Apply AASB 1001 to Report: The Financial Report 2004 of Coles Myer Ltd has proven that the company has obliged the Standard of AASB 1001 Accounting Policies. The report has satisfied relevance by Relevant financial information assisting users in making and evaluating decisions about the allocation of scarce resources (Statement of Financial Position-profit or loss). It assists them in making predictions about future situations and in forming expectations, or it plays a confirmatory role in respect of their past evaluations Financial information may be relevant because of its nature, its nature and magnitude, or because of its magnitude in relation to its nature. Additional guidance on relevance is provided in SAC 3. The financial report has reliable financial information which faithfully conveys to users the underlying transactions and other events that have occurred. For financial information to be reliable, it needs to be free from bias.
Reliable financial information does not lead users to conclusions that serve particular needs, desires or preconceptions of the preparers of financial reports. This is see on the last page of the report where it has been signed by accountants and the AASB representatives. This financial report is able to compare aspects of an entity over time and compare aspects between entities at one time and over time. This implies that the recognition, measurement and presentation of transactions or other events need to be carried out in a consistent manner throughout an entity and over time for that entity, and that there needs to be consistency between entities in these regards. However, consistency should not impede the introduction of improved financial reporting. It is not acceptable for an entity to retain its accounting policies to the detriment of the concepts of relevance and reliability.
Additional guidance on comparability is provided in SAC 3. The financial report of Coles Myer shows that it is on a going concern basis due to the Statement if Financial Performance by viewing the Revenues inflow and Expenses outflow and coming to a profit at the end of the financial year. The accrual basis recognises the financial effects of transactions or other events in the financial years in which they occur, to the extent that those financial effects can be recognised, irrespective of whether cash has been received or paid. Accrual accounting provides information about assets, liabilities, equity, revenues and expenses, and changes in them, that cannot be obtained by accounting only for cash receipts and payments. This Coles Myer Financial Report has provided such information by providing Statement of financial position and performance and cash flows. For the Company to comply with AASB 1001 disclosures must be made.
A summary of accounting policies must be presented in the initial section of the notes in the financial report. The following items must be disclosed in that summary (This summary complies with the Coles Myer financial report on page 8-12): a statement that the financial report is a general purpose financial report.