Accounting Standards and Practices: Annual Report Analysis Project

This report delves into the realm of accounting standards and practices, with a particular emphasis on financial reporting and the treatment of Property, Plant, and Equipment (PPE). The report begins by outlining the objectives and characteristics of financial reporting, referencing the conceptual frameworks established by the IASB. It then proceeds to a critical analysis of an annual report, specifically that of Aurizon Holdings Limited, evaluating how the company meets the disclosure requirements of AASB 116 concerning PPE. The analysis includes a review of recognition and measurement principles, depreciation methods, and revaluation techniques. Furthermore, the report critically assesses the extent to which the company's PPE practices satisfy both fundamental and enhancing qualitative characteristics of financial information, such as relevance, faithful representation, comparability, and verifiability. The discussion also covers how PPE disclosures align with the overarching purpose of financial reporting, including the presentation of assets and liabilities, and the impact of these disclosures on stakeholders' decision-making processes. The report concludes with a summary of the key findings and recommendations regarding the application of accounting standards in the context of PPE.

Accounting standards
and practices

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
a) Objectives and characteristics of FR..................................................................................1
b) Critical analysis of annual report as they meet the disclosure requirements of PPE.........2
C) Critically analyse the PPE as to what extent they are satisfying the objectives................4
d) Discuss the disclosure on PPE align with the purpose of financial reporting....................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Accounting is a statement that communicates the performance and financial aspects of
any business organisation. It is the standard for financial accounting such as how a business
entity can prepare its financial income, expenditures, assets and liabilities. It is formulated
according to the regulation set by international accounting standards board (IASB). This project
report consists of objectives of financial reporting and its uses as per conceptual frameworks for
financial reporting (Demerjian, 2011). Further, going to this project report analysis is done for
the current year annual report of a company whether they are meeting is disclosure requirements
for PPE as per AASB 116. On the basis of the analysis various recommendation has been drawn.
PART 1
a) Objectives and characteristics of FR
Financial reporting is the process which is based on conceptual model of underline
planning and display of accounting statement. IASB primary views is that main objectives of this
conceptual model is to help IASB by determining idea that it will be use regularly at the time of
revising financial reporting. IASB has determined various problems with the existing
frameworks that are discussed underneath:
 The major areas are not covered because it provides very less direction on measurement,
disclosure and the way to determine a reporting entity.
 The guidance in few areas is unclear because, the present explanation of assets and
liabilities could be reinforced.
 The IASB carried out a public reference on its program. Most respondents to that specific
consultation identified frameworks as the most important project for IASB.
Objectives
The main purpose of business reporting forms is the basic aspects of accounting
standards which are based on conceptual model of prospect of the structure streaming the
company growth. The objectives of accounting practices is to analyse the company financial
performances regarding reporting concern which are related with the current stakeholders,
impart and creditors in the decision making process.
The revnewed design sets various steps which follows as per the general standard of
recording of financial reporting. It consists of main accounting regime. On an assumption, the
current framework that data necessity of an individual demand of other shareholders up to a
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higher level. Moreover, as financial reporting cannot be intended to guide information regarding
the value of a reporting business.
Qualitative characteristics of useful financial information
The amended model separated between two types of characteristics that is important
records financial data:
 The fundamental qualitative characteristics: It refers to the applicable financial
content which is competent in decision-making are followed by the concern person. With
regard to analyse basic differences, accounting informations have an interrelated worth
and collateral values or both. The altered conceptual framework is mostly rely on
materiality as an effective components of connection. As, top management has processed
that materiality is an important aspects of financial reporting those are supported on the
quality of property of a component to that particular data is associated with.
 Enhancing qualitative characteristics: It is related with the comparison, timing,
verifiability and quality that are guided in order to increase both applicable and reliably
financial content. The major role of comparability is to enable users to determine
similarities and differences among two products. Both of them have different time
periods within a fixed set of financial statements and various reporting systems.
b) Critical analysis of annual report as they meet the disclosure requirements of PPE
Aurizon Holding limited is one of the largest rail freight operators which is operating as
public company in Australia. The annual report of this company is being analysed by using the
AASB 116 which is applicable for PPE. In accordance to Jones, (2011)the treatment for
property, plant and equipment can be valued by using AASB standard so that individual or
managers can recognised the financial transactions that are done by company during the year in
accordances with kind of investments made by the company. The major problems in financial
recording of PPE are identified through types of assets, estimation of their carrying cost and
extra charges can be cut down that is to be constituted in relation to them.
Extent of these accounting standards which are applied in accordance with the PPE take
out when the another standards required a different accounting treatment.
Some of the situation under which those above assets are valued:
Revaluation methods: If an items of property, plant and equipments is worth, the total
classes of these possession to which they belongs shall be revalued.
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Depreciation: Each part of an items of PPE with a expenditure that is important in
copulation to the whole cost of the component shall be deprecate independently.
This accounting standard is not applied to:
 The treatment of PPE which are categorised in order to sales is related with AASB 5
which linked to the non-current assets that are kept for sales and those which are not of
company use.
 The identification and activity of consideration and evaluation assets. As, per AASB 6.
 If an business concern is considering cost model for analysis of investment property that
need to be according the accounting standards which are made in that context.
According to Radebaugh, (2014) the annual report of the company the PPE analyses is
been done. It has been cleared that property, plant and equipment are increased from the last
year. It was 9,441 $m in 2014 and went up to 9,900 $m in 2015.
Recognition and measurement
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1) The land, building, plant and equipment as well as rolling stocks are under construction. The
cost which is incurred for the acquiring of assets or the fair values of other consideration that are
made by the company.
2) The future costs are enclosed in the assets as carrying cost or constituted as apart asset.
3) Depreciation and amortisation from the date of acquisition is counted from the point an asset
is realized and keep in order for utilization.
C) Critically analyse the PPE as to what extent they are satisfying the objectives
In the above mentioned qualitative characteristics of reclaimable fiscal reporting that
determine the different kind of information which are liable to be the almost effective for users in
decision making process. The accounting reporting concerns are based on the information in its
accounting statements. The qualitative features are applied equally to those information in
accordance to fiscal reports.
It is more crucial when it is applicable and correspond reliably what it intent to stand for. The
utility of fiscal data is increase if it is comparable to, empirical, well-timed and apprehensible.
From the above mentioned, disclosure requirement on PPE will be able to satisfy the
fundamental as well as enhancing qualitative characteristics in order to maintain its financial
positions.
After making proper analysis of financial statements of Aurizon Holding limited it has
been seen that relevance of and constant representation are the one of important characteristics
of using financial reporting. The property, plant and equipments are measured as valuable
decision making which is an necessary values and confirmatory or the combination of both. The
faithful representation has replaced the earlier term of reliability, as the because of lack of
knowledge about financial data of the concern business entity. According to Jones,
(2011)enhancing qualitative characteristics enables users to determine common features of
impact of PPE on the business net profitability. As, these are said to be company's primary
sources which are need to be analysed while preparing financial reporting. The verifiability is a
brand new concepts which need to be used under this designing of company framework. On the
other hand, timeliness of financial informations is quantitative aspects which are based on
accounting standard under the existing framework. The timeliness helps to assure that the data
which represent faithfully the economic aspects is need to be implemented according to the rules
which are prescribe under AASB 116. It increase the qualitative characteristics should be
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maximised to the extent which is necessary for the financial reporting. In the annual report of
the cited company the cost constrain can be kept in pervasive manner so that profitability of the
company can be determine during the year.
d) Discuss the disclosure on PPE align with the purpose of financial reporting
In its attempt to formulate a conceptual framework based on fundamental economic
aspects which are need to analyse the company's financial reporting. It is no longer said to be
evaluation of an business operations that are operated in its daily business activities. Financial
stability is a relevant and faithfully indicate the position of the company during the year. The
board famed that the subjective set out in the altered model which are not incompatible with
financial performances of the company. The IFRS framework that states that is based on going
concern assumption is an underlying taken for granted. The definition of income include both
profits and gains. It is that course of activities of an entity which is referred as verity that
includes sales, fees, interest, divided and other components (Golden and et. al., 2011 ). The
process of incorporation which is based on the balance sheet or income statements an products
that run into the account of an elements which are categorised as the items which are measured
with reliability.
An assets determine by constituted in the balance sheet of a company. It is an applicant
that the coming profitable advantages will stream to the business entity. The assets has a value or
interest that can be sounded faithfully. The plant, property and equipments of the company need
to determine by the accounting standard which are set accordance with the financial reporting.
Measurement of the elements which is distribution as financial amounts at which the components
of accounting information are to be acknowledged and reported in well manners. It will help the
company to identified the future growth chances for the company's (Financial Reporting
Defined, 2017). For the profitability entity offset the reassessment physical process or increments
against the assets are being revalued. There are extra disclosures that need for PPE in relation to
process and consideration bases those are applied at fair value of that particular assets. As per the
AASB 116 needs cost to be revalued for PPE can be calculated at the fair cost for profit
determination of the business entity.
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CONCLUSION
From the above project report it has been concluded that accounting standards are need to
be implemented in correct format so that more positive outcomes can be determine. The project
summarised with various financial framework which are based on the AASB 116. on the basis of
various information which are collected in the report is been analysed by applying various
standards. The overall analyse is based on the various disclosure related with the AASB.
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REFERENCES
Books and Journals:
Demerjian, P.R., 2011. Accounting standards and debt covenants: Has the “balance sheet
approach” led to a decline in the use of balance sheet covenants?. Journal of
Accounting and Economics. 52(2). pp.178-202.
Golden, T.W and et. al., 2011. A guide to forensic accounting investigation. John Wiley & Sons.
Jones, M. ed., 2011. Creative accounting, fraud and international accounting scandals. John
Wiley & Sons.
Mulford, C.W. and Comiskey, E.E., 2011. The financial numbers game: detecting creative
accounting practices. John Wiley & Sons.
Radebaugh, L.H., 2014. Environmental factors influencing the development of accounting
objectives, standards and practices in Peru. The international Journal of Accounting
Education and Research. Urbana. 11(1). pp.39-56.
Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and practices.
Oxford University Press, USA.
Wang, C., 2014. Accounting standards harmonization and financial statement comparability:
Evidence from transnational information transfer. Journal of Accounting Research.
52(4). pp.955-992.
Online
Financial Reporting Defined. 2017.[Online] Available through:
<http://study.com/academy/lesson/what-is-financial-reporting-purpose-statement-
examples-analysis.html> .[Accessed on 2nd October 2017].
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