Contemporary Issues in Accounting: A Report on Ausdrill Ltd

This report provides a comprehensive analysis of contemporary accounting issues within Ausdrill Ltd, an Australian mining company. It examines the company's financial reporting framework, focusing on the objectives of the conceptual framework and its application in preparing financial stat...Read More

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
Name of the Student:
Name of the University:
Author’s Note:

1
CONTEMPORARY ISSUES IN ACCOUNTING
Executive Summary
The assessment focuses on critically analysing the reporting framework which is used by the
considered company which has its primary operations in Australia. The chosen company for this
assessment is Ausdrill Ltd which has its mining operations in Australia. The report would be
focusing on different components which are included in the financial reports which is prepared
so as to ensure that the same is consistent with the generally accepted framework of reporting.
The reporting and recognising criteria for the business would be given focus in the assessment.
The report would be ending with recommendations for the business.

2
CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction......................................................................................................................................3
Discussions......................................................................................................................................3
Objectives of Conceptual Framework.........................................................................................3
Recognition Criteria.....................................................................................................................7
Fundamental Qualitative Characteristics.....................................................................................8
Enhancing Qualitative Characteristics.........................................................................................8
Conclusion and Recommendations..................................................................................................9
Reference.......................................................................................................................................11
Introduction

3
CONTEMPORARY ISSUES IN ACCOUNTING
The idea of conceptual framework relates to a guideline which needs to be followed by
every finance expert who are users or are engaged in preparation of the financial statements. The
conceptual framework was introduced so that a level of consistency can be brought about in
accounting practices around the world. The most logical application of the framework is to
prepare the financial statement in a manner which can be easily understood by the users
providing them with accurate information and the same can also be consistent with accounting
practices around the world (Cheng et al. 2014). This framework is supported by accounting
standards, principles, conventions and rules which needs to be followed by entities for
formulating the financial statements (Wang 2014).
The company which is considered for the assessment is Ausdrill Ltd which is considered
to be a important company in the mining sector operating in Australia. In a more specific
analysis, it can be said that the core activities of the company include integrated mining activities
and energy services. The operations of the company is widespread and is currently known to
have operations in 10 countries with more than 4000 employees working for the company
(Ausdrill.com.au. 2019). The company is further looking for more expansion opportunities.
Discussions
Objectives of Conceptual Framework
The objectives of Conceptual framework which can be identified from the perspective of
accounting and also business is listed below in details:
 The conceptual framework acts a guide to not only the management of the company
while preparing the financial statements but also for the users of the financial statements
so that they can understand all relevant information which is prepared in the annual
report. The conceptual framework guides companies to provide appropriate disclosures

4
CONTEMPORARY ISSUES IN ACCOUNTING
and ensure a level of simplicity is maintained. The purpose behind maintaining simplicity
and focusing on disclosure is to ensure that even a non-user can easily depict the financial
performance of the business for the period. In the case of Ausdrill Ltd, the company is
listed in ASX which means that the company is likely to follow all rules and regulations
relating to accounting and its disclosures (Henderson et al. 2015). The financial
statements are prepared using a format which is widely used by companies around the
world for reporting.
 Another objective which can be identified in respect of conceptual framework is to
identify the cash flow situation of the business. The reporting for the cash flows also
requires appropriate identification of the source from where the cash inflows are
generated. Considering the annual report of Ausdrill ltd, the management of the company
has effectively reported the cash inflows for the business as well as the cash outflows
which is related to the business. The annual report of the company shows that the
business has divested a diamond business and also sold certain plant and machinery from
the business which totaled $ 3.3 million. This shows that the cash flow statement which is
prepared by the management is showing all the relevant details regarding the business.

5
CONTEMPORARY ISSUES IN ACCOUNTING
Figure 1: (Statement showing Cash flow for Ausdrill Ltd)
Source: (Ausdrill.com.au. 2019).
1. The conceptual framework also provides a framework to the management of the company
for appropriately presenting the assets, liabilities and the income and expenses of the
company. This also means that the conceptual framework helps the users to get a clear
picture of the financial position of the business. The business of Ausdrill ltd has

6
CONTEMPORARY ISSUES IN ACCOUNTING
appropriated shown the profits which the business generates during the period along with
other revenue which is generated by the business during the period.
Figure 2: (Income Statement of Ausdrill Ltd)
Source: (Ausdrill.com.au. 2019).
The conceptual framework provides a means to the organizations to present the financial
statements in a systematic manner and maintain a level of accuracy in reporting of financial
items. The framework also promotes simplicity and clarity of information which is the main
reason the framework is used widely for reporting.

7
CONTEMPORARY ISSUES IN ACCOUNTING
Recognition Criteria
The recognition criteria effectively provide instructions as to how certain items can be
presented in the annual reports. In Australia, the accounting standards are issued by Australian
Accounting Standard Board (AASB) which clarifies regarding all the treatments and disclosures
which needs to be provided (Flower 2018). The different items which are reporting in the
financial statements are discussed below in details:
 Assets: The assets form important component of the annual reports and represents the
items which are used by the business for the purpose of generating revenue and profits
for the business. The assets of a business are segregated on the basis of usage which is
either they are short term or long-term assets depending upon the period of use. The
balance sheet of Ausdrill ltd shows current assets which comprises of cash balances, trade
debtors and closing stock value of the business. The non-current assets of the business
consist of assets which are more of fixed nature.
 Liabilities: Similarly, to the assets, the liabilities of a business are also segregated in
terms of long term and short-term liability (Weil, Schipper and Francis 2013). The
current liabilities and non-current liabilities of Ausdrill ltd are appropriately presented
and segregated in the annual reports which is shown by the business for the period.
 Income: The income of the business is shown in the income statement and the main
source of income for the company is from the mining products which is generated or the
service which is provided.
 Expenses: The income statement also consists of expenses of the business and some of
the expenses which is represented in the annual report of 2018 are majorly cash items
with some exceptions as well.

8
CONTEMPORARY ISSUES IN ACCOUNTING
 Equity: Retained earnings form a major part of the equity of the business which is formed
by accumulating profits and the same can be used for the purpose of reinvestment. The
business also utilizes equity capital for meeting the capital fund requirements of the
business and the same is appropriately presented in the annual reports.
Fundamental Qualitative Characteristics
The analysis of the qualitative components from the annual report of Ausdrill ltd are
explained below:
 Relevance: The principle of relevance makes its clear that the information which is to be
included in the annual report should be clear and should be relevant to the operations of
the business. In the case of Ausdrill ltd, the management has followed AASB standards
for which disclosures are also provided which makes the information relevant and
accurate. In addition to this, proper disclosures are also provided by the business.
 Faithful representation: The information which is presented in the annual report should
be accurate as it is to be noted that banks provides financial assistance after analyzing
such information and shareholders also invests their funds after the analysis (Simnett and
Huggins 2015). The audit report makes it clear that the financial statements are accurate
which means that this condition is also met by the management.
Enhancing Qualitative Characteristics
 Comparability: This principle requires the financial information which is presented in the
annual report should be comparable with other periods financial estimates. The
management of Ausdrill ltd has presented previous year results and current years result as
per the format which makes it easier to make comparisons.

9
CONTEMPORARY ISSUES IN ACCOUNTING
 Verifiability: The information which is presented in the financial statement should be
verifiable by different users. This is done so that accuracy and further check can be
imposed on the financial reports which is prepared by the management. The notes to
accounts serves as an important medium for verifying the dinner,
 Timeliness: The principle states that the financial information should be presented by the
company in a suitable time so that the same ate useful for the investors. The financial
reports are presented at the end of year but interims reports can be published on quarterly
basis.
 Understandability: The information and the disclosures included in the annual reports
should be interpreted by everyone. This principle emphasizes on use if simple
presentations and not jargons for explain different disclosures (Leuz and Wysocki 2016).
The information which contained needs to be interpreted by the users so that appropriate
decisions can be taken.
Conclusion and Recommendations
The above discussion makes it cleat that the management of Ausdrill ltd effectively
follows the reporting framework and all the information which is presented in the annual reports
are showing true and fair view. The application of the conceptual framework is used mainly for
promoting better understanding of financial information by the users and on the basis of the same
taking important decisions. The financial reports of the business are appropriate presented
complying with all rules and regulations of reporting.
The recommendation which can be suggested to the management of Ausdrill ltd are listed
below in point form:

10
CONTEMPORARY ISSUES IN ACCOUNTING
 Some of the components which the management has presented in the annual reports need
more explanation just for the clarity of the client. An example can be given for such an
item which is Employee benefit compensation.
 Some of the special treatments needs to be taken accurate such as joint ventures and
appropriate disclosures for the same is also required.

11
CONTEMPORARY ISSUES IN ACCOUNTING
Reference
Ausdrill.com.au. (2019). Home : Ausdrill. [online] Available at: http://www.ausdrill.com.au/
[Accessed 22 Apr. 2019].
Cheng, M., Green, W., Conradie, P., Konishi, N. and Romi, A., 2014. The international
integrated reporting framework: key issues and future research opportunities. Journal of
International Financial Management & Accounting, 25(1), pp.90-119.
Flower, J., 2018. Global financial reporting. Macmillan International Higher Education.
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting.
Pearson Higher Education AU.
Leuz, C. and Wysocki, P.D., 2016. The economics of disclosure and financial reporting
regulation: Evidence and suggestions for future research. Journal of Accounting Research, 54(2),
pp.525-622.
Simnett, R. and Huggins, A.L., 2015. Integrated reporting and assurance: where can research add
value?. Sustainability Accounting, Management and Policy Journal, 6(1), pp.29-53.
Wang, C., 2014. Accounting standards harmonization and financial statement comparability:
Evidence from transnational information transfer. Journal of Accounting Research, 52(4),
pp.955-992.
Weil, R.L., Schipper, K. and Francis, J., 2013. Financial accounting: an introduction to
concepts, methods and uses. Cengage Learning.

12
CONTEMPORARY ISSUES IN ACCOUNTING