Accounting Theory and Issues

Running head: ACCOUNTING THEORY AND ISSUES
Accounting Theory and Issues
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1ACCOUNTING THEORY AND ISSUES
Executive Summary:
The report takes an attempt to assess the various accounting issues inherent in one of the top
ASX organisations, which is Insurance Australia Group Limited. The report takes into account
the application of various theories and identification of accounting issues within the organisation.
Finally, it sheds light on evaluating the compliance of the organisation with the different
requirements of the conceptual framework.

2ACCOUNTING THEORY AND ISSUES
Table of Contents
Introduction:....................................................................................................................................3
Critical analysis/ Discussion:...........................................................................................................4
Discussion of the issues:..............................................................................................................4
Comparison of the annual report:................................................................................................8
Application of accounting theories:...........................................................................................10
Investment decision:..................................................................................................................11
Suggestions to improve accounting practices, disclosures and reporting:................................12
Conclusion:....................................................................................................................................12
References:....................................................................................................................................13

3ACCOUNTING THEORY AND ISSUES
Introduction:
The objective of this report is to dissect certain accounting issues in one of the leading
ASX listed organisations. In order to meet this purpose, Insurance Australia Group Limited is
taken into consideration. Moreover, the report considers the discussion regarding a news article
on Insurance Australia representing the fall in the share price of the organisation.
In this regard, one significant issue for the organisation is the adherence of the
organisation with different needs of AASB and conceptual framework. All AS listed entities are
needed to conform to the doctrines and principles of the accounting conceptual framework for
preparing and presenting financial statements in a precise and accurate manner. If adequate
adherence is not maintained in relation to AASB standards and conceptual framework
requirements, there might be increase in financial errors and frauds (Aasb.gov.au 2018).
Insurance Australia Group Limited is involved in underwriting general insurance
products and it operates across Australia, New Zealand along with corporate and other segments.
In addition, the organisation provides consumer insurance products like motor vehicles, lifestyle
and leisure, home and contents, travel and insurance, income protection products and others
(Iag.com.au 2018). It has workforce of nearly 13,500 employees operating in Australia, New
Zealand, Malaysia and Thailand.
In the current times, a significant accounting issue is non-compliance with the necessary
accounting guidelines and principles for financial reporting. This might develop the opportunity
for financial frauds and even the demise of the organisations. For avoiding this issue, it is
necessary for the organisations to conform to the necessary standards of accounting. Moreover,
the report covers the evaluation of two particular theories for financial reporting of Insurance