Conceptual Framework and Sustainability Reporting

The report is prepared to explain the concept of the conceptual framework and the sustainability reporting. The report provides the concept of both the concept and the standards along with their application. Advantages and disadvantages. The main objective of the report is to provide the brief understanding of the conceptual framework and the sustainability reporting in the terms of the financial information reporting of the firm.

Running head: CONCEPTUAL FRAMEWORK AND SUSTAINABILITY REPORTING
CONCEPTUAL FRAMEWORK AND SUSTAINABILITY REPORTING
Name of the Student:
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Author Note

1CONCEPTUAL FRAMEWORK AND SUSTAINABILITY REPORTING
Executive Summery
The report is prepared to explain the concept of the conceptual framework and the
sustainability reporting. The report provides the concept of both the concept and the standards
along with their application. Advantages and disadvantages. The main objective of the report
is to provide the brief understanding of the conceptual framework and the sustainability
reporting in the terms of the financial information reporting of the firm.

2CONCEPTUAL FRAMEWORK AND SUSTAINABILITY REPORTING
Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Part A. Conceptual Framework..................................................................................................3
History and development of Conceptual Framework............................................................3
Concerns regarding application of conceptual framework....................................................4
Benefit and limitations of the conceptual framework............................................................6
Part B. Sustainability Reporting.................................................................................................9
Comparison of Sustainability Reporting Guidelines..............................................................9
Conventional Accounting.......................................................................................................9
Sustainability and Integrated report.....................................................................................11
Criteria of integrated report..................................................................................................11
Intu Properties PLC..................................................................................................................13
Conclusion................................................................................................................................14
References and Bibliography...................................................................................................15

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Introduction
The report titled “Conceptual Framework and Sustainability Reporting” is prepared
to analyse the several aspects of the corporate external reporting practices. The report discuss
about the history and development of the conceptual framework for financial reporting as per
the International Accounting Standard Board. The report also discuss about the Australian
accounting profession view in the application of the international accounting standard board.
The report also discuss the quality of the conceptual framework for financial reporting. The
report also analyse the annual report of an Australian listed company, in which the report
highlights the statements prepared by the firm, the principle used by the firm to prepare the
report and the characteristics of the information share by the firm in their annual report. For
this, the report choose the BWP Trust Ordinary Units FP (BWP) as the ASX listed Australian
company. The other part of this report compare the sustainability reporting guidelines of the
Global Reporting Initiative and the International Integrated Reporting Framework of the
International Integrated Reporting Council for the corporate social responsibility reporting.
The report also explains the rigour of the conventional accounting and the applicability of the
theories regarding the sustainability. Further, this report analyse the annual report of a South
Africa based company named Intu Properties PLC (ITU) to identify the various component of
integrated report.
Discussion
Part A. Conceptual Framework
History and development of Conceptual Framework
As per the Geoff Lamberton’s “Sustainability accounting – a brief history and
conceptual framework” the first guideline for the sustainability reporting was introduced in
the world summit on sustainable development in August 2002. The RD Hines in

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“Accounting, Auditing & Accountability Journal” talks about the history of developing the
conceptual for the financial reporting (Zhang & Andrew, 2014). The first model of the
conceptual framework was developed as the Plato’s conceptual model. As the time passes,
the conceptual model of Plato was adopted by the various states. As the Accounting
Standards Board of United Kingdom initiated a conceptual model undertaking in 1991 and
the recommendation for accounting has been released in 1940. In the initial stage of
conceptual model, the model was used for sorting footing for developing a common
nomenclature in few countries. The development in terms of the academic, this was only a
personal conceptual model that was based on the writer’s thought on the topic. Further, the
time passes, the additional principle were developed for the conceptual framework and the
conceptual framework has start developing. The rapid development has been observed in the
conceptual framework in last few decade and now it is adopted by nearly by all the states.
The various new concept is developed in this regards and appropriately named the concepts.
The several country also adopted the framework and by making same changes as per their
requirement and according named them. The most recent and developed conceptual
framework which is internationally accepted is the conceptual framework of the International
Accounting Standard Board.
Concerns regarding application of conceptual framework
The conceptual framework of the Australia is based on the International Accounting
standards Board (IASB) and International Financial Reporting System (IFRS). The
Australian Accounting Standard Board is developed in the basis of the principle and
framework of IASB and IFRS. This frame- work provides the principle, rules, regulation and
framework for the accounting or the financial reporting system of the company. This is must
be followed by the every registered company of Australia (Cheng et al, 2015). The
professional accountant are also guided by this frame- work in relation to their duty and

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functions. There is many duties and the responsibilities that the professional accountant need
to perform before implementing the conceptual frame- work in the financial reporting
function of companies.
The most important concern of the professional accountant in implementing the
conceptual frame- work is that the professional need to play the various vital role in relation
to implement the conceptual frame- work in the current business operation.
The professional need to do the several intensive research about the conceptual frame-
work before implementing the frame- work in the company. The research includes the
advantages and disadvantages of the frame- work, concept of the frame- work, requirements
of the frame- work and several other factor that must know by the firm before implementing
the frame- work.
The professional accountant also need to understand the requirement of the frame-
work as well the policy and the regulation of the government in respect of such frame- work.
Not only the accountant need to identify the requirement but also professional need to satisfy
the all requirement of the government and the frame- work to implement the frame- work
within the rule.
The professional accountant also need to analyse the internal environment of the firm
whether the firm requires the frame- work or not, whether the firm is ready for the change or
not and the several other internal factor of the firm to successfully implemented the frame-
work in the business.
Apart from the above, several responsibilities, the professional accountant also need
to perform the several role in respect of the implementing the frame- work in the firm. As
performing, the several functional the professional need to give several time and hard work

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(Collings & Profile, 2019). Hence, these are the main concern of the professional accountant
regarding the application of the frame- work in any company for first time.
Benefit and limitations of the conceptual framework
The conceptual frame- work provides the quality in the reporting the financial
information of the company. The conceptual frame- work ensure the quality of the financial
information reported and provided by the companies to their stakeholder. This also ensure
that the reader of the financial information must see the clear and true picture of the firm and
get the correct knowledge about the financial performance of the firm. The following are the
some important benefit of the frame- work in the financial information reporting of the
company: -
 This helps the management of the firm to manage the accounting problem arises in
the firm. This help the management to predict the financial issuers that can be affect
the performance of the company as well as the image of the company among its
stakeholders. If any issues arises in reporting of the financial information then the
management of the firm can easily solve those problems by using the frame- work.
The conceptual frame- work also minimizes the chances of the mistake in the in the
financial information reporting of the firm.
 As stated above the management of the firm faces several issues regarding the
reporting of the financial issues. Hence, the conceptual frame- work provides the
various standard that helps the management of the company to avoid such financial
reporting related issues.
 The conceptual frame- work provides the various different standard to company in
respect to reporting and presenting the financial transactions of the firm. The frame-
work provides the various standards separately for the each concern of the financial

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reporting. For instance, the conceptual frame- work provides standards for revenues
in one side and the standards for valuation of the assets in other side.
Apart from the above stated advantages, the conceptual frame- work also have some
limitation in respect of the financial reporting of the company. The some major issues are
reported below:
 The financial statement of the company is for all the stakeholders of the firm who
are the readers of the financial statement. The range of the reader of the financial
information is large and the objective of all the reader are also varies from one to
another. Hence, the single frame- work alone is not appropriate to satisfied the need
of all the readers.
 As the diversity of the reader is very high, every single reader of the financial
report have the different purpose for reading the financial statement of the firm.
Hence, the company need to adopt the different standard for each different purpose
of reading the financial report.
 The preparing and reporting the financial information using the conceptual frame-
work is not an easy task at all. The professional accountant need to perform the
several functions to appropriately prepare the financial report of the company under
the conceptual frame- work.
BWP Trust Ordinary Units FP
The BWP Trust Unit FP is an Australian based real estate investment trust that
investing in and managing commercial properties throughout Australia. The company is
largely format retailing properties, particular Bunnings Warehouses, leased to Bunnings
Group Limited. The Bunnings is the leading retailer of home improvement and outdoor living
products in Australia as well as New Zealand.

8CONCEPTUAL FRAMEWORK AND SUSTAINABILITY REPORTING
The annual report of the BWP Trust Unit FP apply the conceptual frame- work in
preparing the financial statement of the firm and the financial notes to the financial statement
(Tschopp & Huefner, 2015). The application of the frame- work can be identified by looking
at the format used by the company in respect of the balance sheet, profit and loss account and
the cash flow of the firm. This treatment and entries of the financial transaction reported by
the firm also shows that the BWP Trust Unit FP properly followed the conceptual-
framework in reporting the financial information of the company.
Mainly the BWP Trust Unit FP prepare the four financial statement namely profit and
loss statement, balance sheet statement, cash flow statement and the statement of change in
equity (Danilenko, 2018). The main component of the profit and loss statement prepared by
the BWP Trust Unit FP is the all revenues of the firm for the accounting period of 2018 as
well as the expenses paid by the firm for the same period. This statement also contain the
revenue, cost of sale, other incomes, expenses, profit before tax, gross profit and the net profit
of the firm for the financial year 2018.
The balance sheet of the firm, contains the value and position of the various financial
items of the firm for the 2018 period. This statement mainly contains the position of the
current asset, non- current assets, liabilities and the capital of the firm for the particular year.
The cash flow statement of the firm contains the all cash truncation of the firm. This
contains the details of all the cash in- flow and out flow of the firm. This also contains the net
flow of the cash. Lastly, the statement of change in equity contains the details of the share
capital of the firm. This contains the details of share issued and like as well as the net change
in the capital of the firm.
The company used the various accounting principles and the standards to prepare the
financial report of the company. The company reported its revenue by applying the accrual

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basis accounting. The value of assets and the liabilities of the firm is calculated in the basis of
the historical cost expect some assets like inventories. The firm used the fair value approach
to value the assets like inventories.
The financial information reporting of the BWP Trust Unit FP has the various
qualitative characteristics. The financial information of the company is properly reported and
fairly presented in the annual report of the company. The external independent auditor that
ensure the trueness of the information shared by the firm also duly audits the annual report of
the company.
Part B. Sustainability Reporting
Comparison of Sustainability Reporting Guidelines
The guidelines of GRI are used by the reporting organizations for disclosing the most
critical impacts whether positive or negative on the environment, economy and the society. It
helps in generating the relevant, reliable as well as the standardized information for assessing
the risks and the opportunities as well as enabling more of the informed decision-making that
is within the business entity and among the stakeholders. G4 has been designed for applying
it universally to all the sectors, types and the organizations whether it is small or large all
across the world (Kirkman, 2014). The presentation of the guidelines is in two parts. First
part is reporting principles and standard disclosures, which contains the reporting principle,
standardized disclosures as well as criteria that are to be applied by the organizations for
preparing their sustainability report, which is according to the guidelines. The second part is
implementation manual that includes explanations of way of applying the reporting
principles, way of preparing the information to be disclosed as well as way for interpreting
different concepts in the given guidelines. Moreover, glossary, other sources references and
general reporting notes are included as well.

10CONCEPTUAL FRAMEWORK AND SUSTAINABILITY REPORTING
Conventional Accounting
Conventional accounting is the system of the accounting that is used for providing the
information to the managers within the organization. The powerful tool that is used for the
business organization for reporting performance of profit to the investors and other
stakeholders. It is also known as historical accounting.
Strength of Conventional Accounting
 It helps in maintaining the objectivity as well as reliability of the accounting
information. Manipulations of data cannot be done because the business transactions
are recorded on the objective basis.
 The concept of conventional accounting is quite simple. The record of the transactions
is at the original amounts (Herath & Albarqi, 2017). Restatement of the financial
statements does not have to be done every year for reflecting the changes in the
values.
 It is used consistently over the time, which enhances inter and intra comparability of
the financial statements.
Limitations of Conventional Accounting
 Under this, price level changes are not taken into account. If the financial statements
are prepared by the system of conventional then it states only the historical facts. It
fails to give the correct and realistic picture of the state of the affairs for the concern.
 Gain or losses on the account of the holding inventories might be mixes up with the
operating gains or losses. For determining the true operating performances, the
holding gains or the losses are segregated from the operating losses and gains.
 Tax is generally levied on the money profit. In conventional accounting, the money
profit does not represent the real profit (Kirkman, 2014). Therefore, there is

11CONCEPTUAL FRAMEWORK AND SUSTAINABILITY REPORTING
overstatement of the reported profits and the assets under this are understand in the
conditions of inflationary.
 In the position statements, the fixed assets are shown at the cost of its acquisitions.
Moreover, the purchases of the assets at the different point of time are mixed up
together in additions to the existing assets.
 The depreciation is charged on historical cost of assets. Depreciation charges of the
fixed charges are based on original purchases price. The assets replacement cost
exceeds far of the original cost.
Therefore, in order to promote the uses of the sustainability as well as contributing to the
sustainable global economy, conventional accounting plays the important role for the welfare
of the society as a whole. In addition, integrated reporting with the help of conventional
accounting enhances the decision-making powers of the investors and other stakeholders.
Sustainability and Integrated report
According to Cory Searcy, the research has showed that report content are determined
by the conducting the internal evaluation, following standards and other methods. Around
five companies were found developing fully integrated reports and other fifteen was found
including some aspects of sustainability in the annual reports. However, for the development
of the sustainability reports, the key challenges was identified such as data collection,
timeliness, selecting content as well as striking the appropriate balance in the reporting.
Moreover, there is various potential future for the uses of sustainability reports such as
improvement for the ability of tracking performance of real-time. Potential benefits of the
integrated reporting are measured by the effectiveness from the perspective of the
stakeholders. It has been found in the study that very few of the stakeholders use integrated
reports as one of the main source of the investment and financial investments. Further, the

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companies use still interim and annual reports as the main source of financial information.
However, there are various opportunities for the integrated reporting in future.
Criteria of integrated report
Organizational Overview and External
Environment
 Principal activities as well as
markets
 Ethics, culture and the values
 Position within value chain
 Operating and Ownership Structure
 Factors of market positioning and
competitive landscape
Governance  Leadership structure of organization
 Mandatory as well as voluntary code
of the corporate governance.
 Code of ethical conduct.
 Uses of strategic purposes for
making strategic decisions.
 Remunerations and Incentives
linking with the value creation in the
short, medium and long-term.
 Risk management.
Stakeholders Relationships/Identification  Identifications of stakeholders
 Engagement Methodology of
stakeholders.
 Identifying material matters of the

13CONCEPTUAL FRAMEWORK AND SUSTAINABILITY REPORTING
stakeholders.
 Application of such matters by the
company.
 Assessments of the impacts,
implications as well as outlook by the
stakeholders of the business model of
company.
Business Model  Business Activities
 Inputs
 Outputs
 Outcomes
Performance  Quantitative Indicators for targets, risks
and opportunities.
 The effect of organization on the
capital.
 State of relationships of key
stakeholders.
 Link between current and past
performance as well as between
organization’s outlook and current
performance.
Intu Properties PLC
The Intu Properties PLC is a South African based real estate company. The main
business of the company is dealing with the properties and construction. The Australian and
the south African based company both follows the conceptual frame- work in preparing the

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annual report of the company and the both the firm properly perform their corporate social
responsibilities.
Conclusion
The report concludes that the history of development of the conceptual frame- work is
very old. The conceptual frame- work provides the guideline for reporting the financial
information of the firm. This have several advantages and disadvantages. The sustainability
reporting of the company is also very important for the firm as this represent the corporate
social responsibility of the firm.

15CONCEPTUAL FRAMEWORK AND SUSTAINABILITY REPORTING
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