Pacific Accounting Review

Running head: ADVANCED FINANCIAL ACCOUNTING
Advanced Financial Accounting
Name of the Student
Name of the University
Author Note

ADVANCED FINANCIAL ACCOUNTING1
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Company’s Overview.............................................................................................................2
Reporting Entity.....................................................................................................................3
Fundamental Qualitative Characteristics...............................................................................5
Relevance and Faithful Representation..............................................................................6
Conclusion..................................................................................................................................8
References................................................................................................................................10

ADVANCED FINANCIAL ACCOUNTING2
Introduction
Financial reports have the most significant position for both the internal and external
stakeholders, as it displays as a company’s scorecard. Thus, the financial reports must
disclose effective information with certain limitation so that it does not reveal any misleading
information. IFRSs provide a set of rules in terms with financial report worldwide.
Australian Accounting Board provided a framework of accounting that consist of regulations
and disclosures that an organization has to follow while maintaining financial reports1. The
aim of preparing this report is to develop an understanding of the theoretical model of
accounting and the need for an accounting framework within an annual report on an entity.
The company chosen within this report is Chorus Limited Foreign Exempt NZX (CNU),
which is engaged in the telecommunications industry. The discussion will demonstrate a
thorough understanding of AASB accounting standards and its related framework as well as
IFRS that is essential for preparing an annual report. It includes the concept of reporting
entity and fundamental qualitative characteristics like relevance and faithfulness. Further, the
discussion will go through the recent annual report of Chorus Limited to analyze the extent of
maintaining the accounting standards of Australian accounting. At last, the report will reflect
the vital need of accounting in the reporting of an entity for an effective outcome for the
stakeholders.
Discussion
Company’s Overview
Chorus Limited is considered as largest telecommunications Infrastructure Company
in New Zealand2. It is listed on the NZX stock exchange and comes within the list of NZX 50
1 Howieson, Bryan. "The phoenix rises: The Australian accounting standards board and IFRS adoption." Journal
of International Accounting Research 16.2 (2017): 127-154.
2 Company.chorus.co.nz, "Who We Are | Corporate Website", Company.Chorus.Co.Nz (Webpage, 2020)
<https://company.chorus.co.nz/who-we-are>

ADVANCED FINANCIAL ACCOUNTING3
Index. Its infrastructure consists of local telephone exchanges, copper, cabinets and fibre
cables. CNU works within such products and services that are named as Fibre, Basic and
Enhanced Copper, Field Services, Value Added Network, and Infrastructure Services.
Reporting Entity
Paragraphs 3.10 of the AASB Conceptual Framework of Accounting defines the
reporting entity as an entity, which is required, or have selected to prepare financial reports. It
is not necessary to be a legal entity. An entity can be sole or a part of an entity or can be a
combination of more than one entity3. To explain a clear concept about the reporting entity
SAC 1 defines the following terms, which is discussed below, which puts a benchmark for
the financial reporting’s minimum required quality for an entity.
General-purpose of Financial Reporting- It means that a financial statement intends to
meet the user’s requirement who is not able to command the reports, thereby satisfying their
informational needs.
Control- The entity’s capacity to govern the decision making whether it is directly or
indirectly, in context with the fiscal and operating policies of a different entity so that to
allow that entity to perform and achieve the objectives of the controlling entity4.
Entity- It refers to any legal, administrative, or any organizational structure or a
person with the capability to organize scarce resources so that to achieve objectives.
Economic entity- it refers to a group of entities that are comprised of controlling
entity and one or more than one controlled entities performing together to attain the objective
that is constant with those of the controlling activity.
3 Aasb.gov.au, Aasb.Gov.Au (Webpage, 2020)
<https://www.aasb.gov.au/admin/file/content105/c9/Conceptual_Framework_05-19.pdf>
4 Aasb.gov.au, Aasb.Gov.Au (Webpage, 2020) “https://www.aasb.gov.au/admin/file/content”102/c3/SAC1_8-
90_2001V.pdf