Conceptual Framework and Integrated Reporting in Financial Accounting

Financial Accounting 1
Advanced Financial Accounting by Student Name
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The City & State
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Financial Accounting 2
Executive Summary
Business entities are guided by conceptual frameworks when preparing their financial reports and
statements. Likewise, the changing trends in financial reporting have seen the stakeholders
changing their focus on the items to be included in financial reports. Companies are now
focussing on creating value by forming a positive relationship with their stakeholders. The
increasing need to include non-financial performance in the financial statements have led to the
creation of sustainability reporting as well as integrated reporting. This report exams the two
important components of accounting, that is, the conceptual framework and integrated and
sustainability reporting. Key elements of the two pillars of accounting have been exhausted. The
findings show that although the Australian Accounting Standards Board (AASB) fully support
the IASB's conceptual framework, several issues need to be addressed as listed in the paper.
Likewise, the application of integrated and sustainability reporting at the expense of conventional
financial reporting is slowly gaining momentum.

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Introduction
The report examines the application of the conceptual framework for financial reporting as well
as integral/ sustainability reporting by the Australian and South African firms. The paper is
divided into two parts. Part A examines the development, issues surrounding, and application of
the conceptual framework. This part is further divided into several sections. The introductory
section examines the history of IASB’s conceptual framework. The second and third sections
discuss the concerns raised by the AASB and academicians in relations to the application of the
conceptual framework for, respectively. The last section examines elements of the conceptual
framework and how Caltex Australia applied the conceptual framework in its 2018 annual report.
Part B examines the issues surrounding integrated reporting and sustainability reporting. This
part is further divided into five sections. Section one compares and contrasts the Global
Reporting Initiative (GRI) sustainability reporting, and the International Integrated Reporting
Council (IIRC) integrated reporting. Section two examines the limitation of conventional
accounting to support sustainability or integrated reporting. Section three discusses the
application of theories to explain the contents of sustainability and integrated reports. Section
four examines the elements of an integrated report contained in the Nedbank Limited 2017 report.
Section five discusses the aspects of Banks of Queensland's (BOQ) 2018 sustainability report.
The last part compares the reports by Nedbank and BOQ.
PART A
a) The history of the Conceptual Framework for Financial Reporting
The conceptual framework for financial reporting addresses the conceptual and theoretical issues
that influence financial reporting. The framework seeks to provide a consistent and coherent

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foundation for developing accounting principles and standards. The development of a conceptual
framework for financial reporting began at different dates in the US, the UK, and globally. The
globally recognised conceptual frameworks for financial reporting were developed by the
International Accounting Standards Board (IASB) (IASB, 2018).
The FASB was established in 1973 in the U.S. to replace the Accounting Principles Board
(APB). FASB began the process of developing its conceptual framework in 1973. The board
released its eight frameworks between 1978 and 2010. The conceptual framework for conceptual
reporting no. 8 was approved and released in 2010 to replace the SFAC nos. 1 and 2
(International Accounting Standards Board, 2018).
The UK's Accounting Standards Board initiated the process of developing its conceptual
framework for financial reporting in 1991. However, the collection of views and recommendation
began in the 1940s. The final concept was released in 2010. Likewise, IASB approved the IFRS'
conceptual frameworks in 2010. The concept has undergone several revisions since then. In 2013,
the revisions of the concept began. Comment period ran between 2013 and 2015 before the board
incorporated the amendments of IFRS 3 in the concept in 2018 (IASB, 2018).
b) The Australian accounting profession’s concerns regarding the Conceptual Framework
The AASB and other accounting professions raised several concerns with the IASB's conceptual
frameworks. The board believes that the IASB's conceptual framework exposure draft cannot be
considered to be up to date, complete and clear to form the basis of developing accounting
standards. The board noted that some sections of the exposure draft laid the foundation for
developing concepts in the future instead of addressing the current accounting issues (Delloite,
2018).