1ST Group Limited Financial Report: Conceptual Framework Analysis

This assignment provides an analysis of 1ST Group Limited's annual report, focusing on its compliance with the IASB's conceptual framework for financial reporting. The report examines whether the company adheres to the measurement requirements, fundamental qualitative characteristics (relevance, faithful representation), and enhancing qualitative characteristics (comparability, verifiability, timeliness, and understandability) of the framework. It also assesses the usability of the financial reports for investors and other stakeholders, considering whether users require more than a basic knowledge of accounting to understand the company's financial position. Furthermore, the assignment reviews the directors' and auditors' reports, highlighting their roles in ensuring the accuracy and reliability of the financial statements. The analysis concludes that the company generally adheres to the guidelines and principles of the conceptual framework, contributing to the understandability and reliability of its financial reporting. Desklib provides access to this and other solved assignments for student learning.

Accounting Assignment

Name of the Student:
Date: 8th Dec, 2018
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Executive Summary
The following assignment deals with the importance of conceptual framework and how it plays
an important role in the preparation of the financial statements of the company. It helps in
making the preparation of the financial statements easy and more user friendly so that they can
analyze the statements and take decisions based on the same. The annual report of a selected
company has been downloaded and analyzed to make sure whether they have followed the basic
principles with relation to conceptual framework and what are the ways in which they can
improve the same. A brief analysis has been presented below.
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Table of Contents
Executive Summary................................................................................................... 2
Introduction................................................................................................................ 3
Analysis...................................................................................................................... 4
Requirements of the Conceptual Framework of the company.......................................................4
Enhancing Qualitative Characteristics................................................................................... 6
Directors Report.............................................................................................................. 8
Auditors Report............................................................................................................... 9
Conclusion and Recommendations..................................................................................... 10
References................................................................................................................... 11
Introduction
The company that has been selected is 1ST group limited - Health Care Equipment &
Services providing company is where the doctors and the patients connect with each other on a
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common portal. It aims to reduce the gap between the doctors and the patients and make sure that
people have health services easily available. In this assignment the annual report of the company
has been downloaded to make a statement whether the company has followed the guidelines in
the preparation of the statements and how friendly it is to the users of the company and on what
grounds do they need to improve (Abdullah & Said, 2017). The conceptual framework of
preparation of the financial statements that has been presented by the IASB aims to improve how
companies all around the world are preparing their statements and enhance and includes certain
characteristics like timeliness, reliability, validity etc. All this helps the users in understanding
that the financial statements are free from all kinds of errors and understanding that analyzes is
based on the same. The conceptual framework also aims to improve the concept of comparability
by ascertaining that there in uniformity among the companies based on which they are preparing
their financial statements (Boghossian, 2017).
Analysis
Requirements of the Conceptual Framework of the company
The annual statements of the company have been analyzed to see what methods are based on
which they are preparing the assets and liabilities of the companies and presenting the same.
They need to see that valuation is done on correct methods so that the correct financial position
of the company is presented and there are no errors in the same. It can be seen that IASB has
presented the various guidelines that companies need to follow and the management needs to
have proper knowledge about that so that they can apply it (Charles H, et al., 2015). In case of
1ST group limited they have prepared the financial statements based on the guidelines that were
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presented to them as per the conceptual framework. It has been clearly mentioned what methods
of valuation has been used and what are the areas in which the users need to focus more. All of
these have been presented in the annual reports of the company in the notes to accounts of the
company. An extract from the annual report of the company has been presented below to
showcase this point very clearly-
The fundamental qualitative characteristics of the conceptual framework which includes
relevance and faithful representation. It is important that the information that is presented in the
annual report of the company should be relevant and should be related to the period during which
the report has been provided for. It is also important that information should be faithfully
represented and there should be no errors and frauds on part of the company. This is the main
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basis based on which the conceptual framework has been prepared by the authorities and thus
that would be helpful to the users as they will have that guarantee that the financial statements
are free from all kind of errors. In case there is any threat to the materiality level in case of the
company then that should also be properly highlighted by the management of the company in the
annual report of the company. The auditors should also do the same (Coate & Mitschow, 2017).
Enhancing Qualitative Characteristics
The various qualitative characteristics includes-
Comparability
It is important that data should be presented in such a manner that it can be easily compared with
the information of the other companies. Conceptual framework helps in making sure that there is
uniformity between the financial statements of the companies around the world so that helps in
comparing the results accordingly. Thus, that is useful to the users also as they can compare the
competitors and take decisions accordingly.
Verifiability
It is important that the financial statements of the company should be free from all kind of errors,
and there should not be any mistakes and fraud on part of the management. The management
should make sure that they need to prepare the statements in such a manner that is free from
errors and in case they are making that assumptions they should state the same in their notes to
accounts. All significant accounting policies and accounting methods must be stated properly in
case of all items that have material relevance (Cundill, et al., 2017). An extract from the annual
report of the company has been given below-
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Timeliness
It is important that information should be related to the period during which the financial
statements have been presented. It should be related to the current period, in case there are
certain events that are affecting material levels of the company then should be clearly stated in
the annual reports of the company. So, we see that information should be time related and should
be prepared on such basis that it showcases the true position of the company and its financials
related to that period (Johan, 2018).
Understandability
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The financial statements should be such that there are easily understandable, the users are not
having high advanced knowledge about the accounting policies. They only have basic
knowledge, so it is important that financial statements should be easy to understand and should
not include any kind of errors and mistakes. The language used should be clear, it should not be
vague, and it must be user friendly and that should be the aim of the company preparing such
statements (Webster, 2017).
Based on all this it can be said that the financial statements have been prepared based on the
principles of fundamental framework. They have applied all the guidelines and principles that
they need to follow (Kaufmann, 2017). It aims to make the user experience very simple and
better decisions can be taken based on the same. So, we see that conceptual framework is a very
important change that the IASB has tried to bring in preparation of the financial statements and
thus that makes it better for all the companies of the world. And in case of this company also
same has been followed (Wellmer, 2018).
Directors Report
The directors give a declaration that they have prepared their statements as per the rules of the
conceptual framework and, they have stated that the statements have been prepared as per the
Australian Accounting Standards and the Corporations Regulations 2001. They have stated that
the statements give a true and fair view of the company financials. The director has also stated
that there are reasonable grounds to believe that the company would be able to pay of their debts.
So, this can give a clarity to the users accordingly (Kusolpalalert, 2018). The company has
followed the same and proper clarity has been given in this case also. An extract from the
director’s declaration has been given below-
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Auditors Report
The auditors are given the responsibility to manage the financials of the company and make a
comment on the validation of the same. They review the annual reports and state whether the
books of the company are free from all kind of errors and mistakes. The auditors have stated that
the books of the company are free from all kind of errors and, they have given a clear report on
the same (Ruth, 2018). The users can refer to the audit report of the company and take decisions
whether they want to invest in the company or not. An extract from the annual report of the
company has been stated below-\
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Conclusion and Recommendations
Based on the overall analysis it can be said that financial statement of the company is free from
all kind of errors. The conceptual framework has made the financial statements easy to
understand for the users. It has also helped in making the directors more responsible. In case they
fail then they can be held liable for the same. The conceptual framework aims to attain
uniformity between the accounts of the companies all around the world. In the given case it can
be seen that the company was able to abide with all the guidelines and principles.
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References
Abdullah, W. & Said, R., 2017. Religious, Educational Background and Corporate
Crime Tolerance by Accounting Professionals. State-of-the-Art Theories and
Empirical Evidence, pp. 129-149.
Boghossian, P., 2017. The Socratic method, defeasibility, and doxastic
responsibility. Educational Philosophy and Theory, 50(3), pp. 244-253.
Charles H, C., Giovanna, M., Dennis M, P. & Robin W, R., 2015. CSR disclosure: the
more things change…?. Accounting, Auditing & Accountability Journal, 28(1), pp. 14-
35.
Coate, C. & Mitschow, M., 2017. Luca Pacioli and the Role of Accounting and
Business: Early Lessons in Social Responsibility. s.l.:s.n.
Cundill, G., Smart, P. & Wilson, H., 2017. Non‐financial Shareholder Activism: A
Process Model for Influencing Corporate Environmental and Social Performance.
International Journal of Management Reviews, 20(2), pp. 606-626.
Johan, S., 2018. The Relationship Between Economic Value Added, Market Value
Added And Return On Cost Of Capital In Measuring Corporate Performance. Jurnal
Manajemen Bisnis dan Kewirausahaan, 3(1).
Kaufmann, W., 2017. The Problem of Regulatory Unreasonableness. First ed. New
York: Routledge.
Kusolpalalert, A., 2018. The relationships of financial assets in financial markets
during recovery period and financial crisis. AU Journal of Management, 11(1).
Ruth, W., 2018. 'Worrying': Companies' reporting of climate risks goes 'backwards'.
The Sydney Morning hearld, 20 September.
Webster, T., 2017. Successful Ethical Decision-Making Practices from the
Professional Accountants' Perspective. ProQuest Dissertations Publishing.
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