The intent of this paper is contribute to analysis the conceptual model of IASB with measure the instance of China Light and Power Company Limited ( CLP ) whether conform to the conceptual model which comprise of the elements that offer the organisation information to stakeholder and users, such as relevancy, faithful representation, comparison every bit good as comprehensibility. We are necessary to farther luxuriant each elements and analyse the CLP instance survey in below context.
BACKGROUND OF INTERNATIONAL ACCOUNTING STANDARD BOARD
First of all, International Accounting Standard Board ( hereinafter called IASB ) which is a planetary independent non-profit standard-setting association. Furthermore, International Financial Reporting Standards ( IFRSs ) through the International Accounting Standards Board ( IASB ) to set up a high quality accounting criterions, cardinal conceptual to aims and place its construct, which besides provide an easier understanding fiscal statements every bit good as describing to a stakeholder ‘s rating. In add-on, an comptrollers and hearers can besides follow this international accounting criterion for assorted practical undertakings. Theoretically, the conceptual model is decidedly able to supply a dependable mention papers in order to develop of accounting criterions when the state deficiency of fundamental law. Besides, this model besides represented as a footing guideline, norm every bit good as a statement of rules. However, the model is non an accounting criterion. Sing the Preparation and Presentation of Financial Statements which was issued by IASC in 1989, IASB was adopted this model in 2001 as good. Most significantly, harmonizing to the different fortunes, the effects of fiscal minutess and features, which to depict the elements of fiscal statements.
2.1 THEORETICAL OF FIVE ELEMENTS OF FINANCIAL STATEMENT
As fiscal statement defined that there are five elements such assets, liabilities, equity, grosss and disbursals. Hereinafter is to lucubrate the theoretical of assets and liabilities. First of wholly, the definition about assets, as the model determined that an assets is the entity as a past incident or dealing and likeliness future economic benefit which controlled by the organisation ( IASB Framework ) . Simultaneously, a future benefit will be created when an assets capacity has a straight or indirectly hard currency influx or hard currency equivalents to an organisation. Furthermore, assets might be classified into severally current and non-current circumstance. Furthermore, refer to IASB finding that liabilities as a present duty of the organisation originating from past events, the colony of which is expected to ensue in an escape from the organisation of resources incarnating economic benefits. In add-on, equity is defined as all the organisation ‘s assets subtract all its liabilities. Significantly, it is no uncertainties that gross Acts of the Apostless as the respects of the organisation additions in future economic benefits which related to increase the assets or decreases the liabilities in accounting period for dependability measuring. Last, the component of disbursals is serves as the lessenings in economic benefits about an organisation which related to depletion in an assets or liabilities in accounting period.
To reason, there is the purposes to province the five elements such as assets, liabilities, equity, gross and disbursals, whilst organisation fixing the income statement and statement of fiscal place. And we can specify that these elements are able to supply the relevancy, faithful representation, comparison every bit good as understandability information to the stakeholder, and familiarise an organisation whether maximise the likeliness of a possible economic benefit in the hereafter which associated with the point will flux to or from the organisation.
CASE STUDY OF ANALYSIS THE 2011 ANNUAL REPORT OF CLP HOLDINGS LIMITED
In this survey, we have to further analyse the four of qualitative features information such as relevancy, dependably representation, comparison and comprehensibility with the instance of CLP, that are most valuable to the bing and possible investors for their determinations taging which relies on the fiscal studies.
3.1 ORGANIZATION HISTORY
CLP was established on Jan, 1901 in Hong Kong and its nucleus concern is a service of supply electricity to Hong Kong citizens. Presents, CLP is a market leading in electricity industry with diversify assorted concern such as power coevals, gas storage, retail services and so on, and implementing a planning about corporate societal duty by corporate administration to enhances credibleness and improves stockholder ‘s and other stakeholders benefits. Therefore, we can reexamine its one-year study to familiarise the concern circumstance and managerial direction about CLP.
3.2 THEORETICAL FRAMEWORK
With mention to Brian and Rutherford ( 2001, pp33-35 ) revealed, a relevancy is provide the related information for the stakeholder to doing different determinations. On the other manus, refer to the stakeholder definition which is comprises of providers, clients, banker, authorities, rivals, citizens, employees, stockholder and so on. Therefore, the information should be possess high quality of relevancy to assist the stakeholder with foretelling the hereafter trends of concern in fiscal statements and thereby enable to measure yesteryear, nowadays and foreseeable circumstance between corroborating and rectifying any past anticipations that they have made ( IFRS mentality 2010 ) . We can discourse a few illustrations to do illustration in farther context. First, from the last fiscal twelvemonth, CLP was disclosed a diminution in net incomes per portion ( EPS ) from $ 2.46 to $ 2.41. Besides, sing the CLP profitableness, this information is relevant to stakeholders whether acquired verification respects of their past anticipations and foreseeable future tendency in the net incomes of the company. Second, seasonableness is a cardinal to relevance, after the day of the month of fiscal place study during the clip when audit is carried out, so, it becomes clearly which debts were realized ( CLP one-year study, 2011, p.210 )
3.2.2 FAITHFUL REPRESTATION
Faithful representation which is comprise of several elements such as Neutrality, Prudence, free from material mistake, completeness and true and just position as good. Furthermore, in the fiscal statement, it is really of import to convey the accurately dealing, circumstance and events that occur during a fiscal period. It is no uncertainty that an economic phenomenon can be attained by the faithful representation whereas it should be unprejudiced, unity every bit good as truth. Virtually it is non similar to legal signifier whereas the economic phenomenon is depicts by dependably fiscal information with the foundation stuff of dealing, event or existent circumstance. Furthermore, there is occur multiple ways despite entirely has a individual economic phenomenon, nevertheless, a multiple economic phenomenon besides can be sought out by a individual word picture in fiscal studies. For case, the independent hearer harmonizing the HKSAs study ( Hong Kong criterions on scrutinizing ) was represented the neutrality, prudence and true and just position ( CLP one-year study pp.139-146 ) .
As a affair of fact, stakeholder can be acquired the accurate information with the comparison analysis and rating about an organisation ‘s comparative fiscal place, public presentation every bit good as fiscal place in the fiscal statement whilst there occurs economic phenomena in growing or worsen circumstance of the similar industry entities. As a consequence, the measuring of the fiscal public presentation in similar organisation, like as minutess and other events should be coherent for the accounting policy with the entity. Therefore, the information of organisation is more valuable for stakeholder referencing. In a momentous therorietical, the information should be based on different fortunes which to be selected or adopted by the stakeholders.
The last qualitative feature is understandability. It acts as the quality of information showing to stakeholders with clearly, right and discriminately every bit good. Therefore, an organisation ‘s dealing and events must be portrayal presented in a clearly respects of the fiscal statements which guarantee the complexness to understand position will non happen during stakeholders review. If they unacquainted with the abstruse fiscal statements and accounting statement which munificent clip and possible misdirecting them. Furthermore, we assume the users of fiscal studies that have a sensible cognition of concern and economic activities to be read the fiscal statement by and large, such as income statement, amalgamate fiscal statement every bit good as fiscal place and so on. Furthermore, when the economic phenomena are enormously complex, merely fewer of stakeholders may understand the fiscal information picturing those economic phenomena for doing their determinations. For case, there were few pages with the fiscal statements of CLP ( CLP one-year study, 2011, pp.136-138 ) that provided the information how to grok the fiscal statement. The one-year study was provided an illustration to user by the construct of “ What is the difference between a concern combination and an plus acquisition? Why is it of import to separate them? ” In this few pages, CLP study provided the acquisition of a concern from accounting position and it is the utile information for deficiency of accounting cognition investors recognize doubtless.
Opinion OF ONE SIGNIFICANT QUALITATIVE CHARACTERISITC
I am considering with several elements respects of relevancy, dependably representation, comparison and comprehensibility that those are similarly of import elements of qualitative features. However, my sentiment to choose the qualitative feature is a dependably representation, whereas this characteristic can adequately to track the fiscal statements to stakeholder for taging different economic determinations, which delegate of an organisation that has a high grade of truenesss demonstrated to investors and possible investors of economic phenomena is critical importance in realistically concern environment.
As a affair of fact, assorted users that require different fiscal information for the intent of their economic determinations taging. Simultaneously, the users in fiscal sectors most likely occurs misinterpretations or doing wrong determinations if the relevant fiscal information is existed inaccurate, false or unjust. Therefore, it is no uncertainty that the users is indispensable to familiar a fiscal statement before make a economic determination.
Brian and Rutherford, ( 2000 ) . An Introduction to Modern Financial Reporting Theory. SAGA. pp33-35
CLP Holdings Limited – Annual Report and Accounts, 2011
hypertext transfer protocol: //www.clpgroup.com/Pages/home.aspx [ accessed 16.11.2012 ] .
Ernst & A ; Yong ( 2010 ) . Conceptual Model: Aims and qualitative features, Addendums to IFRS. Issue 86. Oct 2012
Fiscal Accounting Standards Board, Statement of Financial Accounting Concepts No. Features of Accounting Information ( 1980 )
Hong Kong Standards on Auditing
hypertext transfer protocol: //www.hkicpa.org.hk/en/standards-and-regulations/standards/auditing-assurance/ [ accessed 16.11.2012 ] .
International Accounting Standards Board ( IASB ) ( n.d ) . “ Overview ” . Available from hypertext transfer protocol: //www.ifrs.org/Pages/default.aspx [ accessed 14.11.2012 ] .
Peter J. Walton, Walter Aerts, Peter Walton. , ( 2006 ) . Global Financial Accounting and Reporting: Principles And Analysis. p.87