Analyze and present a report about an Australian company named Qube Holdings Ltd. Yoru report should depict the discussion on relevant accounting concepts and framework and some other qualitative characteristics of the company and its accounting regime.
To bring the transparency in the financial records for the stakeholders in the rapidly changing economic conditions, it is required for each and every company to adopt an effective audit and assurance program. There will be no use of financial statement of an organisation for its stakeholders if the information provided under this is inconsistent and from its past records. To avoid the inconsistencies between the organisation and its stakeholders uniformity is necessary in the financial records. Some accounting frameworks are introduced at national and international level to fetch comparability and such consistencies in the financial statements. Besides these accounting frameworks various accounting concepts and accounting standards are established. The report will depict the discussion on these accounting concepts and framework and some other qualitative characteristics (Qube Holding Ltd, 2019).
The report contains the discussion about an Australian company named Qube Holdings Ltd. The company was established in year 2010 by an investment trust KFM which is diversified its infrastructure and logistic funds to acquire an old company and they introduced a new company called Qube logistics. The principal business performed by the company is to provide logistic solutions in various aspects of import-export supply and to perform the management and development activities in inland rail terminals, bulk terminals and related logistics facilities. In the end of year 2018, the NPAT of the company is $106.8 million which shows an increase in profits for the year. In the report we will further discuss about the application of accounting concepts, principals, fundamental characteristics and provisions of various accounting standards in the financial and accounting reporting of the company (Jones, and Wolnizer, 2013).
Descriptions of Accounting Concepts
The financial statements for every financial year are required to be prepared by every business entity whether it is a listed company or an unlisted company. For the listed companies the task of preparation of the financial statements is more significant and crucial due to the engagement of more stakeholders. The financial statements of listed entity are to be situated before the stakeholder. However, the result of every financial year would be different, incomparable and in understandable for the stakeholders if the company will follow a different accounting basis for every year. For bringing the uniformity and consistency while preparing the financial statements the use of accounting concepts is required. There are several accounting concepts and approaches which are used by the companies in their accounting patterns to establish uniformity in their financial statements such as Going Concern, Accounting Period, Business entity, Money Measurement, Cost Concept, Duality Aspect Concept, Accrual concept, Matching Concept and Realisation concept (Jones, and Wolnizer, 2013).
The Annual report of Qube Holding Ltd. is analysed for financial year 2018 which depicts the use of various accounting concepts in the accounting framework of company. The several accounting concepts used by the company in its financial statements are as follows: (Qube Holding Ltd, 2019).
Conceptual framework, and the Issue of Measurement
The Australian Accounting Standard Board (AASB) established a framework for all the public listed companies for the preparation of financial statements. Afterwards it is amended by the International Accounting Standards Board (IASB) which is released as framework for all the listed entities. The financial statement of entities should be complied with the framework issued by the AASB (Bragg, 2016). The entities are free to adopt any of the measurement criterion provided by this framework which includes fair value measurement, current cost measurement, present value measurement, historical cost measurement, and realizable value measurement. This framework used by the companies to make their accounting framework more transparent and effective. It also helps to set a convergence between domestic and international reporting framework (Halpin, and Senior, 2009).
An argument exists relating of use of these approaches and their fairness in the accounting conditions from a long time but due to the wide use at world level and extreme popularity of historic cost method, it is considered as more favourable and reliable. Such method is popular since nineteenth century. The company adopted the method for preparing its financial statements. The method applies in the business with the historic cost of certain assets, liabilities. The company also follows the Corporation Act and the provisions mentioned under Australian Accounting Standards/International Accounting Standards Board (IASB) to prepare the financial statements (Parrino, Kidwell, and Bates, 2011).
All the financial statement of the company has been recorded by using the fair value measurement method which strengthen its transiency view and strengthen the business position of company. Nonetheless, it is analysed that all the purchased items and assets have been recorded by using the AASB 138 which helps company use the costing model to strengthen the transparency of the recorded items. Company also follows the IAS 136 to identify the impairment loss by undertaking the impairment testing in the recorded items of the books of accounts (Hirschey, 2008).
However, this argument regarding the method is being initiated due to its reporting pattern which allows the reporting of anticipated losses but not profits. Such reporting decreases the value of company and show the lower value of items of income and elements of balance sheet. For attaining the real position of balance sheet of company and its income, the fair value accounting method is considered as more favourable. However, debates have also been made against such method that this method violates the financial results which can become hurdles for the business. The argument regarding the choice of methods is unending. The reason behind this is that the organisations initially chose the historical cost method for recording the inputs in accounts and then they switched to the fair value method while declaring the results. The organisations have the liberty to choose several method of accounting by providing the proper disclosure (Brealey et al. 2007).
For every organisation which is preparing its financial statements, it is mandatory to apply the fundamental qualitative characteristics. These are the only sources of the information providing to its users. Relevance and Faithful representation are two characteristics of fundamental qualitative. These characteristics suggest that all the interest which cannot be controlled and held by other companies shall be aligned with the reporting framework. The organisation uses two methods for valuation of assets for effective reporting framework (Halpin, and Senior, 2009).
The company Qube Holding Ltd. Use both the fundamental qualitative characteristics in the preparation of its financial statements. The company is focused about the relevancy of the information along with its faithful representation. The financial information represented by the company is understandable for the users which enable them to take more appropriate decisions. The characteristics help in increasing the understandability of users at international level. Also the information can also be easily comparable with the help of these accounting characteristics. The financial elements of Qube Holding Ltd. are valued with the proper implement of accounting concepts and reporting frameworks. The company has used proper and relevant methods in measurement of inventories and other assets and liability elements. Also the company is using a proper auditing method to make its reporting framework more effective and reliable for its users (Whittington, 2016).
To survive in the global corporate world, it is needed for every company to follow proper accounting concepts and frameworks according to the nature of their business. The financial information provided by the companies should be the result of application of proper methods of financing otherwise the users will not be able to believe the facts provided by the company and to compare the information. With the help of adequate representation of financial statements and by using proper financial instrument in the transactions of business, the company can gain the confidence of its stakeholders and can also lead among its competitors. The financial analysis made by the company should be fairly represented among the users and should also be relevant to the business of the company. The use of such accounting frameworks and provisions helps the company to make its financial records more transparent. Also these accounting concepts and frameworks have a significant role in establishing a convergence between domestic and international frameworks. Company performing internationally is obligated to follow the international framework of accounting and recording so that it can establish more transparency in its books of accounts. However, the companies have the liberty to choose any of the measurement method as per its nature of business but it is required to choose any one of them for proper execution of business and fair accounting reporting.