Analyzing the Conceptual Framework of Contemporary Accounting

Running head: CONTEMPORARY ACCOUNTING THEORY
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Analyzing the conceptual frame work concepts
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CONTEMPORARY ACCOUNTING THEORY 2
Executive summary
This report brings out an analysis of the conceptual framework of accounting as
provided for under the different international accounting standards. The report is however
presented in two main parts. Part one of the report will put major emphasis on the theoretical
frame work of contemporary accounting. In assessing the frame work, consideration will be put
towards the strengths and weaknesses of the frame work (AASB, 2015). The professions
concerns about the frame are brought forward as well as concerns arising from the academics
point of view (AASB, 2013). The second section of the report will lay focus on the selected
Australian listed company (after pay Touch Company) and the Reunert Company of South
Africa. The report presents comparisons and contrasts about the types of financial reports that
each of these companies prepare. Furthermore the report as well takes at the existing data and
written information about the topic of discussion. This is done through taking a look at the
present literature.
Introduction
This report therefore proceeds to explain the major points of discussion as required by
the topic of study. Key important terms and definitions will be defined within the proceeding
parts of the report. Major reason for such definitions will be to avail the reader with more
knowledge concerning the terms in the conceptual frame work. Additional focus will be as well
put on the strengths and weaknesses of the accounting frame work of accounting.
Alternatively, an analysis of both the integrated and non integrated systems of accounting will
be discussed (AASB, 2018). Continuously, in the second part of the report there will be further

CONTEMPORARY ACCOUNTING THEORY 3
illustrations of the model of sustainable accounting in the organization. The need for such a
type of accounting will be justified as well. This will be done through carrying out applicability
tests on the selected companies so as to determine the level of compliance. Therefore the use
of company annual reports will be of very significant value in this report. It is also worth noting
that focus will be attributed to assets, treatment and measurement of liabilities, and revenues.
An analysis of the conceptual framework (literature review)
First presented as the preparation and presentation framework, during the 1980s, the
concept is not an accounting principle on its own. The conceptual framework as it later came to
be known in 2010 is a financial system that covers a wide range of accounting standards. It
therefore plays the major role of providing additional guidance to accountants during the
process of preparing financial reports for the year. Some of the different standards that the
framework covers include those of the IFRS and the IASB standards of accounting (cloud, 2010).
This frame work was introduced to ensure that entities prepare reports that are in line with the
requirements and guidelines of the standards (Adams, 2013). Basing on the above brief
information therefore an individual can simply conclude that a conceptual framework refers to
a variety of standard accounting principles and guidelines that an entity follows when preparing
and presenting financial data. This data or information would include the faithful disclosure of
assets, liabilities, profits, revenues among others. By including such elements in the financial
reports it is important to note the different ways through which such elements are treated and
measure as per the guidelines.
Addressing the professions point of views about the framework

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In Australia, most of the practicing professions do not appear to understand the
applicability of the conceptual framework model of presenting financial data. Due to the
numerous changes in society and the environment, the demands have as well changed (Barker
and Teixeira, 2018).there is raising concerns disposing the limitations that are associated with
the framework. This is basically in terms of sustainability and social respo0nsibility. To them,
the framework has become increasingly inapplicable even after it was updated. The revised
framework brings abut majorly two concerns for them and the country’s general accounting
board. These are basically the questions regarding the special purpose reporting entities and
then the general reporting companies. The other point of concern is the question of finding the
right definition of an entity. Ever since the new framework was brought into consideration,
there have been a lot of uncertainties in relation to what an entity represents. The framework
definition of an entity contradicts with the AASB’s definition of what an entity means.
Therefore, the Australian professions have found this contradiction confusing, challenging and
consequently a limitation of the new framework. This s because the confusion created does not
promote the principle of understandability as required by the standards of accounting.
Regarding the applicability of the framework to entities, the conceptual frame work
further creates additional contradictions. Since Australia allows entities to prepare their own
financial reports, it is very difficult to determine which entity is allowed to prepare special
purpose reports and which one should not. The framework implies that in Australia, two
different companies operating the same type of business can end up preparing different types
of reports. For example two betting companies can find themselves preparing different types of
financial statements. One of them can prepare special financial reports whereas another