Overview of the Company
Accounting refers to the process of recording, identifying and measuring the transactions and the overall financial performance of an organisation. The process has to be compulsory followed by the public companies, as required by the legal and regulatory framework, in the interest of the stakeholders (Nobes, 2014). The accounting and financial reports are prepared by the companies taking into account various guidelines, principles as laid down by the accounting regulatory body to which the organisation belongs. These are the basic framework for the preparation and presentation of the financial statements, which enable consistency and comparability of the data referred therein. The report explores the various facets of the accounting and financial reporting in relation to the company “Alexium International Group Limited.” The report will shed light on the objective of the conceptual framework. In addition, the report will also describe the recognition criteria, and the fundamental and quality enhancement guidelines. The report will conclude with the description of the relationship between the accounting research and the professional practice.
The company Alexium International Group Limited, is a company engaged in the business of development of chemical. The headquarters of the company are located in Australia. Accordingly, the company is required to prepare its financial statements based on the Australian Accounting Standards as pronounced by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001 (Cth).
The conceptual framework can be described as the concepts or the purposes that leads to the business to the set of standards in respect of preparing the good and proper report. The conceptual framework suggests the better guidelines to every company in respect of making reliable and comparable reports so that it can be simpler for shareholders of the corporation to have the knowledge of the annual report of the corporation and relate it with other rival company to reach over the end (Greenaway, Chan and Crossler, 2015).
In case of Alexium International Group Limited, it is found that this company has made the annual reports with the help of conceptual framework. The Alexium International Group Limited has followed proper guidelines and appropriate accounting standards to accumulate, document, recognise, and evaluate the financial performance of the company. The company has made the financial statement of company according to the AASB rules. There are certain examples of accounting and financial statement of company, which is made as per the conceptual guidelines. These are as follows-
Together with appropriate financial statement, the financial notes are also made to develop the understanding of the financial aspects for the shareholders. It indicates that all transactions are noted and presented according to the conceptual framework and AASB rules in respect to keep the consistency and performance of company. The auditor’s report and statement of BOD of the company has also been considered in order to evaluate the company’s performance, prospects, and risks of the corporation. The major conceptual framework of corporation has evaluated based on relevancy and true representation aspects of the corporate. It is analysed that the complete recording and performance aspects of the corporation are gratified. It is found that this will help the company to advance the complete performance in marketplace (Schulze, et. al, 2016).
Conceptual Framework Objective
The fundamental qualitative features of the company have been analysed through the fundamental and enhancing guidelines of the corporation (Moradi, et. al, 2018). The fundamental and enhancing guidelines specify following features and its compliance in business-
The relevant data are capable to affect the judgements of the shareholders. The annual report of Alexium International Group Limited states that the recording has stated in proper manner by the corporation in the annual report so as to make good decisions by the shareholders of the company (Yin and Kaynak, 2015).
The Verifiability makes sure that all the information related to business have been truly stated and it has authorised by the corporation. In the case of Alexium International Group Limited, it is analysed that all information of the corporation have been authorised before showing it in the company’s annual report.
Timeliness shows to render all data to make decision timely in order to be capable to affect the decision. By analysing the annual report of Alexium International Group Limited, it is found that all data has timely stated in company’s annual report.
It is stated by the true representation that the financial performance and non-financial performance in annual report should be stated with proof and fact so that shareholders can found it true or realistic. All data and actions that have taken place in the corporation, are required to be analysed and recorded in the company’s annual report. In the case of Alexium International Group Limited, it is analysed that all the new developments, new processes, and alterations in the companies have been defined in the company’s annual report concisely (Lewandowski, 2016).
According to the paragraph 5.9 of the Conceptual Framework, a company should recognise the assets and liabilities, income or expenses of the changes in equity as such (AASB, 2015). This recognition must be capable of providing the stakeholders with the relevant financial information, a true representation of the underlying transactions and the overall benefits of provision of such information must exceed the cost of provision of such information. Thus, as per the criteria of the recognition laid down by the conceptual framework text, if there is an uncertainty in the existence of the asset or liability or in its separability form the goodwill, the criteria of recognition is not met. In addition, when there is a low probability of the inflow or outflow of the economic benefits form the asset or liability, it is not beneficial to recognise the asset or liability in the financial statement.
(Source: Alexium Internaitonal Group Ltd, 2018)
In relation to the company Alexium International Group Ltd, the company has recognised four major categories of the assets namely, the current assets, financial assets, property, plant, and equipment, and the intangible assets. In addition, the liabilities are recognised as current liabilities, and non-current liabilities including the deferred income. The amounts have been depicted in the image above.
The above recognition is based on the guidelines on the recognition process as issued by the AASB. The recognition of the assets and liabilities depicts the economic resources of the entity and the claims. In addition, it enables the data to be comparable and understandable to the stakeholders of the financial information. The recognition process aids in the reconciliation of the opening and the closing values in the statements.
Essentiality Of Fundamental And Enhancing Guidelines
It must be noted that failure to recognise the items that meet the recognition criteria, as laid down for the asset, liability, expense and income, may render the financial statements to be incomplete. Thus, it is the judgement of the organisation’s management to decide whether an item is worth the recognition or not, depending upon the amount, facts and circumstances in each case. Further, it must be noted that sometimes an item meets the recognition criteria, but is still not recognised in the financial statements, the disclosure for the same is required in the notes to the financial statements. Thus, it can be stated that recognising an item of the financial statement is essential.
Accounting research is a type of applied research. The focus of the study of the research is that it is made up of the technologies and the practices, which are to be used, by the management and the accounting practitioners in various social and organisational frameworks (Parker, Guthrie and Linacre, 2011). The field of the research is agile. Therefore, the practitioners must constantly update themselves with the latest pronouncements and amendments, to make the statements legally acceptable and comparable in terms of the industry stakeholders. Over the years, there have been constant gaps between the concerns of the policy and framework formulators, practitioners and the academics; when it comes to the need of the identification of the impact of the accounting study and the research, consistency in the practices and social impact. Therefore in order to bring the uniformity in the same, the regulatory bodies like AASB lays down the guidelines and principles for the preparation and presentation of the financial statements. The company Alexium International Group Ltd has prepared its statements according to the laid guidelines, which makes the statements uniform and relevant.
Conclusion
As per the above analysis, it can be concluded that the accounting report is made by the companies by following the various accounting guidelines that creates it simpler for the company and as well as stakeholders of the company to have knowledge of the business and take proper decision in respect of the corporation. As per the study of AASB rules and conceptual framework, it is found that the major purposes of all the accounting guidelines and relevant policies are to render the true, substantial and the appropriate financial data to the shareholders of the company so as to it could be easy to take proper and good decisions. To conclude, the annual report of Alexium International Group Limited has made by focusing on appropriate and relevant guidelines and point to handle and enhance the complete performance of the company. In this way, it is clear that the policies related to conceptual framework are necessarily required be adopted by each company to enhance the performance of the company.
References
Alexium Internaitonal Group Ltd. (2018) Annual Report 2018 [online] Available from: https://alexiuminternational.com/wp-content/uploads/2018/10/Alexium_Annual-Report_October-2018_ASX.pdf [Accessed on 12 December 2018].
Australian Accounting Standards Board. (2015) Conceptual Framework for Financial Reporting [online] Available from: https://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf [Accessed on 12 December 2018].
Greenaway, K. E., Chan, Y. E., and Crossler, R.E. (2015) Company information privacy orientation: a conceptual framework. Information Systems Journal, 25(6), pp. 579-606.
Lewandowski, M. (2016) Designing the business models for circular economy—Towards the conceptual framework. Sustainability, 8(1), p.43.
Moradi, M., Liu, L., Luchies, C., Patterson, M., and Darban, B. (2018) Enhancing Teaching-Learning Effectiveness by Creating Online Interactive Instructional Modules for Fundamental Concepts of Physics and Mathematics. Education Sciences, 8(3), p. 109.
Nobes, C. (2014) International Classification of Financial Reporting. 3rd ed. UK: Routledge.
Parker, L., Guthrie, J. and Linacre, S. (2011) The relationship between academic accounting research and professional practice. Accounting, Auditing & Accountability Journal, 24(1), pp. 5-14.
Schulze, M., Nehler, H., Ottosson, M., and Thollander, P. (2016) Energy management in industry–a systematic review of previous findings and an integrative conceptual framework. Journal of Cleaner Production, 112, pp. 3692-3708.
Yin, S., and Kaynak, O. (2015) Big data for modern industry: challenges and trends [point of view]. Proceedings of the IEEE, 103(2), pp. 143-146.
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