Accounting Theory and Issues .

The report evaluates accounting issues in Suncorp Group Limited and applies positive and normative accounting theories. It also addresses issues through annual reports and PESTEL analysis. The report discusses the conceptual framework and its characteristics, enhancing and comparability.

Running head: ACCOUNTING THEORY AND ISSUES
Accounting Theory and Issues
Name of the Student
Name of the University
Author’s Note

1ACCOUNTING THEORY AND ISSUES
Executive Summary:
The current report is based on understanding the accounting issues that is revolving in Sun Corp.
The report would also place emphasis on the application of the positive accounting theory and
normative accounting theory for Sun Corp Ltd. In the later part of the report, relevant issues
revolving at Sun Corp would be addressed and reference would also be made to the annually
published report. The issues faced by the company would be evaluated in the perspective of
Political, Environmental, Technological, Social and Legal perspective. The report would
consider the qualitative enhancing characteristics of conceptual framework to determine whether
the company is compliance with the regulatory conceptual framework issued by the AASB.

2ACCOUNTING THEORY AND ISSUES
Table of Contents
Introduction..........................................................................................................................3
Positive Accounting Theory:...............................................................................................3
Normative Accounting Theory:...........................................................................................4
About the Company:............................................................................................................4
Issues in the Company:........................................................................................................5
Through Annual Report:..................................................................................................5
PESTEL Analysis:...........................................................................................................6
Conceptual Framework........................................................................................................8
Characteristics..................................................................................................................8
Enhancing........................................................................................................................9
Comparability................................................................................................................10
Timeliness......................................................................................................................11
Conclusion.........................................................................................................................11
Reference List....................................................................................................................13

3ACCOUNTING THEORY AND ISSUES
Introduction
The language of business finance and numerical figures is considered as accounting. The
initiation of the accounting was mainly considered in Middle East however flourished in the
Europe. The conceptualization of the subject has taken into consideration several numbers of
factors which are seen to be based on issues of recording expenditures and trading goods. The
discussions of the study will focus on the evaluation of the Positive Theory and Normative
Theory and will relate the same with Suncorp Group Limited. Some of the other discussions of
the study will include present issues in company through annual Report and Issues in company
through PESTEL. The study on the Conceptual Framework will include Characteristics,
Enhancing, Comparability, timeliness (Sampaio & González, 2017).
Positive Accounting Theory:
Positive accounting theory can be defined as typically used theory in the collection of
data and bookkeeping that takes the objective approach. The positive accounting theory uses the
company’s physical transaction history that analyses and discerns the consequences of the
expenses (Deegan, 2013). The positive accounting theory considers the actual real-world
transactions and assesses how the companies are accounting those transactions (Mattessich et al.,
2014). The theory pursues to understand the financial outcome of the accounting decisions.
The positive accounting theory in case of Sun Corp states that the political cost is related
to the adoption of the accounting policies with the objective of increasing the accounting profits.
Sun Corp often delays in applying the necessary changes in the accounting policies so that it can
avoid the political cost.

4ACCOUNTING THEORY AND ISSUES
Normative Accounting Theory:
The normative accounting is largely found in the company’s business or marketing plan
that takes the subjective approach. On the basis of the theoretical principles, it aims to
characterize what the financial outlook of a business must look like (Dyckman & Zeff, 2015).
Consequently, by considering the normative accounting as the significant conclusion, the theory
aims to use the independent morality in the bookkeeping practice. The Normative Accounting
theory can be applied for Sun Corp Ltd as the framework of AASB to identify the informative
requirements of the investors for undertaking economic decision. The theoretical framework of
the Normative Accounting Theory serves as the input to equity valuation theory. The normative
accounting theory helps the investors in valuing the equity of Sun Corp Ltd (Beattie, 2014).
About the Company:
Suncorp Group Limited is viewed as leading total financial service provider of Australia
some of the main services include finance, insurance, and banking (Suncorp Group, 2018). For
over 50 years the company has backed the Australian industry, societies, government, business
and households. The company delivers a wide variety of solutions which not only provides the
extraordinary benefits for its customers but also for its societies and future generations.
Suncorp Group Limitedis listed in the ASX top 100 companies and in the year 2018 the
company increased its footprints to more than 5,500 highly skilled and trained staff, that supports
the workforce of more than 4000 specialist’s financial service providers that work from the
network of as high as 250 areas across Australia.
The specialized team at Suncorp brings together strong portfolio of banking & wealth and
insurance solutions from across our many brands including Suncorp, AAMI, GIO, Apia and
Shannons (Suncorp Group, 2018). The company provides its customers with the unmatched

5ACCOUNTING THEORY AND ISSUES
ability of collecting, processing, treating and various range of services related to Banking,
Finance and Insurance.
Issues in the Company:
Through Annual Report:
Taking into the account the issues of Suncorp Group Limited from the annual report it is
understood that the collection margins witnessed a declining pressure all through the year that
was mainly because of the wide range of changes in the industry particularly in the area of
Insurance and commodity market (Suncorp Group, 2018). The downward pressure is largely due
to the changes in the Australian banks pertaining to accounting standard AASB 9 – Financial
Instruments. The program led to a significant rise in the needed acceptable quality of Finance,
Insurance and Banking service that in return resulted in direct increase in the cost of processing
to attain the compliance with the grade of higher quality. The commodity pricing was considered
as softer during the financial year of 2018 leading to recovery in the fourth quarter but not up to
the level that was earlier experienced.
On analyzing the annual report of Suncorp Group Limited further issues was noticed in
the collection margins as the company experienced a negative impact on the ramp up cost that
was related to the major contracts in Brisbane City Council, Container and Deposit Scheme in
New South Wales and Central Coast. The EBITDA margins of Suncorp Group Limited reduced
slightly because of the mix volumes of current Finance, Insurance and Banking services.
Another key issue that is identified from the annual report of Suncorp Group Limited is
the stricter Banking service norms issued by the Government for Australian banks pertaining to
accounting standard AASB 9 – Financial Instruments. The stricter standards relating to mixed
paper and mixed plastics products has created complexities for the company at the processing

6ACCOUNTING THEORY AND ISSUES
stage. As per the annual report it is also inferred that the likelihood that Labor will enact its
policy platform to remove tax breaks for property investors will have a significant impact on the
various types of the banking services offered by Suncorp. There are large number of systems for
maintaining the automated process generating dates of due dates of loans offered to the
customers.
The annual report of Suncorp Group Limited highlights another issues as over the past
few years the company has witnessed a seasonal trend that emerges from the injury during the
Christmas and New Year period. The number of factors that are identified for this issue is that
the company faces a sudden rise in the number of cars on road which is coupled with the busiest
time of the year in Finance, Insurance and Banking service for the industry. For Suncorp Group
Limited, this continues to be the area of key focus for the company to assure that investors and
customers enjoys equal benefits.
PESTEL Analysis:
The PESTEL analysis is regarded as the strategic tool to assess the macro environment of
Suncorp Group Limited Any changes in the macro environmental factors can result in direct
effect on the company.
Political Factors: The political factors are vital in ascertaining the factors that can create an
impact on the Suncorp Group Limited long-term profits (Chiapello, 2017). The Australian banks
pertaining to accounting standard AASB 9 – Financial Instruments has created stricter norms for
Finance, Insurance and Banking services. Apart from the Government’s regulations there are
other factors prior to entering into or investing in certain markets;
a. Taxation rates and incentives
b. Industry safety regulations both in the commercial and professional sectors.

7ACCOUNTING THEORY AND ISSUES
c. Work regulations of commercial and professional services
d. Trade regulations of commercial and professional services
e. Political stability and importance of commercial sector in a nation’s economy.
Economic Factors: Economic factors for Suncorp Group Limited includes the inflation
and growth in the economy, consumer spending and competitive advantage of the firm
(Zalengera et al., 2014). This also includes;
a. Exchange rate and stability of a host nation
b. Intervention of the government in the free market
c. Quality of infrastructure in the host nation.
d. Rate of employment and inflation rate
Social Factors: There are certain social factors that the Suncorp Group Limited analyses
are;
a. Demographics and extent of skill in the population
b. Hierarchy and class structure in the community
c. Cultural gender roles and social conventions
d. Health and environmental consciousness
Technological Factors: Technology is quickly disrupting numerous industries around
the world (Bush, 2017). The technological factors that impacts the Suncorp Group are;
a. Recent development in technology that effects the competitors of Suncorp Group Limited
b. Impacts created on the cost structure in the commercial industry
c. Effect of value chain in the commercial sector
Environmental Factors: Different markets has different norms that can affect the
profitability of the company (Policy, 2016). The recent change in the Australian banks pertaining

8ACCOUNTING THEORY AND ISSUES
to accounting standard AASB 9 – Financial Instruments has not only impacted the cost structure
but also negatively affected the collection margins of the company. Apart from this the other
factors includes;
a. Finance regulations in the host nation
b. Banking service in commercial service sector
c. Attitudes towards Insurance products
d. Laws that controls Finance, Insurance and Banking service
Legal Factors: There are some legal factors that Suncorp Group leadership should take
into account at the time of entering into the new market. This includes the following;
a. Health and safety law
b. Protection of data
c. Law relating to employment
d. Corporate Law relating to banking
Conceptual Framework
Characteristics
The characteristics as per the conceptual framework of accounting is seen with its listing
under the “Australian Securities Exchange (ASX)”. It needs to be further seen that the financial
statements of the company are prepared as per the “section 205G(1) of the Corporations Act
2001 (Cth)”. The principal activities of the company need to be evaluated as per the services
ranging in the areas of Finance, Insurance and Banking service. The application of the
characteristic framework also needs to be relevant with services offered in the handling of
Transactional Accounts, Savings Accounts, Home Loans, General Insurance, Car Insurance,
Home Insurance, CTP Car Insurance, Health Insurance, Travel Insurance and House & Home

9ACCOUNTING THEORY AND ISSUES
Loan service providers across Australia. As per the statement of compliance the financial
statement of the company is seen to be prepared according to “Australian Accounting
Standards Board (AASB)” and “Corporations Act 2001 (Cth)”. The preparation of the
consolidated financial statement is further seen to eb based on the various type of the judgements
which are seen to include the assumptions and estimated based on the application of policies
related to accounting (Ovaskainen et al., 2017). In addition to this, the characteristic evaluation
has also found that Suncorp Group Limited uses historical estimates based on the various types
of the experiences under reasonable factors. The underlying estimates are further seen to be
depicted as per the assumptions which are considered for review on an ongoing basis
(Baumgartner, 2014). Some of the areas of loopholes in the characteristic conceptual framework
may take place during the comparison of the financial report with other accounting standards. It
needs to be also seen that the various types so the other issues in the framework may generate
differentiating accounting figures such as “liability adequacy test, provisions for impairment,
contract liabilities, impairment of goodwill and other intangible assets” and valuation of
different types of financial instruments (Cajaiba-Santana, 2014).
Enhancing
Some of the main areas for the enhancement in the conceptual framework of the company
needs to be taken into account as per better estimates of the various types of the financial figures.
It needs to be also seen that some of the other necessary steps which needs to be taken are based
on enhancing the judgements of provision of “liability adequacy test, provisions for impairment,
contract liabilities, impairment of goodwill and other intangible assets” and valuation of
different types of financial instruments. Additionally, the increasing nature of the frequency of
conducting the audit will be also able to significantly contribute to the reliability of the financial
data. This will include conducting the audit on quarterly basis instead of annual basis.

10ACCOUNTING THEORY AND ISSUES
The company has some of the other scope of improvement in terms of managing the risks
which are seen to be inherent as per the operations. Suncorp Group Limited needs to ensure the
compliance with the various types of the legal and regulatory procedures as per the policies
formulated by the company. It also has the significant scope of improvement in the conceptual
framework in terms of putting an augmented focus on design, implement and manage various
types of ongoing risks associated to the company. Some of the additional measures taken by the
company needs to be incorporated as per the execution of the framework by considering the
Suncorp Group Limited policies for the respective Functions (Lewandowski, 2016).
Comparability
In general comparability of Financial Information is associated to that quality, which
exist at the time when the users of the financial users are able to depict the similarities and infer
the differences. These are seen to be related to number of differences pertaining to effect of a
particular transaction, events occurring at a time and assessment of single reporting entity. As
present Suncorp Group Limited is considered to follow the prescribed accounting standard as per
“Australian Accounting Standards Board (AASB)” and “Corporations Act 2001 (Cth)”. This
serves the purpose of increased comparability of the information as per the accounting standards
followed in various parts of the world. The comparability of the financial information in this
particular aspect relates to the various types of the consideration of comparing the financial
information with other various such companies in the same industry (Sheppes et al., 2014). This
includes companies dealing with handling of Transactional Accounts, Savings Accounts, Home
Loans, General Insurance, Car Insurance, Home Insurance, CTP Car Insurance, Health
Insurance, Travel Insurance and House & Home Loan service providers across Australia. This
includes competitors such as Sims Metal Management and Bingo Industries. There have been no
concerning issues identified in terms of comparability. This is due to the fact that all the similar
players in the industry are depicted to following the same conceptual framework. Moreover, such

11ACCOUNTING THEORY AND ISSUES
a universally accepted form of the accounting policy for Suncorp Group Limited has allowed it
compare the financial statement with other divisions of the company situated in a different
country (Zhang & Andrew, 2014).
Timeliness
The consideration of the timeliness factor for the company has been depicted with
publishing consolidated financial statement annually. The disclosure of the some of the other
relevant information related to the timeliness factors needs to be understood with various types
of financial assets. Collecting of relevant information about processing and offsetting the
requirements for Finance, Insurance and Banking service (Fan & Savedoff, 2014). In addition to
this, some of the other consideration of the necessary information pertaining to the company can
be directly inferred with the collecting and processing the information on an annual basis. The
timeliness factor needs to be further considered in terms of disclosing annual fixed payments and
estimating annual requirement for renewal of accounts. The estimation of the timeliness factor
for the disclosure of the information has been depicted as per evaluating the Post Collections
Performance for loans (Macve, 2015).
Conclusion
The main issue for the company has been seen with stricter norms for Finance, Insurance
and Banking service for pertaining to accounting standard AASB 9 – Financial Instruments. This
has significantly affected the EBITDA. The main issues for the Australia’s Banking industry
have faced several challenges with following far stricter standards. This has also negatively
impacting the cost for registration process in the districts and filing of other relevant documents
related to Transactional Accounts, Savings Accounts, Home Loans, General Insurance, Car
Insurance, Home Insurance, CTP Car Insurance, Health Insurance, Travel Insurance and House
& Home Loans.

12ACCOUNTING THEORY AND ISSUES
The inference on the conceptual framework has shown that the company has not faced
any major issues as per universal comparison of the reports. This is evidenced in form of
increased comparability of the information as per the accounting standards followed in various
parts of the world. The comparability of the financial information in this particular aspect relates
to the various types of the consideration of comparing the financial information with other
various such companies in the same industry. In addition to this, consideration of the timeliness
factor for the company has been depicted with publishing consolidated financial statement
annually.

13ACCOUNTING THEORY AND ISSUES
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