Contemporary Accounting Theory: Report

CONTEMPORARY
ACCOUNTING THEORY

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................2
MAIN BODY...................................................................................................................................3
PART A ..........................................................................................................................................3
a. History and development of the Conceptual Framework for Financial Reporting in the
USA, UK, Australia under the International Accounting Standards Board (IASB)...................3
b. Defining application of the International Accounting Standard Board / International
Financial Reporting Standard in Conceptual Framework for Financial Reporting....................4
c. Discussion regarding the advantages and the disadvantages of the conceptual framework in
respect of the financial reporting.................................................................................................5
d. Case.........................................................................................................................................6
(i) Statements or reports prepared as per the Conceptual Framework along with their major
components.................................................................................................................................6
(ii) Recognition principles and measurement bases applied for revenue, assets and liabilities..7
(iii) Qualitative characteristics of information exhibit in company’s various financial reports.
.....................................................................................................................................................7
PART B............................................................................................................................................8
a. Defining broader view of corporate social responsibility reporting in addition to reporting
of corporate financial performance.............................................................................................8
b. Defining strengths and limitations of the conventional accounting based on the Conceptual
Framework for Financial Reporting............................................................................................9
c. Applicability of the theories of sustainability as well as integrated reports..........................10
d. Preparing an index of various components of an integrated report......................................11
e. Comparing the contents of corporate social responsibility reporting & integrated reporting
Tabcorp Holdings Ltd with Curro Holdings Ltd. .....................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

EXECUTIVE SUMMARY
With the help of accounting standards and policies, a company can make proper and effective
financial statements. The report is based on the application of International Accounting standards
and procedures. The report will discuss about two companies named as Tabcorp Holdings
Limited and Curro holdings Limited. In the report, history and development related to the
conceptual framework for financial reporting will be described. Also, it will discuss about the
integrated and the sustainability of the reporting with appropriate guidelines.
INTRODUCTION
Accounting theory refers to the set of the assumptions, methodologies and the framework
that has been used for making the study. The application of the financial principles in respect of
reporting are also called as the accounting theories. Contemporary accounting theory include a
review of the historical foundations relating to the practices of the accounting and the ways by
which these practices are been changed and entered in the regulatory framework which governs
the financial reporting and the statements. Moreover, accounting theory is said to be the logical
reasoning which helps in evaluating and guiding the accounting practices. It also helps in
developing the new practices and the procedures for the accounting. The present study is based
on the two companies one is Australian company and other is South African company named as
Tabcorp Holdings Limited which is engaged in the business of entertainment and gambling
across the world. Another company is Curro holdings limited the largest private company
dealing in education sector. Furthermore, the report will include the conceptual framework in
relation to the international accounting standards for the board. The study also describes the
integrated and the sustainability of the reporting with appropriate guidelines.

MAIN BODY
PART A
a. History and development of the Conceptual Framework for Financial Reporting in the USA,
UK, Australia under the International Accounting Standards Board (IASB).
The international Accounting standard committee has published conceptual framework
for financial reporting in the year 1989. The main objective behind framing of these frameworks
is to provide guidance for both international as well as national standard framers related to
standard setting (Flower, 2018). This also helps in resolving issues related to accounting
transaction which is not provided by these standards as well.
Development of these standard has been made because of following reasons:
 For providing a better framework as well as norms with the aim of framing of better
accounting standards.
 For resolving all the disputes related to accounting transactions.
 With the aim of defining fundamental principles which are not to be repeated in
accounting standards again.
The conceptual Framework is a system or concept related to meaningful ideas, thoughts
and objectives which can assist every business organisation by creating a definite as well as
consistent set of rules, standards and norms (Leuz and Wysocki, 2016). These frameworks are
specifically related to accounting and financial management system of the company. With the
help of the set defined rules and standards in context of accounting, it lays down the nature,
function, concept for Financial Reporting. It also defines the limits in case of preparation of
financial accounting and statements of the company. These Conceptual Framework sets out the
relevant fundamental concepts which are considered as essential for making of the financial
reporting. It also helps in providing proper guidance to the International Accounting Standards
Board which further helps in developing International Financial Reporting Standards.
With on the going amendments and development of these standards, it has also helps in
ensuring that standards are more conceptually framed. Also, it has emphasized that there is a
proper consistency in treating of all the similar transactions in the same way, so as to provide

more meaningful as well as useful information to all the investors, suppliers, lenders, creditors
and other stakeholders.
The Conceptual Framework for financial reporting also assists many companies in
developing as well as framing of better and effective accounting policies in case when no
International Financial Reporting Standard applies to a specific accounting transaction. With the
development of these standards it has helped various stakeholders in making proper and better
understanding and interpreting of the applicable accounting Standards (Beaulieu, Sarker and
Sarker, 2015). The main aim behind development of this standard is to provide better system or
framework to company for framing of accounting standards necessary for resolving issues
related to accounting transactions etc.
b. Defining application of the International Accounting Standard Board / International Financial
Reporting Standard in Conceptual Framework for Financial Reporting.
The application of this framework in business organisation plays a very important role in
the framing as well as development of the accounting standards. These conceptual frameworks
form a basis mainly theoretical in nature, for ascertaining how accounting transactions of the
business to be measured, analysed and reported. It also helps in defining the manner in which
these are presented in the financial statement & thus communicated to its end users for
interpretation. These frameworks provides a better understanding of relevant accounting
practices, concepts, standards, norms to its users and also assist in preparation of financial
statements of the company (Cho and et.al., 2015). With the application of this conceptual
framework for financial reporting, it provides following uses to companies which are as follows:
1. Conceptual Framework related to financial reporting focuses on framing of meaningful
and relevant definitions which aids in making important discussion related to
accounting issues. This issue are further supported by resolution.
2. It helps in providing better and important guidance to all the framers of accounting
standard at the time of developing and reviewing of the financial reporting rules.
3. This framework designed helps the company by ensuring that accounting standards of
the company are internally consistent and followed properly.

4. Sometime, it helps in the preparation of financial statements to its maker as well as to
auditors of the company by resolving all the issues and problems related to the
financial reporting in the absence of proper accounting standard.
5. It also assist the company in setting the limit related to the volume of accounting
standards by giving proper definition, concepts and theory related to accounting
transactions (Corporate Financial Reporting, 2019). This further supports company in
applying of these frameworks in case of specific financial reporting problems.
c. Discussion regarding the advantages and the disadvantages of the conceptual framework in
respect of the financial reporting.
Conceptual framework in the context of the financial reporting is defined as the system of
the objectives and the ideas which results in developing the consistent set of the standards and
the rules (Chih and Zwikael, 2015). These rules and standards are applied in preparation of the
financial statements so that reporting can be made in compliance with all the regulations. There
are various benefits and the limitations that are present in the conceptual framework as follows-
Benefits - Creating the conceptual framework for reporting facilitates adequate
definitions relating to the concepts which in turn provides for the adequate measurement. An
individual can generate many ideas through the conceptual framework. It allows for the effective
communication in between the academics as some individual communicate in the different
languages and on the basis of that make the implicit assumptions and the concepts unconsciously
by not considering the other readers (Osanaiye, Choo and Dlodlo, 2016). Moreover, Conceptual
framework for the reporting allows for the clarification relating to the assumptions, implied
variables and the frames of the reference. It provides for the fixed set of the rules which in turn
leads consistency in the financial reporting.
Limitations - The major limitation that are associated with conceptual framework are that
it is dynamic in nature which means keeps on changing which leads in lack of consistency and
timely changes has to be made by the practitioner (Ovaskainen and et.al., 2017). Furthermore,
Until this framework are not tested empirically, it results in inadequacy regarding its application
in the practice, subjective perspective and limited reporting can be presented.

Financial reporting is a report in which company makes disclosure about all its financial
as well as business transaction which has taken place during a specific period of time.
Benefits – With this report business organization can make comparison of their
individual performance with its rivalry firm of same industry. This assist companies in
improving their overall business performance level and increase profitability. Can be used as a
basis for formulation of budget of next as well as current year.
Limitations – For preparing the financial statements proper compliance with set of
accounting standards, rules, procedures has to be made by company (Henderson and et.al.,
2015). Also, for preparing this expertise is needed as a result of which organization has to
employ highly qualified professionals which in turn increase their cost.
d. Case
(i) Statements or reports prepared as per the Conceptual Framework along with their major
components.
Tabcorp Holdings Limited is a company which is limited by shares being traded on the
Australian Securities Exchange. This Company is incorporated in Australia with the aim of
earning more profit (Tabcorp holdings limited annual report, 2018). The Financial Report of the
Company prepared for the year ended 30 June 2018 comprises of the Parent Company and its
subsidiaries known as the Group along with the interest factor of the Group in the joint
arrangements and associates.
The authorisation for issuing of the Financial Report prepared as per the Conceptual
Framework was given by the Board of Directors on 8 August 2018. The Financial Report of the
company has been prepared in accordance with compliance of the Corporations Act 2001,
Australian Accounting Standards (issued by the Australian Accounting Standards Board) and
other norms related to the financial reporting requirements in Australia.
Also, it has complied with the provisions of International Financial Reporting Standards
issued by the International Accounting Standards Board. Major components of report are:
1. Income Statement – Revenue and expenditure
2. Balance Sheet – assets and liabilities
3. Cash Flow Statement – inflow and outflow of money

4. Statement of changes in equity – equity portion
5. Notes to the financial statements – detail explanation about statements made
6. Directors’ declaration – interest and power of directors
7. Independent auditor’s report – provides details about audit by auditor in his audit report
The report is presented in Australian dollars with dollar amounts rounded to the nearest
hundred thousand. Also, focus is made at the time of report preparation on the historical cost
except derivative financial instruments and financial assets available for sale measured at fair
value. Also, compliance has been made related to use of accounting policies consistently by all
the Group for preparing the Financial Report.
(ii) Recognition principles and measurement bases applied for revenue, assets and liabilities.
The revenue recognition principle of accounting states that revenue are recognised at the
time when they are realized and are earned. It doesn’t get affected by period when the cash will
be received. The company has recorded its revenue when it has been earned by the business and
not when it is collected. Its assets and liabilities are recorded at fair value as well. Also, the
company has follows cost concept, going concern concept, consistency concept and materiality
concept for preparing its financials.
(iii) Qualitative characteristics of information exhibit in company’s various financial reports.
The qualitative characteristics used by the company in its financial report are:
1. Relevance – Information provided in financial statement should be of relevant nature
from the perspective of end user. It must assist its user in decision making process.
2. Materiality – Any omission or error at the time of recording of financial transaction if is
of material nature should be disclosed properly.
3. Reliability – Information presented in company financial report must be free from all
material error and biases so that it can become reliable. All the information should depict
true and fair picture about company.

PART B
a. Defining broader view of corporate social responsibility reporting in addition to reporting of
corporate financial performance.
Guidelines of reporting of sustainability reports under GRI and IIRC are as follows:
Global Reporting Initiative International Integrated Reporting
Council
 Governance – having
proper and effective
governance structure for
every business organization
& framing of committees.
Determining committee
responsible for decision
making related to economic,
environment and social
impact.
 Supply chain – Determining
the supply chain of the
company and it is managed.
 Ethics and integrity – It
defines the code of conduct
and behaviour which every
business organisation
employee has to follow and
adopt.
 Materiality – Communicating
about the impact which the
business is having on society
and environment. Business
strategies and goals framed for
overcoming it.
 Specific standard disclosure
– If company is following any
specific policy related to anti
corruption practices, use of
carbon offset practices etc.,
then its disclosure has to be
made properly for the
betterment of investor (Goel
and Misra, 2017).
Sustainability report is a type of report which is published by every company as well as
business organization for a specific period of time. This report depicts about the impacts created

on economic, environmental as well as social factors because of business operations and
activities.
This sustainability report helps the company in defining the values, beliefs of an
organization and governance model it follows. It also provides an effective link between the
strategies framed by company and its commitment so as to maintain sustainable global economy.
Both the corporate social responsibility report and sustainability report are considered as
synonym as both takes into account financial as well as non financial information.
Corporate social responsibility and Sustainability reporting aimed at betterment of society
as well business. It helps business organization in measuring, understanding and communicating
the importance of economic, environmental, social and governance performance and impact
caused by business activities on it. By setting goals and objective, the management of company
can bring changes in its business operations more effectively.
b. Defining strengths and limitations of the conventional accounting based on the Conceptual
Framework for Financial Reporting.
Strengths of conventional accounting based on the Conceptual Framework for Financial
Reporting are as follows: Facilitates solution – On assessing of a particular accounting problem, all the business
resources are used properly with standardized solution developed on the basis of
patchwork. Not influenced by political factors - At the time of framing and development of effective
accounting standards for preparation of financial report, these are not influenced by
political conflicts and changes in policies. Policies framed in context with the conceptual
framework are not affected by criticism created by the maker of standards (Laskar and
Maji, 2016).
 Concentration - Accounting standards provides main focus on the income statement of
the company along with concentration on the valuation of net assets of the company. It
helps in depicting correct statement of financial position of business for a specific time
period.
Conceptual framework also have following disadvantages:

 Applicability - Financial statements of the company are prepared with the intention of
serving its end users for making crucial decisions. But sometimes a single conceptual
framework can’t be suitable for all the other user. Based on different concepts – Accounting standard devised for a particular transaction is
not always useful in other accounting treatment. Variety of accounting standards is
designed for different purpose and goals having different concept for meeting the user
requirements.
 Not sure about ease of process – By using conceptual framework, it is not always possible
to make process of preparing and framing of financial report by implementing standards
easy in comparison with not using such framework.
c. Applicability of the theories of sustainability as well as integrated reports.
It is the duty of many business organisation to make full disclosure of all the material
information either of financial as well as non financial nature which are having influence on the
decision making process of investors as well as other stakeholders. Many business organisations
are increasingly disclosing financial and non financial performance in its financial reports. This
information must have qualitative characteristics such as reliable, relevance etc. and should be
more accountable and transparent to its investors and other interested parties.
Integrated report of the company clearly specify the content related to environmental, social and
governance aspects as their corporate material disclosures in report. Uses of this report are as
follows:
Helps in mitigating and reversing all the negative impacts caused on environment, social and
governance model.
It also assists company in making their performance better and thereby improving business
reputation and creates brand loyalty.
This report helps in enabling all the external stakeholders and investors in understanding and
interpreting true as well as correct value about the business organization.

Institutional theory – It relates with the firm behaviour governed in context with institutional
environment. This theory provides a deep insight about influences of different market forces,
economic changes, social as well as cultural factors on framing of corporate governance
practices in the business (Kostova and Marano, 2019).
Legitimacy Theory – This theory states that it is the duty of every business organisation to
continually ensure that its business operation are being carried on within the bounds, norms and
interest of the society.
Stakeholder Theory – Under corporate social responsibility, one of the main priority of business
is toward the society and community in which the business is conducting its business operation
at large. This theory relates to social orientation as one of its business responsibilities.
Stakeholder theory states that success of a business primarily depends on building & maintaining
of strong relationship, creating value for stakeholders.
d. Preparing an index of various components of an integrated report.
The elements of an Integrated Report of Curro Holdings Ltd. includes:
1. Overview of business
organization and its external
environment
Society in which it operates and carry on its business
activities
2. Governance model This element of integrated report provides a deep
insight about the leadership style of organisation, code
of corporate governance used by company, ethical
codes. It also focuses on implementation of all the key
governance policies which is benefiting society as well
as business operations.
3. Stakeholder relationships
detail
Provides details about stakeholders of the company and
its relationship status. How the business operations
creates impact on the decision making process of these
stakeholders (Henderson and et.al., 2015).
4. Capital position This element of report emphasizes on the capital and

other business resources which are used by Curro
Holdings Ltd. It also define how the company is using
its available business capital in an effective manner to
create more profit and value.
5. Business model It speaks about the theories, beliefs, values and
concepts on which the company is working. It provides
deep insight about all the business polices, plans and
strategies used by company during a specific period of
time.
Out of these components most of the item are included at the time of preparation of the
company's annual report which are as follows:
 Capital amount – it is disclosed in the balance sheet of the company.
 Overview of business – it is mentioned on the very first beginning of the annual report, so
that every investor and stakeholder can have an overview about the business operation
and its objectives
 Shareholder detail and equity part – the amount of profit which is available to shareholder
after making all adjustment
 Corporate social responsibility – it is enclosed in the financial statements, i.e. social
activities undertaken by company for its society.
e. Comparing the contents of corporate social responsibility reporting & integrated reporting
Tabcorp Holdings Ltd with Curro Holdings Ltd.
Corporate social responsibility reporting is a report which is prepared by the companies
either on annual or periodical basis to depict all the corporate as well as social responsibility
actions and services it has rendered to the society. Integrated Reporting provides detail summary

about the strategy, concept, governance model, performance level etc. of the business assist in
the creation of value over a period of time. Comparison are as follows:
Elements Tabcorp Holdings Ltd Curro Holdings Ltd
Protection and preservation
of Environment
The main emphasis of the
company is related to
environmental preservation.
Focus is made on finding
economical and sustainable
ways for using scarce natural
resources in a sustainable
manner so as to decrease
impact on the environment.
Company focuses on
incorporating several business
items for survey of better and
effective way of protecting
measures related to
environment (Gaynor and
et.al., 2016). Curro has
framed many business
procedures and plans related
to proper disposal and wiping
out waste. It has always
ensures boosting the effective
uses of all resources and
business assets.
Human Rights Business practice creates
impact on the rights, dignity
and respect of the company’s
work force and the
communities. Its main focus is
on creating a better work
culture and environment free
from discrimination. Adopting
of proper codes of conduct,
professional behaviour can
help in maintaining equality
and balance between work and
Curro Holdings Ltd. is always
working for betterment of its
employees as well as for the
society in which it is
operating. Emphasis has been
made on protecting of human
rights by not discriminating
employees.

business life. Donations to
charities and community
organisations has been made
of around total $1.9 million.
Growth of business as well
as economy
The main aim of this company
is to promote growth of
company as well as of the
society as a whole. This
company ensures that the
business activities undertaken
by it are not hampering society
and economy.
It emphasizes on maintaining
of equality in the growth
perspective at both business
as well as economy level. It
works on the belief that with
business development
economy will also develop.
Promoting better health
standards
The environment in which the
company is performing its
business operations has to
always ensure that proper
health standards are
maintained and followed.
Many business organisation
and sector are playing
predominant role in context
with the global economic
development and globalization
of healthy economy.
Complying with best business
practices and standards can
help Curro Holdings Ltd. in
making more profit as well as
in improving g its business
performance level. Company
has to maintain healthy
business environment for its
employees as well as for the
society in which it is
operating.
Participation of Community
or society
By inviting suggestions and
feedbacks about the business
products and services can help
the company in achieving
higher success (Warren,
2016). Every business
This company has always
focuses on making active
participation of its society in
the business decisions. It has
always ensures that money
and time spend by the

organisation should focus on
active participation of its
community as well as society
in decision making process.
company on society is fruitful
for both.
CONCLUSION
From the above report it has been concluded that by adhering to all the accounting standards and
principles, every business organisation can grow with high profits and improves its performance
level as well. It is very important on part of every company to conduct some social activities in
the society in which it is conducting its business operations. Also report has discuss that financial
statement of company should contain all the material information which are relevant and going
to influence the decision making process of any investors or stakeholders.

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