Contemporary Accounting Theory

Running head: CONTEMPORARY ACCOUNTING THEORY 1
Contemporary Accounting Theory (Part A and B)
Student’s Name
Institution Affiliation
Date

CONTEMPORARY ACCOUNTING THEORY 2
1. Executive Summary
The ideology behind the formation of conceptual framework (CF), in the sector of
accounting is based on the mandate to identify key issues while reviewing financial
statements. This framework is purpose to enable the company to attain and evaluate its
financial health. Thus, this paper will critically evaluate the conceptual framework applied in
an ASX listed company: Magellan Glob Trust (MGG) and how the company applies this
concept in the choosing of financial events, concerns and statements. In paper B, the paper
will compare the International Integrated Reporting System over the Sustainability Reporting
Guidelines, which also entails explain the specific strengths and limitations of accounting
based on CF. The paper will compare the evaluation of the framework against a South
African Country Old Mutual Ltd. (OMU) , on an index, Magellan Glob Trust against the
company’s integrated reportage.

CONTEMPORARY ACCOUNTING THEORY 3
2. Introduction
The documentation of the concept is obliged or expected to outlay critical financial
guidelines that fundamentally control and underlie the steps to preparing and presenting a
company’s financial statements and economic valuation. In that regard, these financial
statements are applied by various key stakeholders in the company to effectively formulate
the CF, relevant for evaluating the finances of a company. In that case, this paper evaluates
the concept evaluation of two companies: Magellan Glob Trust (MGG) and the Old Mutual
Ltd. (OMU), which are Australian and South African Companies respectively. It is also
significant to evaluate the IASB in formulating revised and standardized accounting
protocols, which is relevant for financial statements applicable by companies when applying
financial protocols or handling problems evident in the compliance activities to specific
accounting standards. In that regard, this paper analyses the conceptual framework purposed
for financial reporting and its relevance and application in an Australian Company i.e.
Magellan Glob Trust (MGG). The second paper of this paper will evaluate the sustainability
and integrated reporting frameworks applicable in a South African Company i.e. The Old
Mutual Ltd. (OMU).
3. Part A
a) Review of the history and development of the Conceptual Framework for
Financial Reporting
The Conceptual Framework (CF) development in the UK, US and other countries in
the world began in 1976, following its introduction by the FASB in US. The conceptual
framework was created as a basis system that crucially outlays accounting guidelines, which
cordially affirms accounting reporting concerns.

CONTEMPORARY ACCOUNTING THEORY 4
From 1978 to 2010, the governing entity had issued eight accounting statements
regarding the relevant financial reports applied by various companies, including one SFAC
No. 4, which signified the conceptual framework that applies to non-business enterprises.
However, SFACs No. 1, 2 and 3 have already been replaced, which leave only 5 as valid
SFAC Nos. The reporting is the SFAC No. 4, which represent the conceptual framework
considered by the International Accounting Standards Committee (IASC). This accounting
body was established in 1973, which represented a predecessor entity of the accounting
standards body globally. By 1st April 2010, the accounting entity (IASB) assumed the role of
IASC obliged to set out the Conceptual framework, despite the current standards being
reference to as the International Financial Reporting Standards (IFRS) (Timbate & Park,
2018). In 1975, the entity presented its initial reporting of the IAS, which represented the
accounting policy disclosure (Crombie, 2012). The IASC presented its 28th IAS by April
1989, which represented the financial statements for investment in the relevant associates.
Therefore, the conceptual framework developed for the presentation and preparation
of accounting frameworks had been approved by April 1989 by the IASC. This reporting was
therefore published in 1989 and applied by the IASB in 2001, despite its relevance in
formulating and unindustrialized the IAS framework. For the purpose of delayed issuance of
the standard, the fundamental purpose of the CF is to assist the financial entity to formulate
International Accounting Standards in the future; and allow the review of the present
Standards paragraphs (IASB, 2010b and B1713) signifying this framework. The accounting
body committed itself into an agreement with the United States’ FASB, which was referred
as the 2nd Norwalk Agreement by 2002; and mandating that two accounting entities would
principally consider removing its present differences and merge on the basis of the quality
conceptual framework (Ehoff, 2010). Following the joint conference in 2004, the accounting
bodies (FASB and IASB) agreed to include respective key components and concerns as an