Contemporary Accounting Theory

Running head: CONTEMPORARY ACCOUNTING THEORY
Contemporary accounting theory
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1CONTEMPORARY ACCOUNTING THEORY
Table of Contents
Executive summary.........................................................................................................................2
Introduction......................................................................................................................................3
Part A – Conceptual Framework.....................................................................................................3
(a) History and development of conceptual framework.........................................................3
(b) Concerns for conceptual framework application for financial reporting..........................4
(c) Academic concerns for the quality of CF.........................................................................5
(d) Reports prepared by Australian entity and South African entity......................................7
Part B - Integrated and Sustainability Reporting...........................................................................12
(a) Sustainability reporting Guidelines and International Integrated Reporting
Framework.................................................................................................12
(b) Rigour of Conventional Accounting...............................................................................12
(c) Applicability of theories for explanation of the contents of Sustainability and Integrated
Reports.......................................................................................................................................13
(d) Integrated Report Index..................................................................................................13
(e) Integrated Report of Djerriwarrh Limited.......................................................................16
Conclusions....................................................................................................................................17
Reference.......................................................................................................................................18

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Executive summary
Australian company that is Djerriwarh and one South African entity that is Capitec Bank will be
considered for analysing the CF principles used by these entities for preparing their financial
reports in Part A of the report. It will further highlight the academic concerns involved with the
conceptual framework and the advantages and limitations associated with it. In Part B, it will
give attention to the integrated or sustainability reports prepared by these entities. For covering
this part the report will carry out the comparison as well as contrast the guidelines of
sustainability reporting stated by GRI (Global Reporting Initiative) and IIRF (International
Integrated Reporting Framework) as per IIRC (International integrated reporting council). The
report will further discuss the usefulness and limitations associated with contents of the
sustainability.

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Introduction
The main purpose of the report is to provide details regarding the development of
conceptual framework and benefits, limitations and various concerns associated with it. The
report will consider one Australian company that is Djerriwarh and one South African entity that
is Capitec Bank for evaluating how these entities are using the conceptual framework (CF) for
preparing their financial reports. Further, the report will focus on whether they prepare the
integrated reports or not and the topics covered by them in integrated report. The report will
mention the key reports prepared by these entities as per the requirement of CF (Aasb.gov.au,
2019).
Part A – Conceptual Framework
(a) History and development of conceptual framework
Before 1929, no public or private groups were responsible for the accounting standards.
However, after 1929 while the stock market crashed, Securities and Exchange Act was passed in
1934. It resulted into SEC commission for supervising the public entities. SEC designated FASB
which held responsible for setting the accounting standards for the public entities in USA. The
project of Conceptual framework by FASB, started in 1973 for developing solid theoretical basis
to develop the accounting standards in USA (Botosan, 2019). As stated by Caroline Becker for
UK, it was very crucial to create the conceptual framework. Increasing needs from global
accounting, growing economic cooperation globally and influence from USA led to development
of statements of Principles important for UK. Underlying reason for development of conceptual
framework in UK is that it did not want to lag behind in context of accounting method (Caroline,
2019). Further, UK was shifting from the rule based standards to the principle based standards.
Hence, it required introduction of conceptual framework for UK. Since the year 1999 UK started

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using its own conceptual framework. The CF in Australia was considered to contain numerous
accounting concepts with number of statements for defining nature, purpose, subject and wide
content of general purpose of financial reporting for private as well as public sector
(Researchbank.rmit.edu.au, 2019). However, the major development for CF started only after
1980 though it started developing since 1970 (Rensburg & Botha, 2014). The major purpose of
financial reporting in Australia, UK, USA and globally is to offer accounting information issued
by organizations to assist the users in making informed and rational decisions. Main objective of
the regulators and accountants is to achieve the objectives those are influenced by the accounting
concepts with the purpose of financial reports preparations (Eizenberg & Jabareen, 2017).
However, the entire world including the nations like UK, Australia, USA are going through the
same process in context of the treatment of accounts. Further, growing numbers of stakeholders
are in demand of comparable, relevant, understandable and reliable information included in the
financial statement which can assist them to make crucial financial and investment decisions
(Díaz et al., 2015).
(b) Concerns for conceptual framework application for financial reporting
CF sets out the ideas and concepts that provide the basis for presentation and preparation
of the financial reports for the purpose of usage by the external users. CF issued by IASB offers
concepts supporting the models, judgments and estimates. It further addresses the objective for
financial reporting, definition, measurement and recognition for the items included in the
financial statements, useful information’s qualitative characteristics and the concepts of capital
as well as capital maintenance (Deegan & Islam, 2012). However, some major concerns
regarding CF are as follows –

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 There will always exists a conflict among the existing accounting standard those were set
by the accounting standards setters previously and the CF as the principles of CF may
differ with the existing standards in context of principles and nature.
 Small companies may be in the view that the CF principles are only beneficial for the big
entities only and may not be able to serve the purposes of the small entities. Hence the CF
is not acceptable for all the entities (Kirkman, 2014).
 It is not easy for setting up and is time consuming. Hence, the developing countries may
find it costly and not keen to apply the same. Further, one single CF is not able to fulfill
wide range of demands.
 It comes with the high level of rigidity and the users are not in a position to amend it as
per their requirements. Hence, the users are not in a position to incorporate any changes
or any new ideas which is another major concern in using CF for preparing the financial
statements (Lewandowski, 2016).
(c) Academic concerns for the quality of CF
CF is the integral part of financial reporting as it offers the basis based upon which the
accounting standards are developed and items like expenses, revenues, assets, equities and
liabilities are reported under the financial statements (Searcy & Buslovich, 2013). Potential other
benefits of CF are mentioned below –
 Developing the standards with the backing of CF is more economical and easier as the
basic principles and for preparing the financial reports are already established. These
principles can further be applied in the scenario where no guide and accounting standards
exist and conflict of interest is there based on which the policies is to applied under