The undermentioned study will discourse why the International Accounting Standards Board ( IASB ) felt it necessary to update their conceptual model. The study will besides reexamine the company Next PLC one-year studies and measure the relevancy, faithful representation, comparison, seasonableness, verifiability and understand ability of the information with respects to phase A of the joint conceptual model ; Qualitative Characteristics ‘ . The study shall reason with which one of the two ; cardinal qualitative features, relevancy information and faithful representation, is of import and why? 80
IASB Updated Conceptual Framework:
The joint conceptual model undertaking by the International Accounting Standards Board ( ISAB ) and the Financial Accounting Standards Board ( FASB ) was foremost set up in 2005. Each board had their ain set of conceptual models the fiscal accounting criterions board was the first to put up a conceptual model for accounting criterions in the 1970 ‘s.
There was modest distinction between both models, when the international accounting criterions board set up their conceptual model. The IASB and FASB discuss subjects separately and set their positions frontward. However ideas and thoughts are besides brought up at joint meetings. There are besides joint squads from each board designated to each different stage ‘s paper.
The ground behind the updated articulation model “ primary motive for joint undertaking is to meet the models of the two boards in order to supply a consistent rational foundation for convergence of the two sets of criterions ” ( Whittington,2008 ) . The purpose of the new model is to make full in old spreads within both sets of conceptual models that are now presently being amalgamated to achieve entireness and take any contradictive statements. Other countries need updating due to an of all time altering economic environment. This will “ supply a sound foundation to develop future accounting criterions ” ( McGregor & A ; Street,2007 ) .280
Following Plc: Qualitative Characteristics & A ; Annual Histories
Relevance:
Predictive Value ( hard currency flow )
Following province ; that their hard currency coevals remains robust purchasing back ?120m portions and cut downing net debt by ?200m. Chairman ‘s statement refers to strength and ability to raise hard currency. ( Following plc,2010, p2 )
Confirmatory Value ( net income ascents )
Next has changed its net income outlooks on legion occasions during 2009, due to the economic impact non being terrible as expected. The company was able to reimburse more of the value diminution in sterling and bring forth new tendencies faster to the market. ( Next,2010, p4 )
Fair Value:
Following plc step their derivative fiscal instruments at just value than that of historical. As just value is relevant information and represents the current value of the plus alternatively of the purchase monetary value. ( Following plc,2010, p53 )
Faithful Representation:
Corporate Administration:
Following plc has a huge corporate administration statement that covers all facets of concern, from the board of managers through to put on the line direction etc. Following conform to the Combined Code on Corporate Governance and Disclosure and Transparency regulations. ( Next,2010, p25-28 )
Neutrality:
Following plc do non merely concentrate on merely the positive facets of the concern. They besides assess any negative scenario ‘s that may be presented to the company in which may necessitate to be addressed. Example is recognition liquidness hazard within the current economic clime of Next plc and their cardinal providers. ( Following plc,2010, p13 )
Hearers Report:
Following plc hearers, Ernest and Young LLP signed of the audit histories with nil to describe. They stated that Next has given a true and just position and complied with companies act 2006, IFRS and their corporate administration statement.
( Following plc,2010, p40-41 )
Comparison:
Consistency Accounting Policies
Following one-year study shows all accounting policies for each associating accounting entries and how they have dealt with each point. They have stated whether points have been changed to follow with IAS and IFRS and how these alterations have affected the company if any. ( Following plc,2010, p50-55 )
Present/Previous Year Comparable Figures:
Following shows their amalgamate one-year histories in a comparative manner demoing the old twelvemonth ‘s figures within the fiscal statements to the current twelvemonth ‘s figures. ( Following plc,2010, p42-49 )
Ratio & A ; Index Numbers:
Following plc public presentation chart shows a 5 twelvemonth comparative graph with respect to the Ftse index. The company is comparing itself to other companies in which it feels they are more comparable to. ( Following plc,2010, p34 )
Seasonableness:
Year End & A ; Hearers Signature:
Following plc print their one-year study twelvemonth terminal 31st January 2010. Ernest and Young LLP signed off the one-year study off on 25th March 2010. ( Following plc,2010, p40-41 )
Accounting Policy Changes:
Next has changed relevant accounting policies throughout the twelvemonth in a timely manner so these can be stated in the twelvemonth terminal histories and information made available to users. ( Following plc,2010, p50-55 )
EPS:
Within Next ‘s Directors study and reappraisal information has been released to investors and possible investors with respect to EPS. They have stated that they hope the award for EPS by January 2013 to lift by 25 % . ( Following plc,2010, p91 )
Verifiability:
Auditor Report:
Ernest and Young LLP have verified that Next plc have followed everything consequently in fixing their one-year study, ie corporate administration, companies act and IFRS. ( Following plc,2010, p40-41 )
Chairman ‘s Statement:
The president ‘s statement purports the current issues and traveling concerns that the company faces during these rough economic times. However it besides verifies how Following will go on to make good through the economic phenomena. ( Following plc,2010, p2 )
Accounting Policies:
Next ‘s list of accounting policies verifies that the company is utilizing the right criterions implemented in their fiscal statements. This has besides been verified, that right intervention is being used, by the independent hearers. ( Following plc,2010, p50-55 )
Understand ability:
Graphic representation:
Following includes in their one-year study a drumhead of public presentation. This is a graphical representation of 4 chief countries over a 5 twelvemonth historical period. This gives the reader a better apprehension of fiscal growing or loss.
Disclosed Information:
Following discloses information in note signifier to their accounting entries within the amalgamate balance sheet, income statement etc. This note signifier explains how the entries have been treated and gives the user a greater apprehension of numerical figures.
Administration:
Following plc has lain out their one-year study in a concise and clear mode with great easiness of entree to travel around study online.
Cardinal Qualitative Features: Relevance & A ; Faithful
Cardinal qualitative features, relevancy information and faithful representation are every bit of import in their ain right. However in my sentiment, I believe relevancy of information to be the chief of import factor. The ground for such determination is “ … capable of doing a difference in the determination made by users ” ( FASB,2010 ) . Potential investors can determine the place of the company and based upon the relevant information decide whether they wish to put.
The prognostic value method can assist users of the relevant information get how the company has done, net income wise, in old old ages historically, but besides ascertain how it is likely to make in the hereafter. I established this with respects to the quotation mark from QC10 “ … gross information for the current twelvemonth, which can be used as the footing for foretelling grosss in future old ages, besides can be compared with gross anticipations for the current twelvemonth that were made in past year. ” ( FASB,2010 ) . Relevance information ‘s “ prognostic and collateral value is relevant ” ( IASB,2009 ) . I believe that relevant fiscal and non fiscal information is the most of import information with respect to investors.
However I would wish to add that the relevancy information still has to be dependably represented, as everything in fiscal histories should hold a true and just position.
Decision
In the above study it has been stated the ground behind the merger of the IASB and FASB conceptual model. This was to make full in any spreads within the two sets of model and to take any contradictive statements. The model besides needed updating to co-occur with current economic alterations.
With respects to Next plc ; each feature has been evaluated utilizing cited stuff either from IASB or other methods to explicate the nature of each qualitative. This has so been referred to material or statements within Next plc one-year study, which has besides been cited.
The above study besides concludes a penchant as to which cardinal feature was most of import. It was stated that ; both were in fact every bit of import. The determination was made from an investing point of position and opted for relevant information. Which concludes utilizing prognostic and collateral values helps investors ascertain whether or non to put by utilizing the current gross value to cipher future gross and besides historical gross.
References & A ; Reading:
Beretta, S. & A ; Bozzolan, S. ( 2004 ) . A model for the analysis of house hazard
communicating. The International Journal of Accounting, 39, 265-288.
FASB
Statement of Financial Accounting Concepts No. 8
September 2010
Ferdy new wave Beest
Quality of Financial Reporting: measurement
qualitative features April 2009
Holland, J. ( 1999 ) . Fiscal Reporting, Private Disclosure and the Corporate
Governance Role of Financial Institutions. Journal of Management and Governance,
3 ( 2 ) , 161-187.
IASB
Board Meeting: January 2009, London
Undertaking: Conceptual Framework – stage A: Qualitative
Features and Constraints of Financial Reporting
( Agenda paper 5 )
IASB ( 2008 ) . Exposure Draft on an improved Conceptual Framework for Financial
Coverage: The Objective of Financial Reporting and Qualitative Characteristics of
Decision-useful Financial Reporting Information. London.
Mary E. Barth
Standard-Setters, Measurement Issues, and the Relevance of Research December 2006.
Following plc Annual Report 2010
Oscar J. Holzmann and Tom Robinson
Joint Conceptual Framework Volume 18, Issue 1, Article foremost published online: 18 OCT 2006.
Sloan, R. ( 2001 ) . Fiscal accounting and corporate administration: a treatment. Journal of Accounting and Economics, 32, 335-347.
Warren McGregor
Donna L. Street
IASB and FASB Face Challenges in Pursuit of Joint Conceptual Framework June 2007
Geoffrey Whittington
Fair Value and the IASB/FASB Conceptual Framework Project: An Alternative Position
Volume 44, A Issue 2, A pages 139-168, A June 2008
