Qualitative Features of IFRS Financial Statements, Australian Government Decision, FASB Regulation, Revaluation of Property, Plant and Equipment

Running head: ADVANCED FINANCIAL ACCOUNTING
Advanced Financial Accounting
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1ADVANCED FINANCIAL ACCOUNTING
Table of Contents
Part A:..............................................................................................................................................2
Part B:..............................................................................................................................................4
Part C:..............................................................................................................................................6
Part D:..............................................................................................................................................8
Requirement a:.............................................................................................................................8
Requirement b:.............................................................................................................................8
Requirement c:.............................................................................................................................9
References:....................................................................................................................................10

2ADVANCED FINANCIAL ACCOUNTING
Part A:
According to the provided information, the financial statements prepared in accordance
with IFRS do not provide information for developing insight of the financial condition of the
business entities despite the fact that they have incurred huge amount of money in enhancing
financial reporting. Thus, it is crucial for the corporate entities to have all the necessary
qualitative features in their financial statements for increasing the total value of financial
information for users such as creditors, investors, lenders and others. The conceptual framework
laid down in AASB states the fundamental qualitative features include faithful representation and
relevance, while the enhancing qualitative features are verifiability, comparability,
understandability and timeliness (Beatty and Liao 2014). This discussion would provide a
thorough insight of the qualitative features, which are not present within the adopted financial
statements of IFRS.
As opined by the Former Head of Finance of AXA, Mr. Roberts Geoff, the fund
managers and financial analysts did not raise concerns associated with the adjustments of the
financial statements for obtaining accurate financial image of the organisations, which are
prepared based on the IFRS standard. Hence, they have not encountered any issues to contrast
the financial statements of the various organisations while obtaining insight regarding the
financial standing of such organisations. All the essential evidences are mentioned in these
aspects that the IFRS financial statements have the essential qualitative features of
understandability and comparability. As a result, the value of financial information of the
organisations is increased due to the presence of understandability and comparability. However,
it has been observed in the recent years that the IFRS financial statements do not provide clear

3ADVANCED FINANCIAL ACCOUNTING
understanding and scope of contrast of such statements. This clearly lays out the fact that both
comparability and understandability are seem to be lacking in the IFRS financial reporting
framework (Bushman 2014).
It could be further validated by the statement of Terry Brown, the Finance Director of
Wesfarmers, that financial notes could not be interpreted properly, if the financial analysts aim to
describe them when they possess needed technical knowledge regarding the IFRS standard.
Verifiability is an important qualitative characteristic of financial reporting, which enables in
improving the quality of financial reporting by providing extent to the users of applying their
observations and financial knowledge to understand the financial positions of the organisations.
The financial notes need to be assessed carefully, since this is a vital aspect for the users to
obtain overview regarding the financial standing of the enterprises. It has been found that the
users often fail to assess the information represented in the financial notes due to lack of
technical knowledge, which is needed for the IFRS financial statements. This indicates that the
IFRS financial reporting framework does not contain understandability and verifiability (Callen
2015).
David Craig, the Chief Financial Officer of Commonwealth Bank, opines that adequate
significance is not provided to the financial statements by the investors prepared under IFRS
because these statements could mislead the investors regarding financial position and financial
performance of the corporate enterprises. Relevance and faithful representation should be present
in the financial information of the companies in order to develop positive influence on the user
investment decisions. The users could not obtain overview of the financial position of the
organisations, if these two features are absent. Due to this reason, the entities are required to
assure the fact that both these features should be present within the disclosed financial