Usefulness of Conceptual Framework and Integrated Reporting for Financial and Sustainability Reporting

ACCT20074 Contemporary Accounting Theory
1

Executive Summary
This report has been prepared under two sections. The first section is regarding the
discussion and usefulness of conceptual framework for guiding the financial reports preparation
of business entities across the world by the use of an ASX listed entity. The other section is
sustainability reporting and it has presented a discussion about the difference in global reporting
initiatives and integrated reporting frameworks used for sustainable reporting. This has been
conducted through comparing the integrated reports prepared by a South African Company with
the sustainable reports developed by the ASX listed entity.
2

Contents
Executive Summary.........................................................................................................................2
Introduction......................................................................................................................................4
Part A: Conceptual Framework.......................................................................................................4
Section A: Literature Regarding the History and Development of the Conceptual Framework. 4
Section B: Issues Raised by the Accounting Professionals in the Application of IASB/IFRS
Financial Reporting......................................................................................................................5
Section C: Potential Benefits and limitations of conceptual framework for financial reporting. 5
Section D: Use of conceptual framework to evaluate the annual report of Australian
Agricultural Company Limited (AACL).....................................................................................6
Part B: Integrated reporting...........................................................................................................11
Section A: Comparison of Global Reporting Initiative (GRI) and International Integrated
Reporting Framework for Social Responsibility Reporting:.....................................................11
Section B: Examination of Usefulness of Conventional Accounting Techniques for Sustainable
Reporting....................................................................................................................................11
Section C: Application of Theories for Explaining the Contents of Sustainability Reporting. .12
Section D: Application of the integrated reporting framework by the selected South Africa
Company (Bidvest Group Limited)...........................................................................................12
Section E: Evaluation and comparison of reporting practices with integrated reporting
components index and practices in selected South African company.......................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
3

Introduction
This report has been carried out in the context of illustrating the usefulness of two
important concepts of business reporting, that is financial and sustainability reporting, As such,
the first section has provided analysis and description regarding the various issues such as
usefulness of conceptual framework, its various benefits and limitations and its applicability
within a selected ASX listed entity to demonstrate the contemporary trends in financial reporting.
The other section has highlighted the development of sustainability frameworks such as GRIO or
integrated reporting and the limitations of conventional accounting techniques to produce social
and environmental disclosures of a company. It has also detailed regarding the various criteria of
integrated reporting system by taking an example of a South African company and comparing it
with the sustainability reporting system of the selected ASX listed entity.
Part A: Conceptual Framework
Section A: Literature Regarding the History and Development of the Conceptual
Framework
The normative theory of accounting has provided the primary basis for developing the
conceptual framework (CF) for the purpose of financial reporting. The theory has provided a
theoretical basis to the development and establishment of standard accounting policies and
concepts (Seng, 2014). The CF has been provided by the IASB for the purpose of achieving
uniformity in the financial reporting process of business corporations across the world. The
IASB has placed greater emphasis on implementation of the principles of conceptual accounting
framework to improve the international comparability within the financial reporting system of
businesses (Dean and Clarke, 2003). The adoption of CF of accounting within the developed
countries such as the UK, Australia and the US can be linked with the progress made by the
accounting standard-setters in these countries for developing a proper system for measurement of
assets and liabilities, measuring the business performance, protection of interests of end-users
and reducing the occurrence of corporate scandals (Chua, Chee and Cheong, 2012).
For example, in the US there has been the development of Accounting Principles Board
(APB) for providing accounting principles and concepts to develop financial reports. There has
4