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Towards Conceptual Framework for Financial Reporting

   

Added on  2021-02-20

12 Pages4133 Words265 Views
ContemporaryAccounting Theory

Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................1PART 1............................................................................................................................................11. Explain the history and development of conceptual framework for financial reporting.........12. Explain Australian accounting professions concern regarding conceptual framework...........23. Discussed the academic concern regarding conceptual framework........................................34. How conceptual framework applied by the Australian company............................................4PART B............................................................................................................................................51. Compare Global Reporting Initiative (GRI) and International Integrated ReportingFramework for the holistic view of corporate social responsibility............................................52. Rigour of conventional accounting..........................................................................................13. Explain the required theory which is used to explain the contents of sustainability as well asintegrated reports.........................................................................................................................24. Components of integrated report of Montauk Holdings Limited...........................................25. Compare the context of Australian company corporate social responsibility in addition toreport it's financial performance..................................................................................................3CONCLUSION................................................................................................................................3REFERENCES................................................................................................................................5

INTRODUCTIONAccounting theory is a logical reasoning which include the different set of principle andprovide overall guidelines in order to build their financial reporting which contain all thefinancial informational. Accounting principle include various practices which help the managerto maintain their transaction for the further analysis (Bedford and Ziegler, 2016). It will help themanager to build strategy and take effective decision in order to achieve their goals & objectives.Infigen Energy Limited company selected for the better understanding of this concepts.Company generate electricity from renewable sources and it was founded in 2003 and providerenewable energy assets management services. This report include the various topics such asconceptual framework for financial reporting under the umbrella of International AccountingStandard Board (IASB). Application of IASB for the financial reporting. In addition, it includethe conventional accounting which explain the sustainability or integrated report. Along withthis, this report include the comparison of Australian company's reporting practices. MAIN BODYPART 11. Explain the history and development of conceptual framework for financial reportingConceptual framework is the theory of accounting which provide the clear guidelinesregarding developing their financial reporting. It is a set of idea, rules, guidelines which help theorganization to maintain their daily transaction in order to develop proper financial report. It willhelp the business and their users for building strategy in order to provide effective or efficientinformation. Which further helps in increasing productivity or profitability of the company. International Accounting Standard Board (IASB) is independent body which approve theInternational Financial Reporting Standard (IFRS). IASB founded in 2001 after replacingInternational Accounting Standard Committee (IASC). IASC establish in 1973 and after this,various amendments will take place and introduce IASB. Purpose of the framework is to assist IASB and developing IFRS which is based onvarious concepts. It include those activities or policies which is not included in the accountingstandard. Manager of the company follow the judgement which helps in making informationreliable or relevant for the organization. These framework use for the development of financialreporting where day to day activity are recorded for the further functioning.1

Primary purpose of the financial reporting is to show all the financial information to thepotential investors, lenders and creditors. With the help of these information individual can takedecision regarding their investments and manager of the company to develop strategy for thefurther functioning. Financial reporting include the various statements such as profits & lossaccounts, balance sheet and cash flow statements (Budding, Grossi and Tagesson, 2014). Financial reporting required for the disclosure of financial information for their userswhich attract the stakeholders to make their decision regarding investment. With the help ofreporting, internal as well as external users can identify the financial position of the company forthe specific time period weather it is profitable or not. Stakeholders are included, potentialinvestors, debtor, customers, employees, owner, government, supplier etc. 2. Explain Australian accounting professions concern regarding conceptual frameworkIn the United State, conceptual framework define as a coherent system of interrelatedobjectives. Conceptual framework include the nature of business, functions, limitation andrequirement of financial accounting and reporting. In the Australia, it is consider as a series ofStatement of Accounting Concepts which include the purpose, nature and general purpose ofmaintain their records and develop financial reporting.In 2005, there is a change in the Australian conceptual framework and it will bedeveloped as International Accounting Standard Broad (IASB). As per accounting professionals,conceptual framework help the every organization in order to develop their financial reportwhich include various standards, rules and guidelines. Firstly, organization have to identify thepurpose of developing financial report and then objectives. Information can be qualitative orquantitative which affect the business in order to increase their sale and profit. Throughattracting consumers and potential investors to achieve their organizational goals & objectives.As time passes, accounting professionals attract great deal of criticism and it willgenerate due to lack of agreement which is greater issue as per the legitimacy perspective. Theyalso required conceptual framework for the effective analysis. Which help the Australiancompany in order to follow all the standards and develop their financial report which isnecessary for the business to know their actual position in terms of market share of profitability(Carnegie, 2014). Now most of the countries develop their own conceptual framework which issimilar to the IASB. Conceptual framework provide fundamentals of an accounting system2

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