Rio Tinto's Compliance with Conceptual Framework for Financial Reporting

CONTEMPORARY ISSSUES

Contemporary Issues
Abstract
The report sheds light on the Australian listed corporation that is Rio Tinto and a detailed
critical analysis is conducted of the company’s effectiveness to adhere to the conceptual
framework. The main area of report is based on the annual report of the company wherein the
five basic elements of the conceptual framework is dealt in. various arguments are put forth
to provide a better understanding and Rio Tinto is studied in an in-depth manner. The report
initiates with an introduction followed by the five main elements and ending with a
conclusion that provides that all the elements are met by the company.
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Contemporary Issues
Contents
Introduction...........................................................................................................................................3
Satisfaction of objectives of conceptual framework..............................................................................4
Recognition criteria...............................................................................................................................4
Fundamental qualitative characteristics.................................................................................................5
Enhancing qualitative characteristics.....................................................................................................6
Conclusion.............................................................................................................................................8
Bibliography..........................................................................................................................................9
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Contemporary Issues
Introduction
The conceptual framework for financial reporting plays a key role in underlying the
presentation and preparation of financial statements for users to assist them in making
effective decisions. Decision making is vastly influenced with the help of conceptual
framework as it provides a strong foundation. Hence, it is very important to them because it
allows them to understand the limitations of financial reporting. Furthermore, in order to
adhere to the requirements of the conceptual framework, the IASB has laid down various
qualitative characteristics like materiality, relevance, reliability, etc that must be fulfilled by
every company. Furthermore, the framework also specifies a recognition criterion that must
be effectively met in order to report asset, liabilities, expenses, income, and equity in the
financial statements (Conceptual Framework, 2016). For the purpose of this report, the
annual report of Rio Tinto has been selected and it will be evaluated whether the company
has complied with the requirements of the conceptual framework.
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