Compliance of CSR Limited with Accounting Conceptual Framework

This report analyzes whether CSR Limited has complied with all the standards and requirements of accounting conceptual framework. It examines various aspects of conceptual framework such as objectives, recognition criteria, fundamental and enhancing qualitative characteristics. The report concludes that CSR Limited fully complies with the rules and regulations of AASB Conceptual framework and provides adequate and relevant financial information to its users.

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

1CONTEMPORARY ISSUES
Abstract
The main aim of this report is to examine that whether CSR Limited has complied with all the
standards and requirements of accounting conceptual framework. Different part of the report
analyze various aspects of conceptual framework that the objectives, recognition criteria,
fundamental and enhancing qualitative characteristics.

2CONTEMPORARY ISSUES
Table of Contents
Introduction......................................................................................................................................3
Objectives of Conceptual Framework.............................................................................................3
Information Need of Target Audience.............................................................................................8
Conceptual Framework Recognition Criteria..................................................................................8
Fundamental Qualitative Characteristics.......................................................................................12
Enhancing Qualitative Characteristics...........................................................................................13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

3CONTEMPORARY ISSUES
Introduction
This report takes an honest attempt to analyze and evaluate different requirement and
standards of accounting conceptual framework. It can be seen in the recent years that the
business entities are facing major issue related to the accounting and financial reporting; and
non-compliance with the required standards is the main reason behind these issues. It is the
obligation on every Australian company to follow the rules of accenting conceptual framework.
In Australia, Australian Accounting Standard Board (AASB) and International Accounting
Standard Board (IASB) have developed a conceptual framework that includes all the required
rules and regulations for financial reporting (aasb.gov.au 2018). For this report, CSR Limited is
taken into consideration. CSR Limited is a major Australian business entity involves in providing
building products for residential and commercial construction. The company is listed under top
100 companies in Australian Security Exchange (ASX) in the name of ‘CSR’ (csr.com.au 2018).
Objectives of Conceptual Framework
It needs to be mentioned that AASB conceptual framework has some major objectives for
the purpose of financial reporting of the Australian business entities. They are discussed below:
1st Objective: As per the first objective, the financial statements of the business entities must
contain information about the their different economic resources so that their financial position
can be determined (aasb.gov.au 2018).

4CONTEMPORARY ISSUES
(Source: csr.com.au 2018)
From the above table, it can be observed that CSR Limited has released the statement of
financial position that has all the required information about the economic resources of the
company like assets, liabilities and others. It is possible for the user to ascertain the financial
standing of CSR Limited from the provided information in this statement (csr.com.au 2018).
2nd Objective: Business entities must provide the financial statements containing adequate
information so that the users can determine the financial performance of the them (aasb.gov.au
2018).

5CONTEMPORARY ISSUES
(Source: csr.com.au 2018)
From the above figure, it can be seen that CSR Limited has released the statement of
financial performance in the annual report of them and this statements contain information about
revenue, gross margin, net profit and others. This information is necessary for the users in the
determination of the financial performance of CSR Limited (csr.com.au 2018).
3rd Objective: Some of the financial statements of the business entities must contain the financial
information expressing the change in the financial performance of the entities (aasb.gov.au
2018).

6CONTEMPORARY ISSUES
(Source: csr.com.au 2018)

7CONTEMPORARY ISSUES
(Source: csr.com.au 2018)
From the above figures, it can be observed that CSR Limited has released both the statements of
change in equity and the statement of cash flows along with their latest annual report that contain
major information about the change in profit, change in net debt and others. This information
helps the users in determining the change in financial performance of CSR Limited (csr.com.au
2018).

8CONTEMPORARY ISSUES
Moreover, the latest financial statement of CSR Limited states the fact that the company
complies with the principles and standards of Corporations Act 2001 and AASB to prepare and
present the financial statements. In addition, the company also follows the standards of IASB as
a guide for financial reporting (csr.com.au 2018). All these aspects prove the full compliance of
CSR Limited with the objective of conceptual framework.
Information Need of Target Audience
The target audience of general-purpose financial reporting is the users that take the helps
of different financial information for different decision-making process. These users include
investors, creditors, banks, tax authorities, government and others. From the above discussion, it
can be observed that CSR Limited provides all the necessary financial information with the help
of different financial statement. The information about economic resources and financial position
can be obtained from the statement of financial position; information about the financial
performance of CSR Limited can be obtained from the statement of financial performance; and
the information about the change in performance can be obtained from the statement of change
in equity and cash flow statements (csr.com.au 2018). Thus, based on the above discussion, it
can be said that the target audience of CSR Limited are able to get sufficient information from
the financial statements of CSR Limited.
Conceptual Framework Recognition Criteria
It is needed for the business entities of Australia to follow the provided criteria by AASB
conceptual framework for the recognition of asset, liability, equity, revenue and expense. There
is not any exception of this regulation for CSR Limited as the company is required to follows
these recognition criteria.

9CONTEMPORARY ISSUES
Asset: Property, plant and equipment is a major part of the assets of CSR Limited and CSR
Limited follows the principles of AASB 116 Property, Plant and Equipment (aasb.gov.au 2018).
They are recognized based on historical cost after the deduction of acquisition and depreciation
cost.
(Source: csr.com.au 2018)
The recognition of software is done based on cost value after including all the
development charges fair value measurement is used for the recognition of other intangible
assets (csr.com.au 2018).
(Source: csr.com.au 2018)
The recognition of goodwill is done based on fair value on the value of the acquired
assets and liabilities. For the recognition of intangible assets, CSR Limited follows the principles
of AASB 138 Intangible Assets (aasb.gov.au 2018).

10CONTEMPORARY ISSUES
(Source: csr.com.au 2018)
Trade and other receivables are recognized at fair value on the value of the acquired
assets and liabilities as per AASB 9 Financial Instruments. As per the standard of AASB 102
Inventories, inventories are recognized at net realizable value (aasb.gov.au 2018).
Liability: For the recognition of trade and other payable, CSR Limited follows the rules of
AASB 9 Financial Instruments and recognizes them at their amortized costs (aasb.gov.au 2018).
(Source: csr.com.au 2018)
CSR Limited recognizes their provision in the presence of any present obligation as a
result of any past event.
(Source: csr.com.au 2018)

11CONTEMPORARY ISSUES
As per the principles of AASB, CSR Limited recognizes the long term borrowings of the
business based on fair value, net of the transaction costs (csr.com.au 2018).
(Source: csr.com.au 2018)
Equity: In CSR Limited, the ordinary shares are recognized as the equity and they do not have
any par value and follows the standards of AASB 1004 Contributions (aasb.gov.au 2018).
(Source: csr.com.au 2018)
Revenue: In CSR Limited measures revenue from trading on the fair value of the consideration
receivable as per the rules of AASB 118 Revenue (aasb.gov.au 2018).

12CONTEMPORARY ISSUES
(Source: csr.com.au 2018)
Expenses: In CSR Limited, the expenses include interest income and other expenses are
recognized in fair value at the time of their occurrences. The recognition of current and deferred
tax is done in the statement of financial performance (csr.com.au 2018).
(Source: csr.com.au 2018)
Fundamental Qualitative Characteristics
The following discussion shows the fundamental qualitative characteristics of the
financial information of CSR Limited:
Relevance: Provided financial information of the business entities must be relevant so that they
can make difference in the decision-making process of different users (aasb.gov.au 2018). Thus,
the information must have confirmatory and predictive values. CSR Limited provides recent
financial information along with necessary notes that help the users in reaching proper decisions
(csr.com.au 2018).

13CONTEMPORARY ISSUES
Faithful Representation: At the same time, business entities are needed to faithfully present
their financial information so that there is not any error and fraud in it. It makes financial
information complete, neutral and error free (aasb.gov.au 2018). CSR Limited follows the
principles of AASB conceptual framework for the preparation and presentation of financial
statements and it supports the characteristic of faithful representation (csr.com.au 2018).
Enhancing Qualitative Characteristics
The following discussion shows the enhancing qualitative characteristics of the financial
information of CSR Limited:
Comparability: This characteristic helps the uses in the selection of correct alternatives and
assists indentifying similarities and differences between the correct financial aspects
(aasb.gov.au 2018). CSR Limited presents their financial information in such a manner so that
the users can easily compare them to the other companies (csr.com.au 2018).
Verifiability: Verifiability helps the users in reaching consensus with the application of different
knowledge and independent observation (aasb.gov.au 2018). The users can verify the provided
financial information of CSR Limited with the help of different methodologies. In addition,
faithful representation of financial information also supports this characteristic (csr.com.au
2018).
Timeliness: Timeliness helps the users in timely acquiring the required financial information of
the business entities (aasb.gov.au 2018). In case of CSR Limited, it can be seen that the company
releases their financial results and information at a specific time of the years so that the users can
become beneficial from it (csr.com.au 2018).

14CONTEMPORARY ISSUES
Understandability: Financial information can be classified, characterized and correctly
presented with the help of greater understandability (aasb.gov.au 2018). In case of CSR Limited,
the users can easily understand the financial information with the assistance of effective financial
knowledge (csr.com.au 2018).
Conclusion
Based on the above discussion, it can be said that the business entities are needed to fully
comply with the standards, regulations and principles of AASB conceptual framework in order to
avoid major accounting and financial reporting related issues. In case of CSR Limited, there is
not any significant accounting issue in the company as it fully complies with the rules and
regulations of AASB Conceptual framework. Apart from this, compliance with this requirement
helps the users of financial information in getting adequate and relevant information in order to
reach to effective financial decisions. Thus, it is recommended to all the Australian business
organizations to follow the principles of conceptual framework for smooth accounting process.

15CONTEMPORARY ISSUES
References
Aasb.gov.au. (2018). Conceptual Framework for Financial Reporting. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf [Accessed 14 Apr.
2018].
Aasb.gov.au. (2018). Conceptual Framework for Financial Reporting. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf [Accessed 14 Apr.
2018].
Aasb.gov.au. (2018). Contributions. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/AASB1004_12-07_COMPjan15_07-15.pdf
[Accessed 14 Apr. 2018].
Aasb.gov.au. (2018). Financial Instruments. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/AASB9_12-14.pdf [Accessed 14 Apr. 2018].
Aasb.gov.au. (2018). Intangible Assets. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/AASB138_08-15_COMPoct15_01-18.pdf
[Accessed 14 Apr. 2018].
Aasb.gov.au. (2018). Inventories. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/AASB102_07-15.pdf [Accessed 14 Apr.
2018].

16CONTEMPORARY ISSUES
Aasb.gov.au. (2018). Property, Plant and Equipment. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/AASB116_07-04_COMPjun14_07-14.pdf
[Accessed 14 Apr. 2018].
Aasb.gov.au. (2018). Revenue. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/AASB118_07-04_COMPmay09_01-10.pdf
[Accessed 14 Apr. 2018].
Corporate. (2018). About Us | CSR . [online] Available at: http://www.csr.com.au/about-us
[Accessed 14 Apr. 2018].
Corporate. (2018). Annual Meetings and Reports. [online] Available at:
http://www.csr.com.au/investor-relations-and-news/annual-meetings-and-reports [Accessed 14
Apr. 2018].