ACC303 Contemporary Issues: GWA Group & AASB Framework Analysis

This report analyzes GWA Group Limited's adherence to the AASB conceptual framework, examining the objectives of general-purpose financial reporting, recognition criteria for assets, liabilities, equity, revenue, and expenses, and the qualitative characteristics of financial reporting. The analysis reveals that GWA Group Limited generally conforms to the AASB framework in its financial reporting practices, providing necessary information to investors and users for evaluating the organization's financial condition. The report recommends continued adherence to AASB guidelines to avoid accounting issues in the future. Desklib provides a platform for students to access similar solved assignments and past papers.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
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1CONTEMPORARY ISSUES IN ACCOUNTING
Executive Summary:
The current report is intended to analyse the various aspects, which are mentioned in the
AASB conceptual framework from the perspective of GWA Group Limited. From the analysis
conducted, it has been found that the organisation has adhered to all the required principles and
regulations of the conceptual framework of AASB for formulating and representing their
financial statements, as the organisation intends to provide the investors with all needed
information. The reason is to assist them in evaluating the financial condition of the organisation.

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Table of Contents
1. Introduction:................................................................................................................................3
2. Objectives of General Purpose Financial Reporting:..................................................................3
3. Recognition criteria:....................................................................................................................9
4. Qualitative characteristics of financial reporting:......................................................................15
5. Conclusion and recommendations:............................................................................................16
References:....................................................................................................................................18

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1. Introduction:
In this report, possible efforts are made in order to analyse the conformance of one of the
Australian organisations in relation to the different aspects associated with the conceptual
framework. Therefore, for meeting the purpose of this assignment, GWA Group Limited has
been chosen as the Australian organisations, which sells household products for its consumers
and it is listed on the “Australian Stock Exchange” in May 1993 (GWA Group Limited, 2018).
This report covers three significant aspects. The first segment would focus on the evaluation of
the conceptual framework objectives from the perspective of GWA Group Limited. The second
segment would highlight the analysis of certain criteria for recognition, which are stated in the
conceptual framework pertaining to various financial aspects. The last segment of the report
would concentrate on assessing the qualitative characteristics of conceptual framework for GWA
Group Limited. Finally, the report would shed light on providing some recommendations for the
concerned organisation based on the overall findings.
2. Objectives of General Purpose Financial Reporting:
The “Australian Accounting Standards Board (AASB)” has announced the needed
framework for the organisations operating in Australia and they are required to abide by the
certain rules laid out in the framework. The conceptual framework of AASB has a group of
objectives that the organisations should abide by in their financial reporting processes, which are
enumerated briefly as follows:
Objective 1:

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The business organisations have the responsibility of disclosing all necessary
information, which would help the investors and other related users to gain an overview of the
existing financial performance and position. Due to this reason, it is mandatory for these
organisations to disclose all information regarding their financial resources that include
liabilities, assets and others (Cheng, et al., 2014). In accordance with the latest annual report of
GWA Group Limited in 2017, it could be found that the organisation has published its balance
sheet statement containing all necessary information regarding its organisational resources. This
information is beneficial to the investors as well as other related users to gain an insight of the
current financial condition of the organisation. The statement is illustrated briefly as follows:

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Table 1: Balance sheet statement of GWA Group Limited for 2016 and 2017
(Source: Gwagroup.com.au, 2018)
Objective 2:
The conceptual framework of AASB states that all business organisations are responsible
to disclose all the needed information for assisting the investors as well other users in
determining their overall financial performance. This aspect has increased the responsibility of

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the organisations in disclosing all information associated with income, revenue, profit and
expenses (Henderson, et al., 2015). This is evident from the annual report of GWA Group
Limited in 2017, as it is observed to disclose all information associated with its financial
performance by publishing the comprehensive income statement depicted as follows:
Table 2: Comprehensive income statement of GWA Group Limited for 2016 and 2017
(Source: Gwagroup.com.au, 2018)

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Objective 3:
All the Australian entities are obliged to reflect any change in financial performance and
cash position in their financial statements, as a part of the guiding principles of the AASB
conceptual framework (Aasb.gov.au, 2018). After evaluation of the annual report of GWA
Group Limited in 2017, it has been found that all required information has been released in order
to judge the changes in financial performance by publishing the statement of changes in equity
and cash flow statement. These statements are represented in the form of tables as follows;

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Table 3: Statement of changes in equity of GWA Group Limited for 2016 and 2017
(Source: Gwagroup.com.au, 2018)
Table 4: Cash flow statement of GWA Group Limited for 2016 and 2017
(Source: Gwagroup.com.au, 2018)
Based on the above evaluation, there are wider evidences regarding the disclosure of all
necessary information from the end of GWA Group Limited. The intention is to assist the
various financial statement users including the investors in analysing the actual financial

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performance, financial position and any change in performance in accordance with the objectives
of the conceptual framework.
3. Recognition criteria:
All the business organisations have to conduct suitable recognition of few significant
financial aspects, which constitute of assets, liabilities, revenues, expenses and equity (Jin, Shan
and Taylor, 2015). The conceptual framework of AASB has various criteria, which GWA Group
Limited needs to abide while realising the financial aspects and they are represented as follows:
Assets:
In accordance with the conceptual framework of AASB, GWA Group Limited is needed
to conform to the norms of “AASB 116 Property, Plant and Equipment” under “Section 334 of
the Corporations Act 2001” for realising its property, plant and equipment (Macve 2015). GWA
Group Limited realises its property, plant and equipment in its balance sheet statement by
deducting impairment losses and accumulated depreciation from cost. For computing
accumulated depreciation, it uses straight line method. The inventories are realised by adhering
to “AASB 102 Inventories” and they are disclosed at either net realisable value or cost,
whichever is lower.

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Table 5: Accounting treatment of property, plant and equipment of GWA Group Limited
(Source: Gwagroup.com.au, 2018)
Table 6: Accounting treatment of inventory of GWA Group Limited

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(Source: Gwagroup.com.au, 2018)
Along with this, GWA Group Limited needs to adhere to “AASB 138 Intangible Assets”
for realising intangible business assets and it gauges its intangible assets at cost.
Liability:
One of the fundamental guiding principles of AASB conceptual framework for any
business organisation is to comply with “AASB 132 Presentation of Financial Instruments” in
order to realise interest-bearing bonds (Newberry 2015). In accordance with the annual report of
GWA Group Limited in 2017, the organisation realises its interest-bearing financial instruments
at notional value. Moreover, it needs to conform to AASB 16 Leases and it realises leases in the
form of expense in relation to operating leases. In order to realise provisions, GWA Group
Limited needs to adhere to the guidelines laid down in “AASB 137 Provisions, Contingent
Assets and Contingent Liabilities”. The organisation realises its provisions at present legal or
constructive obligation because of any past events. These recognitions could be illustrated as
follows:
Table 7: Recognition of interest bearing financial instruments of GWA Group Limited