information for decision-making. The first statement provided
information on the company’s financial performance, the second statement provides
information on the entity’s financial position and the last statement provides information on
the cash flows of the business (maynepharma.com, 2019).

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Knowledge Required for Analysing the General Purpose Financial Reports
It needs to be mentioned that Mayne Pharma has prepared their general purpose
financial reports in such a manner so that the users with the adequate knowledge on business
and economic activities can understand the substances in these reports (Bentley, Omer and
Sharp, 2013). However, there are certain sections in these reports that may require the help of
advisers to be understood due to the presence of certain complex economic phenomena in
them. Some of these aspects are financial instruments, hedging, derivatives and others
(maynepharma.com, 2019). Apart from these aspects, users can understand the aspects of the
financial statements of Mayne Pharma with the help of the provided justifications and
clarifications in the Notes to the Consolidated Financial Statements.
Requirements of General Purpose Financial Reporting
The key requirement of the general purpose financial reporting is to ensure the
compliance with the needed financial reporting standards and principles while preparing and
presenting these reports (May, 2013). It can be seen from the 2018 Annual Report of Mayne
Pharma that the company has complied with the standards and requirements of Corporations
Act 2001, Australian Accounting Standards and the needed pronouncements of the AASB. In
addition, the company has also complied with the principles and standards of the IFRS and
the International Accounting Standards Board (IASB) (maynepharma.com, 2019).
Conclusion
To infer, the Conceptual Framework of the AASB and IFRS has put certain key
obligations on the Australian companies to adhere to the needed guidelines and standards for
general purpose financial reporting. It can be seen from the above analysis that Mayne
Pharma has measured as well as recognized the financial substances of their general purpose
financial reporting in accordance with the measurement and recognition criteria of the AASB

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and IFRS Conceptual Framework. After that, the company has correctly applied the
fundamental qualitative characteristics by providing the necessary information about different
economic phenomena. In addition, they have also satisfied the enhancing qualitative
characteristics of financial reporting. It can also be seen from the above discussion that
Mayne Pharma has published all three required financial statements for providing the users
with the required information for the purpose of decision-making. Lastly, Mayne Pharma has
complied with the requirement of AASB, IFRS, Corporations Act 2001 and IASB to adhere
to the requirements of general purpose financial reporting.

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References
Aasb.gov.au. 2019. Conceptual Framework for Financial Reporting. [online] Available at:
https://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf [Accessed 14 Apr.
2019].
Aasb.gov.au. 2019. Definition and Recognition of the Elements of Financial Statements.
[online] Available at: https://www.aasb.gov.au/admin/file/content102/c3/SAC4_3-95.pdf
[Accessed 14 Apr. 2019].
Adrian-Cosmin, C., 2015. ACCOUNTING INFORMATION SYSTEM-QUALITATIVE
CHARACTERISTICS AND THE IMPORTANCE OF ACCOUNTING INFORMATION
AT TRADE ENTITIES. Annals of'Constantin Brancusi'University of Targu-Jiu. Economy
Series, 2(1).
Barth, M.E., 2013. Measurement in financial reporting: The need for concepts. Accounting
Horizons, 28(2), pp.331-352.
Bentley, K.A., Omer, T.C. and Sharp, N.Y., 2013. Business strategy, financial reporting
irregularities, and audit effort. Contemporary Accounting Research, 30(2), pp.780-817.
Carraher, S. and Van Auken, H., 2013. The use of financial statements for decision making
by small firms. Journal of Small Business & Entrepreneurship, 26(3), pp.323-336.
Kim, S., Kraft, P. and Ryan, S.G., 2013. Financial statement comparability and credit
risk. Review of Accounting Studies, 18(3), pp.783-823.
Lawrence, A., 2013. Individual investors and financial disclosure. Journal of Accounting and
Economics, 56(1), pp.130-147.
May, G.O., 2013. Financial accounting. Read Books Ltd.

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Maynepharma.com. 2019. [online] Available at:
https://www.maynepharma.com/media/2194/mayne-pharma-annual-report-2018.pdf
[Accessed 14 Apr. 2019]
Palea, V., 2013. IAS/IFRS and financial reporting quality: Lessons from the European
experience. China Journal of Accounting Research, 6(4), pp.247-263.
Wang, C., 2014. Accounting standards harmonization and financial statement comparability:
Evidence from transnational information transfer. Journal of Accounting Research, 52(4),
pp.955-992.