In this report, fundamental accounting concepts and qualitative intents of the prepared financial statement of the company has been discussed. It is considered that in order to strengthen the transparency of the recorded items in the books of account, there is need to comply with the applicable accounting standards and legal laws. However, harmonization in the prepared financial statements on domestic and international level is based on the compliance with the domestic and international accounting standards. In this report, Southern Cross Media group Company has been selected. This report divulges the key understanding on the accounting concepts, conceptual framework and fundamental qualitative characteristic of the financial statement of the company.
The main concept of the accounting has been formulated from the accounting authorities which can bring the consistency presentation and preparation in the field of financial data to make the organization value different all over the country. The concept of accounting if very much famous not only at national level but at international level also such as International accounting Standards Board (IASB) which is completely based on the concept of accounting. Also these globally accounting ideas go about as an umbrella structure which must be embraced by associations all across the world. The accounting ideas embraced by Southern Cross Media Group which are as per the following concepts (Eppler, and Mengis, 2014).
Because of the implementation of the accrual notion, the income expense is registered in the economic results declaration at the moment the operations were put by the company for acquisition or any other sale-related activity. There is no relationship with the payment of these money operations (Eppler, and Mengis, 2014).
Also this type of concept is always applied on the Southern Cross Media Group which give correct direction to the business so that the revenue recorded can be increased and the probability of the economic gain benefits (Eppler, and Mengis, 2014).
Southern Cross Media Group's economic statements were ready by using the Dual Aspect Concept. By use of this concept, two parties of the accounts have influenced the company operations. Software acquisition has influenced both the money account and the property account. The assets have been increased by $70,541,000 and cash balance has declined by $70,541,000.
The Southern Cross Media group just follows the period of accounting which has to start from the 2nd of July and it will end on the #0th June next year.
It is due to the implementation of the company entity notion in the Link category that called on the community to demonstrate the cash collected from the shareholders in the form of shares under the category of liabilities and equity and not property. The cash collected from the holders must be returned to them and is not the property of the organization.
It is considered that the conceptual framework followed in the books of account helps in measuring the liabilities, assets and income and expenditure recorded. However, in order to measure these accounts, proper measurement method, amortisation method and other costing method are followed (Bovens, 2007). However, impairment testing is also one of the method followed to strengthen the measurement concepts in the recorded items. However, conceptual framework followed by the all the listed companies in the Australia needs to be aligned with the frameworks and guidelines set by the IASB accounting standard (Schaltegger, and Burritt, 2017).
It is considered that there are several costing method to determine the true value of the recorded items in the books of account. The historical costing method allows company to identify the true value of the recorded items. However, the historical costing method is used with the impairment testing method to identify the present value of the assets. It helps company to identify the impairment loss occurred on the assets historical value. The historical value determine the value of the assets at its cost. This method is preferred method which is used by company to make the less complexities in the recorded assets. It helps in determining the realised value and current proposition of the assets held by company in its financial statement (Zimmerman, and Yahya-Zadeh, 2011).
. Another valuation method is fair value method which is used to identify the market value of the recorded items in the financial statement. This helps in determining the organization value and based on the earning management concept of the organization. This method is ideally not followed due to the discrepancies created by the management department in the manipulation of the financial statements (Meyer, and Land, 2015).
It is analysed that financial statement of the company has been prepared by using the historical cost method. All the assets have been recorded at the historical cost and considering the depreciation effect. The measurement of the provision recorded in the books of account at the cost and future cost redundancies. For instance, property and plants are recorded at their purchase price and value is deducted with the depreciation rate. The goodwill is also recorded at the historical value irrespective of its market value. The impairment test also helped in determining the true value of the recorded items by deducing the impairment loss from the historical cost. The amortization cost is also used to assess the value of the assets (Ouchi, 2019).
It is analysed that the conceptual framework of the company is used to prepare the financial statement of Southern Cross Media group Company. However, fundamental qualitative characteristics are followed by the company to maintain the uniformity in the recorded items with the other accounting standards (Barth, et al. 2011). It is required to follow the set qualitative characteristic by the Southern Cross Media group Company to maintain the transparency and fair and true view of the recorded items in the books of account. It is mandatory for the listed companies to comply with these fundamental qualitative characteristic (Eppler, and Mengis, 2014).
Nonetheless, below are the given two fundamental qualitative characteristic which needs to be followed by the Southern Cross Media group Company in its prepared financial statements and recorded books of account (Adams, 2015).
Relevance: - All the recorded items in the financial statement needs to be recorded to the extent it is imperative or material to its stakeholders. The unnecessary information should be avoided while recording the financial and no-financial transaction in the financial statement. The financial statement of Southern Cross Media group Company must reveal the material qualitative items and should not take into account those information which are imperative or material to its stakeholders (Barad, 2018).
In case of Southern Cross Media group Company, it is found that company has avoided those information which are imperative or material to its stakeholders. In addition to this, qualitative concept of the followed relevancy concept has revealed that company reflected all the financial figures recorded in the books of account by rounding off them to the closed thousand. It has also given the supporting notes in the notes to account of the annual report for the same. The uncertainty, audit risk model has also been disclosed by the company in its annual report to make the shareholders and other stakeholders more informed (Bosse and Phillips, 2016).
There are several qualitative intents adopted in the conceptual framework of the organization for the valuation of the assets and liabilities recorded in the financial statement. However, these qualitative characteristic is used to strengthen the comparability, uniformity, interpretation of the recorded items and maintain the transparency in its books of accounts.
It is analysed that in order to identify the true value of the recorded assets in the books of account, computation of the value should be done on the basis of proper assumptions (Dumay, et al. 2016). IAS 137 should be periodically followed to identify the impairment loss of the assets recorded.
Valuation of the assets could be done by considering the materiality of the information faithfulness. In case of Southern Cross Media group Company, it is found that company has avoided those information which are imperative or material to its stakeholders. Therefore, it could be inferred that there is no single qualitative characteristic which should be considered only as compared to others. These qualitative characteristic helps organization to strengthen the reporting framework and also align its domestic reporting compliance with the international accounting and reporting framework (Evans, et al. 2016).
After analysing the annual report of Southern Cross Media group Company, it has been found that company has kept higher transparency in the recorded financial items by complying with the IFRS rules and accounting standards. However, the international accounting conceptual frameworks has been adopted by the Southern Cross Media group Company to align or set up harmonization in the domestic and international accounting framework. This has allowed company to disclose all the imperative information to its stakeholder with the true and fair view aspects. IAS 137, AASB 138 has been followed by company to identify the true value of the recorded intangible assets covering high value in the books of account.