Accounting Theory

Running Head: ACCOUNTING THEORY 1
Accounting Theory
Student’s Name
Institutional Affiliation

ACCOUNTING THEORY 2
Accounting Theory
Executive Summary
This report provides an assays of different parts in the contemporary accounting theory, it
evaluates conceptual framework and sustainability. It uses data from the South Africa Company
and other companies that are located in Australia. Also, it provides a table integrated report of
one of the companies in Australia. Therefore, the purpose of the report is to analyze in details the
conceptual framework and the sustainability that occurs in the accounting field.
Introduction
Accounting theory is a set of framework assumptions and methodologies that are used in
the development, study, and application of the financial reporting principles. It more so involves
the review of practices, the historical foundation of accounting and the way these methods are
changing over time (Accounting Standards Board, 1999). Therefore, there is a need to study
what needs to be changed or added to the framework that governs and regulate the financial
reporting and financial information so as to be at par with the contemporary accounting theory.
Hence the following assessment is research and report of several aspects of the business
external report practices. It has the two parts which are part A and B. the first part talks about the
conceptual framework. The framework encourage the evaluation and development of existing
and new standards. Therefore, the paper is going to analyze the historical development of the
conceptual framework in various countries. Moreover, it’s going to discuss the professor's
concern about the application of the conceptual framework in Australia under IASB. Also, the
benefit and the limitation that entails the framework in academic fields. Finally, it will analyze
the application of this conceptual framework in several companies in Australia.

ACCOUNTING THEORY 3
The part B of the paper is going to evaluate integrated or sustainability reporting. The
research paper is going to analyze the Comparison of Reporting Guidelines GRI and IIRC. Also,
the strengths and limitations of conventional accounting. Moreover, it will discuss the
Applicability of the theories to explain the contents of sustainability as well as integrated reports.
Prepare an index table of various components of an integrated report. More so, develop a
comparison of the Australian company’s reporting practices with the index and the integrated
reporting practices in the selected South African company.
Part A
a) History and development of the conceptual framework.
Conceptual framework is regarded to as system of objectives which leads to the
generation of consistent accounting set standards. Since its inception in 1989, the conceptual
framework has largely remained unchanged. More so, this was the time that the financial stamen
preparation and the presentation were accepted by the International Accounting Standard
Committee board. Globally the conceptual framework has undergone through various stages, in
July 1989, it was the time which the framework was published. IASB further adopted the
conceptual framework and in 2010, IASB passed the conceptual framework for financial
Reporting. Also, in March 2018, was the time where the framework was published.
The institutional effort for the USA to start and develop the Business Corporation
framework which can be traced from in 1940 by work of Littleton and Paton monograph. It was
later followed studies done by Sprouse and Moonitz in attempt to develop accounting literature
which was laid out by Patron William. Australian accounting research foundation (AARF) and
the Australian Accounting Standard Board (AASB) developed the conceptual framework for
Australia over the period of 1985-1995. The main objective of the conceptual framework was to

ACCOUNTING THEORY 4
provide a set related concept that defines the subject, nature, purpose and broad base of
understanding financial reporting and give a unique rendition on the thinking that governs the set
standards. IASB adopt the framework in 2001, the framework describes the basic concept of how
financial statement can be prepared. Therefore the adoption of IASB standard in Australia
reviewed the conceptual framework to ensure that the framework fulfills its function when
AASB gives out standards that are based on IFRS (Mosso, 1998). Moreover, they check whether
the framework has been changed to meet the changed circumstances in the Australian setting.
The conceptual framework in the United Kingdom over a few years has been based on the rules-
based, as opposed to the principle-based system as set by the ASB standard. However as time
goes by the nation has been adopting the principle base standard which is been used by another
country such as Canada, USA, and Australia. In 1999, the country formed its own conceptual
framework base on the stated principle that was issued by the Accounting standard board (ASB)
(Solomon, et al., 2000). The move was very essential due to the increase due to the increasing
international needs for accounting and more so the influence that the nation received in term of
globalization from countries such as the USA.
b) Australian professors concern about the application of the conceptual framework
In 2010, as part of the joint mission with FASB, IASB gave out two chapters of the
revised conceptual framework that they would like to amend in the standards that were already
set. The chapter deal with the general objective of the purpose of the financial reporting and the
useful information and the quantitative characteristics that the report must include. However, in
2012, IASB decided to restart the work of the conceptual framework so that they can reconsider
making changes in these chapters (Financial Accounting Standards Board, 2004). The decision
aroused concerns in the accounting profession and more IASB considers and proposes new rules