Accounting Concepts Standardised Principles

Question: Discuss about the Accounting Concepts Standardised Principles. Answer: Accounting concepts: As we all are aware that the term Accounting Concepts mainly relate to the standardised principles as well as the concepts which have been considered as a base for the preparation of accounts. All these have been consider as a broad conversations which is mainly devised with the objective to provide the basic framework in regard to the financial reporting. Moreover, the term Financial reporting have been taken as an utmost important because it involves professional judgement by the experience accountants which are required to be as per the law an standard set by the government. These consequently ensures that the concepts as well as principles is clearly seek to ensure that all such people which involves to use the financial statement for various decision such as investment decision would not be any way misled by these standardised principles as well concepts. So, it can be stated that it would be the work of accountant to ensure that accounting treatment that have been adopted by th e organization must be in line with the different concepts as well as the principle of accounting (Accounting tools,2016). Further, in order tonsure that principles as well concepts have been applied as per the criteria, it has been provided that majority of the accounting bodies have been incorporated in regard to the reporting frameworks like IASB. Below list will clearly provide the various accounting concepts as well as principles/ accounting standards that are required to be followed while preparation of the annual report or financial statement of an organization or an entity (Singed, 2016). Objectivity Relevance Reliability Timeliness Prudence Matching Concept Neutrality Substance over form neutrality Business Entity Completeness Faithfulness Going Concern Accrual Consistency Materiality True representation Prudence (Accounting tools, 2016). In case of any conflict that would have been arising while preparing the annual report or financial statement of the enmity or an organization like classic case of any accounting principle or concept that may result to provide conflict with the another principle or concept, that time it is advisable that the accountant must take decision taking into consideration all the relevant facts and must adopt the best strategy for the preparation of the annual report or for the users of the financial sameness (Accounting simplified, 2016)..An instance that can be taken for the fact that is trade off which have been exist between the relevancies as well the reliability. That the information which would have been more relevant must required to disclosed in timely manner (Aisles, 2016). Also whether that particular piece of information is reliable or not is consequently depend upon the relevancy in regard to the information that have been consider as a subject matter for the judgement which in r esultant ought to be taken for the interest of users of the financial stement or information. [i] It is the fact that information will be considered reliable only when the same disclosed in the timely manner. Also whether the same have been reliable or not also depend upon informations relevancy which is also the subject matter from the pint of the users of the annual report or the financial information As well are aware that accounting concepts and the principle involves Objectivity, Relevance, Reliability, Timeliness, Prudence In the stated case of Woolworth, annual report of the company found to be prepared in accordance with the various principles as well as concepts and the same has resultant prove to be true as well. Also the financial stement have been prepared in accordance with the Australian Accounting standards. Further, this statement also involves the interpretation in regard to the different accounting standards and also the pronouncement of the international financial reporting standards. All these standards have been governed by the various provisions of the Corporation Act, 2001. Woolworth Group has been operating under their elegant Australian Accounting Standards for the purpose of the financial reporting (woolworthslimited, 2016). The main aim of the Australian standards of accounting is the fact that this sets out the rules and the regulations on the basis of which the financial statements are prepared. This makes the financial statements very useful for the users that use these financial statements. This is the information which includes the various events, transactions that have been entered into under the year. All these events and transactions are governed by the Australian Standards of Accounting and these are in line with the principles laid down by the International Financial Reporting standards. As per the financial stement of the Woolworth, it clearly states that the same has been prepared using the accrual accounting and have also been on the baize of the historical Cost which have been further modified wherever required or applicable..The same has been done by the measurement which is at fair value for the various selected non- current assets, the financial assets and also the financial liabilities. Also it has been observed that Woolworth have been following the Going concern Concept which clearly provides that the financial statement have been prepared with the assumption that the Group will shall function for the foreseeable future. This would resultant help to conduct the day to day business activities along with the realisation for the assets and also the discharge of the various liabilities during the normal course of the trade of the business. The fact that the consolidated entity has incurred a profit of $ 2146 million and the net cash flows from the operating activities for the year ended 2015 has been decreased $262.3 million to $ 4711.1 million. The directors of the company further are of the view that many of the reasonable grounds have been laid down for the purposes of consolidating the entity that would enable the company to act as a going concern. This would be done after the consideration of the following laid done factors: The company appears as was successful in raising the capital to an amount of $5064.9 million from $ 485.01 million during the period of 2015. Also the cash balance has been raised to $ 1333.4 million from $922.46 which also states that company performance is positive (woolworthslimited, 2016).As per the directors of the company, the company along with its consolidated company would be able to continue to act on the assumption of going concern and that would be very apt for the preparation of the financial statements of the stated companies and the financial report of the same. Report of the group: In the context of AASB/IASB standard, the annual report of the Group Woolworth clearly specifies that the mainly assessor the group has been values at their fair value.The annual report of the company states that the various assets of the company have been valued at its fair value. In respect of the financial instruments, recognition and the initial measurement, the various financial assets and the financial liabilities Del to be recognised as and when entity has become part for the various provisions of the contract to the provision.Taking into consideration the annual report of the Woolosworth, it has been found that payment for the tax has been reduced for the year 2015 to $ 1055.7 million which was previously in the year 2014 was $ 1162.5 million. And also it has been observed that the same is mainly or predominantly because of the higher number of the payment made in the year 2014 mainly due to the amendment sin the Australian Tax legislations (woolworthslimited, 2016).In respec t of the GST i.e. Goods Service Tax, It has been found that the revenue, expense as well as assets have been recognised net of GST, except in the case which have been stated by the tax authority that GST incurred could not be recoverable. . An as a result in the mentioned case the GST would be recognised as an expense or as cost. In the Woolworths, receivables as well as payables have found to be stated with the inclusion of the GST. In the financial position of the woolsworth, the net amount of GST recoverable or payable to the authority have found to be included as current liability or the current assets in consolidated financial statement. Also the cash flow has been included in the consolidated financial statement on gross basis (Aisles, 2016). Also the GST component which has been arisen from the investing as well as financing which have been recoverable as well payable to the tax authority and resultant classified as operating cash flow. Also, in regard to the adoption of the new and the amended standard by the Group- It has found that all the new and relevant effective standards which have been issued by Australian Accounting .some instances of adoption are as follow AASB 2015-2 Amendments to Australian Accounting Standards Disclosure Initiative: Amendments to AASB 101 it has been clear that Woolsworth group has adopted the same. Also the group adopted AASB 2015-2 Amendments to Australian Accounting Standards Disclosure Initiative: Amendments to AASB 101 ahead of the mandatory, which have been effective from 1st January, 2016. AASB 2015-2 amends AASB 101 Presentation of Financial Statements in order to provide clarification in respect to the disclosure requirements in AASB 101. It has found that the Woolworth Group applied all these amendments for the determination as well as for disclosures while preparing the financial reports of the group.In regard to the income tax of the Woolworth, it has been found that the same have been comprised of both current tax and differed tax.Current tax- it represents the income tax payable i.e. the amount which has been expected to pay for the income during the period to the Taxation Authorities. The same must be calculated using the tax rate enacted for the reporting period and with the adjustment, if nay in regard to the previous year. Deferred Tax- In the stated case of Wools worth, the deferred tax have been calculated using the balance sheet method, which resultant have been providing the temporary difference between the carrying amount of the liabilities as well as the assets for the purpose of financial reporting and also for the taxation purpose. Also, the same have been calculated using the rate which are expected to apply for the prevailing period in which the liability have been settled or assets realise on the basis of the tax rate that is prevailing during the period. Also it has been clearly stated that deferred tax liabilities or assets would not be recognized in case there is temporary difference which have arisen from the initial recognition of both the liabilities and assets in a transaction which would consequently would not affect the taxable profit or accounting profit. Tax consolidation- it is found on the baize of the annual report of the Wools worth that the company its wholly- owned Australian entities have been formed a group (consolidated) with effect from the 1st Jolt, 2002. Woolworth limited has been considering as the head for this consolidated group and as a result have assumed the current tax for their investors or members. In the tax consolidation group (Crikey, 2014). Hence, in summarisation the current tax, deferred tax, and any other tax payable must arises from that temporary differences that would be further recognised by each of the subsidiary and accordingly represent the same on standalone basis. Issue of tax effect Accounting in the stated case of Woolworth This would provide the Australian tax consequence on the investors which are of different type one who holds on the capital account of the group and other who have not been associated with wools worth of the tax laws. As a result it has been provided that tax which have been arisen for the investors who are involved in the business of the share trading or can say dealing in the securities or in other terms holding the notes for the revenue account not required to be considered at the time tax summary. It is the fact that the Australian GST as well as the income tax vary from situation to situation and also requires that each of them must seek they own advice which should be specific for the particular circumstances. Also ,the auditor Pwc has stated that they have been asked to prepare the summary for the Australian taxation and also for the GST i.e. Goods Service Tax consequence in egad to the issue of notes of the Woolworth for the purpose of inclusion in the prospectus. This sum mary would provide the Australian tax consequence on the investors which are of different type one who holds on the capital account of the group and other who have not been associated with wools worth of the tax laws. This summary basically provides guide for the general income taxation of Australia and GST consequences of investing (Crikey, 2014). In the stated case of Woolworth, annual report of the company found to be prepared in accordance with the various principles as well as concepts and the same has resultant prove to be true as well. Also the financial stement have been prepared in accordance with the Australian Accounting standards. Further, this statement also involves the interpretation in regard to the different accounting standards and also the pronouncement of the international financial reporting standards. All these standards have been governed by the various provisions of the Corporation Act, 2001. Woolworth Group have been operating under their elegant Australian Accounting Standards for the purpose of the financial reporting References: Accounting-simplified.com. (2016). Accounting Concepts Principles | Accounting-Simplified.com. [online] Available at: https://accounting-simplified.com/financial-accounting/accounting-concepts-and-principles/ [Accessed 27 May 2016https://cms.sinhgad.edu/. (2016). 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