The Accounting Standards Board ( ASB ) is a organic structure concerned with scene regulations and ordinances aimed at assisting to better fiscal coverage criterions of entities and thereby guarantee conformity with corporate administration rules. These criterions describe the regulations and ordinances to be adhered to by describing entities and/or corporations to guarantee credibleness of the fiscal information to the chief users and/or steadfast major stakeholders. Besides setting ordinances for corporate and authorities coverage, ASB besides contains statements of rules which assist in reexamining and developing these criterions. Changeless reappraisal and development guarantee dynamism in board commissariats and therefore assist the organic structure to capture the current demands of fiscal information users ( Britton & A ; Alexander 2004 ) . Similarly, the accounting organic structure besides plays other functions such as specifying liabilities and assets, reflecting the treatment of the statement on activities which are to be included in a company ‘s fiscal statements every bit good as representation of the fiscal public presentation of an entity.
Chapter II: Discussion
3.0 Primary Features
3.10 Dependability
During fiscal presentation processs all the intended information presented ought to be dependable. Reliability entails exclusion of those features that indicate organisations financial studies free of any conflicting information or even of knowing biasness. The presentation of financial studies ought to be free of any mistake, upholds completeness in describing as per the accounting criterions. For illustration, modern organisations consider usage of amalgamate financials in an effort to heighten dependability of the full one-year study.
3.11 Neutrality
Any information represented demands to be impersonal significance that it should non be intentionally biased. Neutrality will non be achieved when fiscal information has been presented in a mode that influences the determination devising. Similarly, the judgement germinating results which are predetermined should be considered ( Britton & A ; Alexander, 2004 ) .
3.12 Verifiability
Verifiability relates to the consensus of steps, and their usage without prejudice or mistake. Normally this quality is classified as a dependability sub-notion. Counterchecking of mistakes is done by analysing the primary paperss, for illustration bills or assorted grosss prior to entering. Similarly, actions of the internal hearers are monitored for verifiability intents. Verifiability is besides an of import facet in the cheque of the fidelity of information presented. External hearers have to verify a company ‘s fiscal study independently, sing verifiability to be a restraint. Similarly, external hearers may put to death the confirmation of all the fiscal studies of an entity by intentionally size uping the entity ‘s financial studies ( Elliot, 2006 )
3.13 Completeness
A wholly error free study presentation is usually within boundaries of materiality. Harmonizing to Higson ( 2003 ) , false and deceptive fiscal studies may ensue from stuff mistake or skips for other grounds which are n’t material. This therefore will intend the study will be undependable with lack in relevancy. Completeness in this instance is comparative since a fiscal study portrays an entity ‘s fiscal place and public presentation which has high degree of collection hence can non uncover everything.
3.14 Substance over Form
Substance over signifier ensures fiscal studies are complete, relevant demoing the right position of events and minutess every bit good. This means the fiscal statements represented for the entity will be existent and non in legal signifier. The entity represents the substance, while the events and minutess represent the signifier. For substance over-form to be achieved, there is demand for vigilant, interior apprehension and cognition of the operations of the company be undertaken ( Higson, 2003 ) Need for excess probes in seeking more grounds and cogent evidence is applied. The minutess or events of an entity usually go on within an accounting period, for case in readying of balance sheets. For illustration, a company may out-rightly purchase equipment while in existent sense the dealing substance reflects a rental.
3.15 Prudence
There are high degrees of uncertainness within fiscal describing which can be conquered by statements which unwrap the nature of uncertainness and sensed extent every bit good. In add-on, pattern of prudence can assist to cut down uncertainness. Prudence refers to the sum of cautiousness taken in exerting judgements while taking estimations needed in uncertainness ( Britton & A ; Alexander, 2004 ) . Exaggeration of net incomes and assets and understatement of losingss and liabilities are controlled. However, where there are no instances of uncertainness, it ‘s useless to exert prudence. Besides, utilizing prudence for the intent of, for illustration making militias which are hidden or commissariats which are in extra. Prudence should non besides be deliberately used in understating additions and assets or exaggerating losingss and liabilities. This would intend the fiscal study is non impersonal, therefore undependable.
3.16 Faithful representation
Faithful representation is an property of dependability. An event or dealing portrayed in the fiscal coverage is extremely dependent on its weight, duties and rights. Any information is said to be faithful if the steps of accounting within the fiscal is letter writer with the economic phenomena. The footing of measuring and techniques of representation used to deduce the duties and rights are besides evaluated. Faithfulness is apparent where fiscal studies acknowledgment measuring and presentation does match to the reverberation of a given dealing or an identified event. Faithful presentation will revolve on the contemplation of adversity in application of measuring and inventing them, plus techniques to be used for representation disclosure messages reflecting those events and minutess. Completeness, substance over signifier and neutrality possibly said to measure up faithful representation significance thereby rendering dependability redundant ( Britton & A ; Alexander 2004 ) .
3.20 Relevance
Relevance analyzes the capacity of the information represented to convey in a alteration in determination devising. Any relevant information provides values which are prognostic and confirmatory, foretelling on future, present and past. Therefore, this implies that for fiscal information to be considered appropriate, it must give the users a prognosis of the expected tendency of the entity in the hereafter. Relevance quality is besides of import in rectifying and corroborating anterior outlooks due from its confirmatory value. This is because, for relevancy to be achieved, market tendencies lucidity and transparence should be considered. Normally, any information is relevant if presentation of economic determination devising is achieved and besides if the information provided is timely and influences the determinations taken by the end-users ( Higson, 2003 ) . For illustration, plus retentions construction and its current degree representation will assist the user to analyse the ability of the entity to maximise chances and uncover it ‘s response to inauspicious state of affairss. At the same clip, similar information will help in corroborating appraisals in the yesteryear on the construction and the consequences of its operations. In add-on, infrequent or unnatural net incomes or losingss disclosure through fiscal statements is a anticipation that assists the users to anticipate the reverberations of a similar state of affairs in the hereafter.
3.21 Predictive value
Predictive value influences determination doing due to its anticipation abilities. For illustration, net incomes predictive value may mention to the possibility of utilizing current net incomes to anticipate future hard currency flow and future net incomes. Users hence develop high outlooks on future incomes in correlativity with hard currency flows in the hereafter. One of the major aims of accounting for net incomes is anticipation of future uncertainnesss, timing and sum. Feedback value may besides help to foretell future happening. The function of this value is influence on determinations by rectifying or corroborating the antecedently developed outlooks to the determination shapers ( Britton & A ; Alexander, 2004 ) .
3.22 Seasonableness
Timeliness is an facet of relevancy which explains the demand for handiness of information when required. When a study is seasonably, this does non nevertheless heighten relevancy while its absence may ensue to irrelevant information or lead to the loss of relevancy. Normally timeliness harmonizing to ASB is non defined as a relevancy constituent instead as a restraint restricting the being of relevancy on information presented. Early fiscal study presentation improves relevancy ( Higson, 2003 ) .
3.23 Materiality
Materiality is usually an property of relevancy, stand foring the last trial that should be availed to any fiscal study. It inquiries the importance of any fiscal information inclusion into the fiscal study ( Elliot, 2006 ) . The quality acts as the threshold usually required by all fiscal statements. Immaterial representation will impair the apprehension of any other information in proviso. Other qualitative features possibly affected by materiality, for illustration faithful representation. The quality is a filter in finding of significance of any fiscal information act uponing determination reached by users.
3.24 Influence Economic Decision
Any determination taken by an entity will ever hold a fiscal or even material consequence. For illustration, an functionary within an entity may put 2000 dollars in the concern ensuing into inauspicious effects such as addition in returns during favourable concern public presentation rhythms or even losingss due to hapless internal direction. Normally, it ‘s advisable non to let functionaries to do determinations for the entity to avoid inauspicious effects. Whenever a determination is being made, a consideration should be put in topographic point to find whether that determination affects the entity straight in indirectly.
Chapter III: Part 2 Case Application, Afren Plc.
Preparation of fiscal statements nevertheless can be faced with troubles to accomplish the above named quality features. These troubles include seasonableness, complexness, cost against benefits every bit good as the accomplishments required in fixing the fiscal studies ( Elliot, 2006 ) .
Seasonableness
Despite a study holding met the demand of relevance and dependability, or materiality, its usefulness possibly lost if it ‘s non reported on clip ( Higson, 2003 ) . For illustration, Afren plc reported a successful fiscal twelvemonth in 2008, due to application of seasonableness on assorted elements impacting amalgamate financials. The available clip for assemblage and showing a study acts as a restraint in proviso of a relevant study. Normally, when describing period convention is applied, a demand will originate for an earlier coverage before dealing and event facets are known. This thereby limits the possibility of relevant and dependable information representation. Hearers, compositors of criterions, preparers or regulators need to account for the clip available for proper presentation of fiscal studies so as to enable user to do timely determinations ( Higson, 2003 ) .
Costss against benefits
Standard compositors or even hearers are chiefly faced with the trouble of make up one’s minding whether certain fiscal information they are to stand for is more dearly-won than the additions to be derived. These disbursals are such as retrieval, storage, aggregation, presentation, analysis, reading, losingss and decline that may happen, misdirected resources, among others ( Higson, 2003 ) . Afren plc has acquired extremely qualified professionals in its board, leting for proper control of fundss. In 2008, it recruited extremely skilled staff from Randal and Dewey proficient squad. Since there are no universally accepted methods in measuring of additions or costs, professional judgement is hence applied.
Skill required
For every study to be presented to the users, expertness in footings of aggregation, presentation storage analysis and reading among others will necessitate professional cognition. Therefore for any fiscal study professional such as hearers, will be required and their absence may ensue to undependability ( Elliot, 2006 ) . For illustration, the board of managers of Afren plc has applied the been enrolling professionals such as comptrollers, hearers, ( internal and external ) .
Complexity
The complexness of study presentation differs from a study to another. Some may be hard to analyse and show than others. Apart from enrolling extremely talented squad, Afren plc ensures significant and frequent preparation, fiting its staff with extremely standardised accomplishments. The company besides holds regular reappraisal of operations such as originating new coverage governments and intentionally reconstituting it B.O.D ‘s compensations.
Chapter IV: Decision
Afren plc has put into topographic point internal control measures that aid in guaranting proper fiscal study representation is made and every bit good controling the restraints encountered. The company ‘s board is responsible for the above undertaking in an effort to guarantee dependability or even credibleness in fiscal coverage ( Elliot, 2006 ) . On the trouble of costs against benefits, the board holds regular meetings and strategizes on O.K.ing major capital disbursals, policy divestment and fiscal affair considerations. On complexness and accomplishments restraint, the board applies the jurisprudence of deputation to persons thereby easing specialisation. The group public presentation is reported on quarterly, every bit good as financial footing and comparings with the anterior and latest period is done.
