NiCE Qualitative Characteristics Measurement †MyAssignmenthelp

Question: Discuss about the NiCE Qualitative Characteristics Measurement. Answer: Introduction In this continuously changing business world, companies all over the world are witnessing impressive growth in the businesses that leads to higher profitability. At the same time, the business entities have to confront with various difficult business problems or issues due to their complex business structure. One of these issues is known as Accounting Issues. Business entities face different kinds of accounting issues at the time of conducting the accounting and financial operations. Various reasons are there behind these issues management, but non compliance with the required accounting and financial standards is considered as the major reason behind the occurrence of accounting issues (Kulikova, Grigoryeva and Gubaidullina 2014). It needs to be mentioned that it is the obligation on the business entities to carry on their accounting and financial operations as per the provided standards and principles of accounting conceptual framework and there is not any exception of this rule in case of Australian Security Exchange (ASX) listed companies. In Australia, Australian Accounting Standard Board (AASB), collaborating with International Accounting Standard Board (IASB), has developed an accounting conceptual framework that consists of all the required standards, regulations and principles that the ASX listed companies must comply with in order to avoid the significant accounting issues (aasb.gov.au 2018). This report aims to do an in-depth analysis of the standards and principles of the conceptual framework in Australia. Dominos Pizza Enterprises Limited of Australia is selected for the analysis as the company is listed in the top 100 ASX companies (dominos.com.au 2018). Conceptual Framework Objectives As per the earlier discussion, the ASX listed business entities are responsible to comply with the standards and principles of AASB conceptual framework so that the aspects like transparency and accuracy in financial reporting can be maintained. Now, it is required to be mentioned that the AASB conceptual framework has three major objectives in financial reporting and they are mentioned below: Users of financial statements need information about the economic resources of the business entities as this information is helpful for ascertaining the financial standing of the business entities. Thus, the first objective of conceptual framework is the give the users the necessary information about the economic resources of the entities for determining the financial position (aasb.gov.au 2018). For the purpose of investment decision-making, users need financial information related to profit/loss, sales and other financial aspects so that the financial performance of the business entities can be ascertained. Thus, the second objective lies in the delivery of this kind of information through financial reporting (aasb.gov.au 2018). Apart from above discussed requirements, users want the information related to the change in the financial performance of the business entities over the years for better decision-making process. Hence, the third objective of conceptual framework is to provide this necessary information to the users through the accurate financial statements (aasb.gov.au 2018). The following discussion shows the compliance of Dominos Pizza Enterprises with the above-discussed objectives of AASB conceptual framework management: The above figure is the consolidated statements of financial position of Dominos Pizza Enterprises. The above statement includes the financial information of the economic resources of the Dominos Pizza Enterprises like assets, liabilities, equity and others and this information helps the users in the determination of the financial standing of the company (dominos.com.au 2018). The above statement is the consolidated statement of profit or loss and other comprehensive income of Dominos Pizza Enterprises that consists of the financial information about revenue, income, profit/loss and others. This information is largely helpful for the users for the determination of the financial performance of the company (dominos.com.au 2018). The above statement is the consolidated statements of change in equity; and this statement includes information related to the change in profit, change in equity, change in income and others so that the users can ascertain the exact change in the financial performance of the company (dominos.com.au 2018). Apart from all these, Dominos Pizza Enterprises provides the necessary notes of financial statements in order to provide proper explanation and justification of the accounting treatments. From the latest annual report of Dominos Pizza Enterprises, it can be found that the company complies with Corporations Act 2001, Australian Accounting standards and the conceptual framework of AASB to prepare and present the financial statements. In addition, Dominos Pizza Enterprises also follows IASB and International Financial Reporting Standards (IFRS) for financial reporting. All these aspects support the argument that Dominos Pizza Enterprises Dominos Pizza Enterprises fulfils all the objectives of AASB conceptual framework (dominos.com.au 2018). Recognition Criteria Apart from the above-mentioned objectives, AASB conceptual framework has another dimension that is the recognition criteria of major financial aspects like assets, liabilities, equity, revenue and expenses. At the time of the preparation and presentation of the financial reports, business entities of ASX need to consider these recognition criteria (aasb.gov.au 2018). Moreover, business organizations need to consider two other aspects. First, companies are required to take into account all the relevant information associated with these above-mentioned financial aspects. After that, business entities are required to ensure the faithful representation of the financial statements for the recognition of major financial elements (aasb.gov.au 2018). In this context, it needs to be mentioned that the conceptual framework of AASB has provided the business entities of Australia with different rules for the recognition and measurement of the crucial elements of financial reporting. The following discussion shows the compliance of Dominos Pizza Enterprises with the above-discussed recognition criteria of AASB conceptual framework: Revenue: The accountants of Dominos Pizza Enterprises do the recognition of revenue based on the fair value of the received consideration. Revenue from the sales of the goods is recognized after the transfer of risk and rewards of ownership. Accrual basis is used for the recognition of franchise income. Dominos Pizza Enterprises follow AASB 118 for revenue recognition (aasb.gov.au 2018). Equity: ordinary shares are considered as equity in Dominos Pizza Enterprises and the company does not have any limit on the issue of authorized capital. In addition, the issued shares do not have any par value. The company follows AASB 1004 for the recognition of equity (aasb.gov.au 2018). Assets: Dominos Pizza Enterprises uses fair value model for the recognition of property, plant equipment as per AASB 116. It needs to be mentioned that Dominos Pizza Enterprises has pledged all their assets except goodwill as security (aasb.gov.au 2018). For the recognition of goodwill, Dominos Pizza Enterprises uses fair value and the goodwill is subject of amortisation as per AASB 138 (aasb.gov.au 2018). The company recognizes their trade and other receivables as loans and receivables and their measurement is done based on amortized costs as per AASB 9 (aasb.gov.au 2018). Liability: Trade and other payable is a significant liability of Dominos Pizza Enterprises and the company recognizes them as financial liabilities based on the amortized costs according o AASB 9 (aasb.gov.au 2018). In the company, interest bearing liabilities are considered as the borrowings of the company and Dominos Pizza Enterprises recognizes them on fair value basis after the deduction of transaction costs (aasb.gov.au 2018). Dominos Pizza Enterprises recognizes their business provision at the time of the presence of any present legal obligation due to any past event as per AASB (aasb.gov.au 2018). Thus, from the above discussion, it can be observed that Dominos Pizza Enterprises use the different recognition criteria provided by AASB conceptual framework for the recognition of different financial aspects. It implies that the company fully complies with the standards and principle of the recognition criteria of AASB conceptual framework. Fundamental Qualitative Characteristics In the conceptual framework for financial reporting, AASB has mentioned abut two fundamental characteristics of financial reporting as it is necessary for the financial statements to have these two characteristics in order to become useful to the users. They are Relevance and Faithful Representation. It needs to be mentioned that the relevant financial information has the capability to make positive difference in the decision-making process of the users (Nobes and Stadler 2015). At the same time, faithful representation helps the companies in representing all the information about the economic phenomena of the business entities (Sytnik 2014). The analysis of the 2017 Annual Report of Dominos Pizza Enterprises states that the company is very efficient in releasing the required financial through the publication of necessary financial statements like balance sheet, income statement, cash flows statement and others (dominos.com.au 2018). By accessing these reports, users can obtain all the relevant financial information of the company (dominos.com.au 2018). As per the above audit report, it can be observed that Dominos Pizza Enterprises has prepared and presented all of their financial statement with accordance to the standards of Australian Accounting Standard, AASB and Corporations Act 2001 (dominos.com.au 2018). In addition, the company also follows the standards of IASB and IFRS for financial reporting. Thus, all these above-mentioned aspects support the argument that the company has ensured faithful representation of financial information (dominos.com.au 2018). Enhancing Qualitative Characteristics Apart from the fundamental qualitative characteristics, AASB conceptual framework has also mentioned about four enhancing qualitative characteristics in order to enhance the quality of financial reporting. They are Comparability, Verifiability, Timeliness and Understandability (Bohuova 2014). Comparability helps in the identification of the similarities and differences in the different aspects of financial reports (Yurisandi and Puspitasari 2015). At the same time, verifiability ensures that the users can verify the provided financial information with the help of their knowledge. In the presence of timeliness characteristic, business organizations can ensure the timely delivery of the financial information (Kulikova Grigoryeva and Gubaidullina 2014). Lastly, in the presence of understandability, users can classify the financial information based on their characteristics and can present them (Gebhardt, Mora and Wagenhofer 2014). The presence of all these characteristics can be seen in the financial reporting of Dominos Pizza Enterprises (dominos.com.au 2018). The presence of faithful representation ensures to retain the characteristics of comparability and verifiability as the users can compare and verify the information by using the standards of AASB (dominos.com.au 2018). In addition, timely release of annual report ensures timeliness in financial information. It needs to be mentioned that Dominos Pizza Enterprises discloses all the necessary justification and clarification of accounting procedures with various notes to financial statements so that it becomes easy for the users to understand them (dominos.com.au 2018). Conclusion Based on the above discussion, it can be said that it is necessary for the business entities of ASX to comply with the standards and principles of the conceptual framework of AASB so that they can ignore the major accounting issues caused by non-complying with the required standards. Apart from this, the compliance with the conceptual framework of AASB helps in bringing accuracy, transparency and understandability in the financial reporting for the overall betterment of the users of these reports. In this report, it can be observed that Dominos Pizza Enterprises prepares and presents all of their financial statements in accordance with the rules and regulations of AASB conceptual framework. The company has fulfilled the objectives of AASB conceptual framework where they have recognized and measured the major financial elements as per the AASB recognition criteria. Complying with all these aspects has ensured that the financial reporting of the company posses all the fundamental as we ll as enhacing qualitative characteristics of AASB conceptual framework. By complying with all these standards and principles, Dominos Pizza Enterprises has been able to assist the users in decision-making process. From the whole discussion, some recommendations are provided below: It is recommended for all the ASX listed business entities to follow all the required standards and regulations for financial reporting in order to avoid the accounting issues; like AASB, IFRS, IASB and others. The business entities of Australia are required to comply with the objective of AASB conceptual framework for effective financial reporting. It is recommended to all ASX listed business entities to follow the recognition criteria of AASB conceptual framework for the recognition of major financial elements. The financial statements of these companies must possess both the fundamental and enhancing qualitative characteristics of financial reporting. References Aasb.gov.au. (2018).Conceptual Framework for Financial Reporting. [online] Available at: https://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf [Accessed 16 Apr. 2018]. Aasb.gov.au. (2018).Conceptual Framework for Financial Reporting. [online] Available at: https://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf [Accessed 16 Apr. 2018]. Aasb.gov.au. (2018).Contributions. [online] Available at: https://www.aasb.gov.au/admin/file/content105/c9/AASB1004_12-07_COMPjan15_07-15.pdf [Accessed 16 Apr. 2018]. 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