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Conceptual Framework of Accounting Record 

Introduction to Conceptual Framework

Quintessentially, the primary purpose of financial reports in Australia and other countries like the USA is to ensure that the accounting information offered by companies puts the management in a position where they will prove their accountability while at the same time enabling the users of that information to make rational decisions. The longing of the accounting regulators to attain their objective is what transitioned into the formation of accounting concepts that are essential when preparing financial reports. As a result, these particular concepts of accounting have been used as a ground for the Australian Conceptual Framework for General Purpose Financial Reporting.

However, there are certain assumptions that underlie the conceptual framework. According to the assumptions, to make certain that the information offered in the financial reports is useful, the firm has to assume that the users of the financial statements have homogenous needs, and the information offered is capable of meeting those needs. When these assumptions are put into consideration, the accounting information provided is then considered as reliable and relevant. Correspondingly, all firms which are listed on the Australian Stock Exchange ought to promptly inform the market about any issues that affect or are likely to change their securities prices (ASX Listing Rules, Chapter 3). In as much as there is a paradox between relevant and unreliable information or reliable and irrelevant information, the conceptual framework purposes to make the accounting information reliable and relevant to facilitate ethical decision making amongst the shareholders.

Background of BHP Group Limited

BHP Group Ltd, initially known as BHP Billiton Ltd, is a worldwide resources firm. The firm is listed on the Australian Stock Exchange as a dual firm made up of BHP Billiton Ltd and BHP Billiton Plc. Moreover, the headquarter of this firm is situated in Melbourne, Australia. The firm produces various products, such as coal, iron ore, petroleum, uranium, and copper (BHP Group, 2018). The business of the firm entails marketing, petroleum, minerals Australia, and Americas. Besides, the firm draws out and manufactures gas, oil, and minerals mainly from its production areas located in America and Australia. It is one of the largest mining firms across the globe, with almost 72 000 employees. In addition, the firm aims at magnifying its operating margins and fully make use of its assets to ensure that its shareholders gain value.

Nonetheless, the company's operations are in line with the AASB standards and the conceptual framework that was provided by the board. Correspondingly, to come up with a more substantial corporate reporting parity, the firm gives maximum consideration to the general-purpose accounting principles. The purpose of this report is to deliberate upon the general accounting principles, the conceptual framework, and other relevant issues that BHP Group Ltd encounters while executing its operations.

Conceptual Framework

The conceptual accounting framework refers to the theory that explains the reasoning behind financial statements and reports. Again, the framework highlights the objectives of the financial statements as well as its users to ensure that there is a consistency of understanding and dispute resolution (No, 2018). In relation to the efficiency of the firm in executing its responsibilities, which are in line with the conceptual framework, BHP Group Ltd has fulfilled all the requirements. This implies that the firm is in compliance with all the essential guidelines and fundamentals needed in a conceptual framework. Apart from being compliant, BHP Group Limited has been on the frontline of informing its shareholders of the current situation of its operations. Significantly, this has enabled them to remain competitive in the market and also allow its shareholders to make good decisions that have helped them to excel.

Notably, the BHP Group critical guidelines of the rules and regulations of the directors are an essential tool that illustrates its abiding by the loyal representation feature of the conceptual framework. Both the Australian and US rules are used to ensure that the directors operate independently. Furthermore, the directors are expected to come up with financial reports that honestly and fairly reflect the overall performance of the firm. Correspondingly all the requirements, as highlighted in the Corporations Act 2001, are strictly adhered to by the directors. Besides, there is a guideline that allows the firm to come up with adequate reporting controls that ensure that relevant information is promptly shared with the shareholders (BHP Billiton, 2018). Also, the firm is more focused on assuring its investors of the favorable reception of unbiased information and highly standardized disclosures to ensure that they make rational decisions. This means that the qualitative features of the conceptual framework, including reliability, relevance, and timely presentation of financial reports is strictly abided by the firm to ensure its financial report covers everything.

The compliance of the firm with the Joint Ores Reserves Committee is relevant in relation to the conceptual accounting framework. The existence of such guidelines makes sure that users have confidence in how the firm is running its affairs. Moreover, those guidelines are very critical in public reporting in relation to mining, of which the company has strictly observed thus, allowing the users to make proper decisions. Besides, the company has a risk management guideline that is crucial in managing and identifying potential risks to ensure that the stakeholders experience an enduring value. Additionally, the implementation of internal control aids in the prevention of the effects as a result of the identified risks as well as a close observation of the procedures within the firm. Nevertheless, it is through such guidelines that the BHP Group has been able to comply with the disclosure requirements through which it has been capable of fulfilling the conceptual framework requirements for financial reporting.

Markedly, the firm has been releasing essential details of how it is currently performing and other previous performances, which make it easy for users to compare and contrast their level of progress. Explicitly, the issuing of such information is in line with the user comparability and understandability requirements since they will be in a better position to rationally decide on what is best.

General Purpose Accounting Principle

Basically, the accounting principles refer to the rules and guidelines that firms ought to comply with when reporting their financial information. Chiefly, the revenue recognition principle is concerned with the revenue identified in the financial reports and statements. The principle of matching, on the other hand, sets forth that the costs obtained in a fiscal year should be coupled with the revenues; correspondingly, adjustments ought to be done. The principle of historical cost requires that if no cash is given out when an asset is being acquired, then it should not be considered as an asset. The principle of objectivity, is all about data authentication, it stipulates that all transactions which are noted down must be fully supported with adequate evidence. Lastly, the principle of full disclosure principle upholds that financial statements must present all the essential data without hiding anything that is considered vital (Adamu, 2018).

From the financial statements of the BHP Group Limited, it is clear that information concerning revenues is exposed, the costs undergone by the company and other adjustments are also presented. Notably, the annual report has made use of all the policies of accounting since the chief executive officer has signed the document, the financial statements have footnotes which give further explanation about the policies used and there is a match between the income and expense columns. Also, the financial statements explain the computation of the earnings per share, dividends, factors that affect revenue and profits, intangible assets, as well as the current and deferred taxes. Lastly, the preparation of the financial statements by the firm is in adherence to the IFRS standards since the information concerning the judgments, estimates, and potential impacts on its financial position is also captured in the reports.

Based on the annual reports of the BHP Group, it is evident that the essential financial and non-financial data has been disclosed to enable the shareholders to use them when making decisions related to the firm. In addition, the firm also explained its principal performance through the disclosure of its proxy performance measures. Although the financial statements of the firm lack the specified data as per the Australian law, they are trying to offer as much information as they can to the users. Besides, the exposure of so much information in relation to their alternate performance measures and developments is more likely to hurt its prejudicial interests. Furthermore, the disclosure of such information may misguide the firm since it concerns sensitive contracts; the confidentiality between the two may be undermined.

Indeed, the annual report of the BHP Group Ltd does not contain information that is related to the estimations and what they look forward to do regarding internal management. Also, the information concerning assets that are more likely to change its module of pricing and commercial contracts are not part of the annual reports. This implies that the principle of improved measures of disclosure has been strictly followed by the firm through its inclusions and exclusions. This is as well following the general purpose financial reporting.

Ultimately, the financial statements of the firm are prepared according to the IFRS standards. The critical accounting policies complied by the firm when making vital assumptions and judgments are in terms of exploration and evaluation, depreciation of plant and property, impairment of non-current assets, development expenditure, significant events such as Samarco dam failure, closure and rehabilitation provisions. This implies that a good number of accounting policies have been integrated into the groundwork of the general purpose financial reports statements.

The BHP Group limited experiences various issues while conducting its activities. For instance, in the financial year 2011, they had problems related to the interaction of vehicles and mobile equipment, compliance to isolation, and work permit processes while minimizing the job-related health exposures, specifically to mutagens (Ridley & Lewis, 2019). However, the fatal risk control was formulated to improve their control over particular areas of risk. The GLD for lethal risk controls provides the steps taken to identify, analyze and counter the risks of vehicles and mobile equipment, isolation and work permit, ammunition and bursting, control of the ground, and perilous materials, among others. Health issues faced by individuals were extreme tiredness, ailments, and career-related exposure to noise.

Conclusion on Conceptual Framework

In conclusion, the information presented in the financial statements and reports are a representation of the crucial data related to the financial health of the BHP Group Ltd. Thus, adherence to the conceptual framework and accounting policies when making the financial statements eases the process of decision-making amongst stakeholders and forthcoming investors on whether they should invest in the firm or be engaged in its developmental projects. In addition, the financial statements look into the decisions concerning marketing, thereby providing information about how the company operates, thus, offering a significant return on investment. From the report, it is clear that the BHP Group complies with all the IFRS standards as well as other Australian accounting policies.

References for the Assignment

Adamu, Nabil. "Accounting Foundations." Training 1 (2018): 1HU. BHP Group Limited. Annual Report. 2018. Retrieved from https://www.bhp.com/-/media/documents/investors/annual-reports/2018/bhpannualreport2018.pdf BHP Group Limited. Annual Report. 2011. Retrieved from https://www.bhp.com/-/media/bhp/documents/investors/reports/2011/bhpbillitonannualreport2011.pdf?la=en Corporations Act 2001. Retrieved from www.comlaw.gov.au

No, Accounting Standard. "Conceptual framework for financial reporting." Norwalk, CT: FASB (2018).

Ridley, Kirstin, and Barbara Lewis. "BHP to defend damages." Australia's Paydirt 1.272 (2019): 13.

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