CSL Limited & AASB: Analysis of Contemporary Accounting Issues

This report provides an in-depth analysis of CSL Limited's compliance with the Australian Accounting Standards Board (AASB) conceptual framework. It examines the achievement of conceptual framework objectives through a review of CSL Limited's consolidated balance sheet, income statement, statement of changes in equity, and cash flow statement, demonstrating the company's commitment to providing relevant financial information to its target audience. The report also evaluates CSL Limited's adherence to recognition criteria for assets, liabilities, equity, revenue, and expenses, referencing specific AASB standards such as AASB 116, AASB 138, AASB 9, AASB 102, AASB 1004, and AASB 118. Furthermore, the analysis extends to the fundamental qualitative characteristics (relevance and faithful representation) and enhancing qualitative characteristics (comparability, verifiability, timeliness, and understandability) of the financial information presented by CSL Limited, concluding that the company effectively complies with AASB standards, minimizing potential accounting issues.

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

1CONTEMPORARY ISSUES IN ACCOUNTING
Abstract
This report examines various requirements and standards of the conceptual framework with
respect of CSL Limited. The main aim of the first part of the report lies in the examination of the
conceptual framework objectives. The second part involves in the examination of recognition
criteria. The last part evaluates the characteristics of financial information.

2CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction......................................................................................................................................3
Conceptual Framework Objectives..................................................................................................3
Target Audience...............................................................................................................................7
Recognition Criteria.........................................................................................................................8
Fundamental Qualitative Characteristics.......................................................................................13
Enhancing Qualitative Characteristics...........................................................................................14
Conclusion.....................................................................................................................................15
References......................................................................................................................................16

3CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
In today’s business world, the accounting profession is facing different kinds of issues in
the process of financial reporting of the business entities. All of these issues are crucial issues
and the financial regulatory authorities are required to take into consideration all of these issues.
In the recent years, it can be seen that the business entities are facing the compliance issues with
the required standards and principles of accounting conceptual framework. It is expected that the
business organizations will follow all the standards and regulations of financial reporting at the
time of the preparation and presentation of their financial statements (aasb.gov.au 2018). The
conceptual framework of AASB and IASB can be defined as a system that is responsible for the
development required regulations and principles for financial accounting. Thus, all the
Australian business entities need to follow the standards and principles of AASB conceptual
framework in order to avoid the accounting issues (aasb.gov.au 2018). Different parts of the
report examine different requirements of AASB conceptual framework in respect to an
Australian company, CSL Limited. CSL Limited involves in the research, development,
manufacturing and marketing of biological products and the company is listed among the top 100
companies of Australian Securities Exchange (ASX) (csl.com 2018).
Conceptual Framework Objectives
The conceptual framework of AASB has three major objectives that are required to be
achieved at the time of financial reporting. They are discussed below:
First Objective: Financial statements of the companies must be able to provide the users with
relevant financial information about the current financial position of the business entities and

4CONTEMPORARY ISSUES IN ACCOUNTING
there must be adequate information about the economic resources of the business entities
(aasb.gov.au 2018).
(Source: annualreport.csl.com.au 2018)
The above table is the consolidated financial balance sheet of CSL Limited that has all
the information about the economic resources of the entity. From this statement, the users can
acquire necessary knowledge regarding the current financial standing of CSL Limited
(annualreport.csl.com.au 2018).
Second Objective: Financial statements of the business entities must be able to provide the users
with necessary information about the financial performance of the business entity and the
information must be relevant (aasb.gov.au 2018).

5CONTEMPORARY ISSUES IN ACCOUNTING
(Source: annualreport.csl.com.au 2018)
The above table is the consolidated statements of comprehensive income of CSL Limited
that contains information about profit/loss, income and expenses of the entity and this
information is crucial for the users in the determination of the financial performance of the
organization (annualreport.csl.com.au 2018).
Third Objective: Financial Statements of the entities must be able to provide the information to
judge the change in financial position and performance of the entities (aasb.gov.au 2018).

6CONTEMPORARY ISSUES IN ACCOUNTING
(Source: annualreport.csl.com.au 2018)
(Source: annualreport.csl.com.au 2018)
The above statements are the consolidated statement of change in equity and consolidated
statement of cash flow of CSL Limited. It can be observed that the above statements contain the

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financial information related to the change in profit, change in cash inflows, change in cash
outflows and others that helps the users in the determination of the change in performance of
CSL Limited (annualreport.csl.com.au 2018).
Apart from this, the analysis of the latest annual report of CSL Limited shows that the
company complies with the regulations of Australian Accounting Standards and the other
authoritative accounting pronouncements of AASB (annualreport.csl.com.au 2018). Moreover,
in order to bring uniformity, the company has adopted the standards of International Financial
Reporting Standards (IFRS) and IASB. Hence, all these aspects prove the fact that CSL Limited
has achieved the objective of conceptual framework (annualreport.csl.com.au 2018).
Target Audience
The above discussion shows that CSL Limited publishes different kinds of financial
statements containing information on different financial aspects of the entity. From the
consolidated balance sheet, the target audience can get the information about the financial
situation of the company (annualreport.csl.com.au 2018). From the income statement, the target
audience can obtain relevant financial information to judge the financial performance of the
company. After that, the statements of change in equity and cash flows provide information that
is required to ascertain the change in the financial position and performance of the company. It
implies that the users of financial statements can get all the relevant information for effective
decision-making process (annualreport.csl.com.au 2018). Thus, based on the above discussion, it
can be said that CSL Limited provides all the adequate information for the needs of users.

8CONTEMPORARY ISSUES IN ACCOUNTING
Recognition Criteria
The conceptual framework of AASB has some crucial criteria that are required to be
satisfied for the recognition of assets, liabilities, equity, revenue and expenditure. It implies that
the business entities are required to comply with the recognition criteria provided by and CSL
Limited is also required to do so. The following discussion shows the complies of these
recognition criteria by CSL Limited:
Asset: While recognizing property, plant and equipment, CSL Limited uses historical cost
method after deducting depreciation and amortisation costs and follows the principles of AASB
116 Property, Plant and Equipment. As per the standard of AASB 138 Intangible Assets, fair
value method is used for the recognition of intangible assets (aasb.gov.au 2018).
(Source: annualreport.csl.com.au 2018)
As per AASB 9 Financial Instruments, the recognition of trade and other receivables are
done based on fair value method and they are due within 30 to 60 days from the date of invoice
(aasb.gov.au 2018).

9CONTEMPORARY ISSUES IN ACCOUNTING
(Source: annualreport.csl.com.au 2018)
As per AASB 102 Inventories, all the related factors affecting the assessment of the
recovery of finished goods are taken into consideration while recognizing the inventory
(aasb.gov.au 2018).
(Source: annualreport.csl.com.au 2018)
Liability: CSL Limited recognizes their interest bearing liabilities on the basis of fair value after
the consideration of the net transaction costs. After that, they are recognized at amortization cost
(aasb.gov.au 2018).

10CONTEMPORARY ISSUES IN ACCOUNTING
(Source: annualreport.csl.com.au 2018)
CSL Limited uses fair value for the recognition of trade and other payables as per AASB 9
Financial Instruments (aasb.gov.au 2018).
(Source: annualreport.csl.com.au 2018)
Equity: In CSL Limited, ordinary shares are considered as equity. It needs to be mentioned that
the ordinary shares are subject of dividends as per the declaration. For the recognition of equity,
the company follows the principles of AASB 1004 Contributions (aasb.gov.au 2018).

11CONTEMPORARY ISSUES IN ACCOUNTING
(Source: annualreport.csl.com.au 2018)
Revenue: CSL Limited recognizes the revenue from sales at the time of the transfer of
significant risk and rewards of ownership. Revenues from royalties licence and finances are
recognized as accrues. For the recognition of revenue, the company follows AASB 118 Revenue
(aasb.gov.au 2018).