Importance of Accounting Concepts in Financial Statements - SCA Property Group

auditing and assurance
Module Number-
[DATE]
Hewlett-Packard
[Company address]

Table of Contents
Introduction...........................................................................................................................................1
Descriptions of Accounting Concepts...................................................................................................2
Conceptual framework, and the Issue of Measurement.........................................................................4
Fundamental Qualitative Characteristics - Understanding of Relevance and Representational
Faithfulness...........................................................................................................................................5
Conclusion.............................................................................................................................................6
References.............................................................................................................................................7

Introduction
There are several accounting standards which are used by the company to record the
financial data in the books of account and strengthen the transparency of the recorded items
in the books of accounts. There are different organizations in the world and every listed
organization operating in the “globalised world of corporations” wants to attract more
investors. All the investors consider some factors while choosing the segment for investment
like position of the organization and performance levels. Investors get the information about
the companies in their annual reports. But there is an issue in analysing the annual reports of
the companies because every company prepares and presents their financial statements in
their own way and there is a lack of standardisation. Because of this, it becomes difficult for
investors to assess profitability and performance. Absence of standardisation in creating
financial statements leads to chaos for the investors all around the world. To resolve such
issue, there is an introduction of accounting framework that includes different accounting
standards, concepts and qualitative characteristics. However, these all the standards needs to
be followed by every company while preparation and presentation of financial statements.
This allows in bringing uniformity for all organizations. In the given report, there is a
discussion about the importance of such components while preparing and presenting financial
statements of SCA Property Group.
SCA Property Group was created by Woolworths Limited and it was a stapled trust structure.
The trusts were formed by the Woolworths for transferring the ownership to shopping centres
to SCA property group to Woolworth’s shareholder. One stapled unit had been given to each
shareholder in SCA property group in lieu of every five shares. SCA Property Group have
many shopping centres located all over Australia. Its focus is on convenience retailing by
ownership and management of the portfolios related to its shopping centres. They also raised
a capital of $ 472m while listing on ASX. It is earning approximately $175.2 m statutory
profits after tax.

Descriptions of Accounting Concepts
There are some assumptions that are known as accounting standards that have been used by
every organization in preparing and presenting financial statements. There are Generally
Accepted Accounting principles that are basically developed with the help of these
accounting assumptions and results in a proper understanding and interpretation of financial
data. Some accounting concepts used by SCA Property Group are-
 Money measurement concept: According to this concept, SCA Property Group record
everything in terms of money while preparing financial statements. It is known that it is not
possible to measure each and everything like skill level, honesty and hard work so these are
ignored. It is mandatory to record financial transactions in home currency and not in the
currency belong to any other country (Bujaki, Lento & Sayed, 2019). This concept helps
SCA Property Group to record the financial transactions in the books of account considering
the value currency effect and other aspects which may impact the financial books of account.
 Business entity Concept: Business entity concept states that the owners and the business are
altogether different from each other SCA Property Group does not record personal
transactions of shareholders in the books of accounts. This business entity concepts helps in
assessing the recording of the financial transactions and keep the personal transactions
separate from the recorded business transaction in the financial statement of company.
 Accounting Cost Concept: It is necessary to record assets of the business at historical cost
on the starting. The main reason behind the same is he to revalue assets at fair value to show
a clear picture of the status of the organization. Historical cost includes installation cost,
delivery fees and purchase price. The assets that are not acquired by paying an amount are
not allowed to record in the financial statements. E.g. Goodwill of an organization.
 Accrual concept: According to this concept, the revenue of SCA Property Group is only
allowed to record only when company raised the right to receive. It can only be done when
there is a delivery of services by the company. Cash receipt is not important for this even if
the amount is payable in upcoming years then also it must be done when the services are
actually provided to the customers (Steenkamp & Steenkamp, 2016).
 Matching concept: There is a concept that all the expenses of a financial year needs to be
deducted from the overall revenues of the same period. It is not allowed to carry forward