Contemporary Issues in Accounting - Analysis of Qube Ltd's Financial Statements

This assessment analyzes Qube Ltd's financial statements to identify whether they are prepared as per the conceptual framework of a business and assesses the qualitative characteristics of the annual reports presented by the management.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
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Executive Summary
The main purpose of this assessment is to analyze the financial statements of Qube Ltd in order
to identify whether the financial reports are prepared as per the conceptual framework of a
business. The report will also be assessing the qualitative characteristics of the annual reports
which are presented by the management of Qube ltd. The framework will also be analyzing the
whether the financial information which is presented is relevant or not. The annual report will be
analyzed whether the same has information which can help the users in order to take investment
decisions of the business.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Objectives of Conceptual Framework.........................................................................................3
Recognition Criteria for Financial Statements............................................................................7
Qualitative Characteristics of Financial Statement....................................................................11
Conclusion.....................................................................................................................................13
Reference.......................................................................................................................................14

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Introduction
The role of accounting has been widening over the years and the significance of
appropriate reporting framework is more necessary than ever before. The conceptual framework
is a reporting framework which a business uses for the purpose of reporting financial information
to the users. The conceptual framework of a business allows a company to ensure that the
financial information of the business are properly classified and summarized in the annual
reports of the business. The reporting framework requires companies to adhere to relevant
accounting standards and legislations which are applicable to the business (Manes Rossi,
Aversano and Christiaens 2014). The conceptual framework of a business also covers the
disclosure requirements which are necessary so that the investors are able to understand the
various treatments of items which are shown in the books of accounts. In addition to this, the
disclosures also explain the reasons and shows breakup for the calculations which is shown in
the financial statements. Therefore, the management of the company should also adhere to
disclosure requirements as per the conceptual framework of the business.
The company which is selected for analyzing the conceptual framework is Qube
Holdings ltd. The company is engaged in the business of logistics and infrastructure development
in Australia and the company was established in 2010. The company is listed in Australian Stock
Exchange and therefore needs to follow all regulations of the business (Qube.com.au. 2018).
Discussion
Objectives of Conceptual Framework
The conceptual framework of an accounting process is mainly associated with the
framework which is followed by the business for reporting of financial information and also

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includes use of accounting standards, principles and other relevant legislations (Weil, Schipper
and Francis 2013). The main objectives of conceptual framework which can be identified are
listed below in details:
 The main objective of conceptual framework is to ensure that the annual reports which
are prepared by the business is presentable and following all relevant standards of
accounting which is applicable to the business. The annual reports which is prepared by
the management of Qube ltd is in compliance with the relevant accounting standards and
the framework which consist of statement of profit and loss, Balance sheet, cash flow
statement is effectively presented.
 The conceptual framework also ensures that the financial statements which are prepared
by the business includes important financial information which can be used by the users
of the financial statements in the process of decision-making regarding investments of the
business (O'Connor 2013). The availability of all significant information is ensured by
the presence of notes to account section of annual report which is shown.

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 The conceptual framework is also important for the purpose of showing all the assets,
liabilities, equity of the business which is shown in the balance sheet of the business.
The balance sheet which is shown for Qube ltd for the year 2017 is fairly presented
showing all assets and liabilities of the business (Smith 2017).

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Recognition Criteria for Financial Statements
The recognition criteria require businesses to recognition items which are of significant
importance to the users of the financial statements (Stice and Stice 2013). The items which are to
be recognized in the annual reports are expenses, income, assets, liabilities and equity of the
business. The recognition for each item is shown below:
 Assets: The assets of a business are shown in the balance sheet of the company which
is shown in the case of Qube ltd. The assets comprise of assets which are of short
term nature as well as assets which are of long-term nature which are also known as
current assets and non-current assets of the business. The assets are used by the
management to generate revenues and profits for the business. The assets of Qube ltd
is shown in the notes to account section as shown below:

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 Liabilities: The liabilities of the business are also portrayed in the balance sheet of
the business. The liabilities section of balance sheet of Qube ltd shows deferred tax
liability which is shown in the extract below:

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The deferred tax assets and liabilities of the business are shown in the above picture
which is portrayed in the notes to accounts section of the annual reports. The management of
Qube ltd has also shown provisions in the balance sheet regarding expenses of the company.
 Equity: The equity of the business shows contributed capital of the business, retained
earnings and reserves of the business. This contributed capital forms a major part of
the equity of the business.

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 Revenue: The revenue of the business refers to the income which is generated by the
business from operating activities of the business and also other activities of the
business (Bovens 2014). The main source of revenue of the business is from core
activities of the business.

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 Expenses: The expenses of the business are shown in the profit and loss account
which is formulated by the business. The expenses are mainly associated with
operating activities of the business.
Qualitative Characteristics of Financial Statement
The qualitative characteristics of the financial statements refers to the characteristics
which should be present in the financial statements in order to ensure that all relevant
information and the quality of information of the financial statements are appropriate. The
qualitative characteristics of financial statements are classified into two types which are
fundamental qualitative characteristics and enhancing qualitative characteristics. The
characteristics are discussed below in details:
1. Relevance: As per this principle, the financial statements should include information
which have some relevance to the users of the financial statement in the overall decision-
making process. The business of Qube ltd is listed in Australian stock exchange and
therefore, it follows all the rules and regulations which are applicable to the company. In
addition to this, from the annual reports of the company for the year 2017, it is clear that
the business follows Australian accounting standards which are issued (Nobes and
Stadler 2015). This shows that the information which are portrayed in the annual reports
of the company are relevant in nature.
2. Faithful Representation: The principle makes it clear that in order for the users to have
full belief of the information contained in the annual reports, the information should be
fairly represented showing true and fair view. The faithful representation principle can be
verified by the auditor of the company in the audit report. As per the audit report of Qube
ltd which is shown in the annual report 2017 shows that the auditor of the company is

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PwC Australia. The opinion of the auditor is that the financial statements are showing
true and fair view of the financial information.
3. Comparability: This principle states that the financial information which is portrayed in
the annual reports of the company should be capable be being analyzed in a comparative
manner. The data should be maintained in such a way that comparison is made possible
for past year’s company performance as well current year with other companies (Barth
2013). The financial information which is shown in the financial statements are easily
comparable from previous year’s results which is along shown along side the current
year’s performance in the annual report of the company.
4. Verifiability: This principle forms a part of the enhancing qualitative characteristics of
the financial statements. The principle states that the information which is presented in
the financial statements should be such that the same is easily verifiable by the users of
the annual reports of the business (Hasan, Abdullah and Hossain 2014).
5. Understandability: The main focus of a annual report is to inform the stakeholders and
potential shareholders about the overall performance of the business for which
understanding the information presented is an important criteria. The principle states that
the information must be interpretable by the users so that important decisions can be
taken easily by them.
6. Timeliness: Another principle which is considered to be important for an annual report is
that the same should be prepared in a timely manner so that the users are able to take
important decisions regarding investments considering the annual reports of the business.
The annual report for the business is prepared and published on a yearly basis.

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Conclusion
The above discussion makes it clear that the management of Qube ltd has followed the
conceptual framework and reported all the necessary items which should be present in the annual
reports of the business. The fundamental and enhancing characteristics which are present in the
financial statement is effectively followed by the business. The relevance of information which
are presented in the annual reports of Qube ltd are significant as the company follows the
relevant accounting standards and also the relevant disclosures requirements which are specified
by the conceptual framework.
Therefore, it can be said that the information which are shown in the annual reports of the
company are in compliance with the conceptual framework of reporting and the company has
effectively recorded each and every transaction which can help the users of the financial
accounts in taking appropriate decisions regarding whether to invest or not in the business.

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Reference
Barth, M.E., 2013. Measurement in financial reporting: The need for concepts. Accounting
Horizons, 28(2), pp.331-352.
Bovens, M., 2014. Two Concepts of Accountability: Accountability as a Virtue and as a
Mechanism. In Accountability and European Governance (pp. 28-49). Routledge.
Hasan, M., Abdullah, S.N. and Hossain, S.Z.H., 2014. Qualitative characteristics of financial
reporting. The Pakistan Accountant, 50(1), pp.23-31.
Manes Rossi, F., Aversano, N. and Christiaens, J., 2014. IPSASB’s conceptual framework:
Coherence with accounting systems in European public administrations. International Journal of
Public Administration, 37(8), pp.456-465.
Nobes, C.W. and Stadler, C., 2015. The qualitative characteristics of financial information, and
managers’ accounting decisions: evidence from IFRS policy changes. Accounting and Business
Research, 45(5), pp.572-601.
O'Connor, A., 2013. A conceptual framework for entrepreneurship education policy: Meeting
government and economic purposes. Journal of Business Venturing, 28(4), pp.546-563.
Qube.com.au. 2018. [online] Available at:
http://qube.com.au/wp-content/uploads/2018/01/2017_Annual_Report_and_Notice_of_AGM.pd
f [Accessed 13 Aug. 2018].
Smith, M., 2017. Research methods in accounting. Sage.
Stice, E.K. and Stice, J.D., 2013. Intermediate accounting. Cengage Learning.

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Weil, R.L., Schipper, K. and Francis, J., 2013. Financial accounting: an introduction to
concepts, methods and uses. Cengage Learning.