Contemporary Issues in Accounting

This report discusses the requirements of general purpose reporting standards under the conceptual framework and whether Flight Centre Travel Group is complying with them. It also covers the recognition criteria for the elements of financial statement and the fundamentals of qualitative characteristics under conceptual framework.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary issues in accounting
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1CONTEMPORARY ISSUES IN ACCOUNTING
Abstract
The main objective of the report is to state the requirement of general purpose reporting
standards under the conceptual framework. It will further state whether Flight Centre Travel
Group is complying with the requirements of the conceptual framework and whether they
recognized the items of financial statement as per the requirement. Finally the report will
state whether the company is complying with the fundamentals of qualitative characteristics
under conceptual framework.

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Table of Contents
Introduction................................................................................................................................3
Objectives of general purpose financial reporting.....................................................................3
Adequate information for the users of financial statement........................................................3
Assessment of timing and amounts involved.........................................................................4
Usual information...................................................................................................................4
Resource of the organization..................................................................................................4
Recognition criteria for the elements of financial statement.....................................................5
Asset recognition....................................................................................................................5
Liabilities recognition............................................................................................................5
Equity recognition..................................................................................................................6
Revenue recognition...............................................................................................................7
Expenses recognition.............................................................................................................7
Qualitative characteristics..........................................................................................................8
Relevance...............................................................................................................................8
Materiality..............................................................................................................................8
Comparability.........................................................................................................................9
Timeliness..............................................................................................................................9
Verifiability............................................................................................................................9
Conclusion..................................................................................................................................9
References................................................................................................................................11

3CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
Conceptual framework for the general purpose financial reporting by the public sector
companies delivers the International public sector accounting standards board with concepts
that will strengthen development of IPSASs (International Public Sector Accounting
Standards) and the practice guidelines for future years. it deals with the concepts those are
applicable to the general purpose financial reporting as per accrual basis of the accounting. It
provides the guidelines for dealing with the issues related to financial reporting that are dealt
by the IPSASs. Under the circumstance, the preparers and others may consider and refer to
the applicability of definition, measurement principles, recognition criteria and various other
concepts recognized under the conceptual framework.
Objectives of general purpose financial reporting
Flight centre Travel Group is biggest retail outlet for travel in Australia. It was
established in the year 1982 and it’s headquarter is in Brisbane (Fctgl.com 2018). From the
financial statement of the company it is found that the general purpose financial report of the
company has been prepared in accordance with the AAS (Australian Accounting Standards)
and interpretations released by AASB (Australian Accounting Standards Board) and
Corporation Act 2001. The company is a for-profit company for preparing financial
statements (Noon, Blyton and Morrell 2013). Further, the consolidated financial statement of
entity is complied with the IFRS (International Financial Reporting Standards) released by
IASB (International Accounting Standard Board).

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Adequate information for the users of financial statement
Main objectives of the financial reporting by the public companies are to deliver
useful information regarding the company to the users of GPFRs for the purpose of
accountability and making decisions (Bebbington and Larrinaga 2014).
Assessment of timing and amounts involved
As per the requirement of conceptual framework the financial statement shall be
presented in such a manner that the amount for each item can be analysed on timely manner.
it is observed from the financial statement of the company that the statements are prepared
for the period of 1 year and which is closing on 30th June 2017 (Francis, Hasan and Wu
2013). Further, the amount for all the items are separately mentioned in the financial reports
and the associated notes disclosed with the statements.

5CONTEMPORARY ISSUES IN ACCOUNTING
Usual information
As per the requirement of conceptual framework the information presented in
financial report must be presented in such manner that will be useful to the users. It is
observed that the company presented all the necessary information through the financial
statements, graphs, tables and ratio presentation. The users can use this information for
analysing the performance of the company for the purpose of decision making (Griffith,
Hammersley and Kadous 2015). Therefore, the information is provided in useful manner and
can be used by the users for making decisions.
Resource of the organization
The conceptual framework requires that the financial statement shall clearly provide
the information regarding the resources available to the company and the sources through

6CONTEMPORARY ISSUES IN ACCOUNTING
which the resources are obtained (Li 2013). It has been observed from the financial report of
the company that all the resources and their sources are properly mentioned in the financial
report of the company.
Therefore, the financial statement of Flight Centre Travel Group Limited is
complying with all the requirements as per conceptual framework regarding the general
purpose reporting standard.
Recognition criteria for the elements of financial statement
Recognition of the item is key driver for determining whether information is stated on
face of financial statement or is disclosed through notes or anywhere in the GPFRs. Further,
the notes for the financial statements disclose the information that supports the achievements
of financial reporting objectives (Frias‐Aceituno, Rodriguez‐Ariza and Garcia‐Sanchez

7CONTEMPORARY ISSUES IN ACCOUNTING
2013). Any item is identified in the financial statement if the cost or value of the item can be
measured reliably and it is probable that upcoming economic benefit from the item will be
inflow for the company.
Asset recognition
When it is apparent that the upcoming economic benefits associated with asset will be
inflow to the company then the asset is recognized in the company’s balance sheet. From the
balance sheet of the company for the year ended 30th June 2017 it is observed that the assets
are divided as current and non-current assets (Miller and Power 2013.). The assets of the
company like building, plant and equipment are transacted at historical cost less depreciation
provided on straight line method. Further, the asset’s carrying amount is immediately
impaired to the recoverable amount if the carrying value is more than the expected
recoverable amount.
Liabilities recognition
When it is probable that the company will require the outflow of economic resources
to settle down the underlying obligation then the liabilities are recognized in balance sheet.
Further, to recognize the liability the amount for the item shall be reliably measured. The
company divides their liabilities as current and non-current based on their time period for
payment. The company presented the trade and other payables as current asset. These

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payables are recognized at fair values initially and thereafter are measured at the amortised
cost using the method of effective interest. Provisions for the make good obligations and
legal claims are recognized when the company has present constructive or legal obligation
that will required outflow of economic resources. Further, the borrowings are recognized at
the fair value initially after deducting the transaction cost and are measured at the amortised
cost subsequently.
Equity recognition
The equity of the company includes the contributed equity and treasury shares.
Movements in the contributed equity are related to the shares that are issues under ESP.
Further, the the company presented the details regarding the opening balances, closing
balances and purchase details of the shares through the disclosure notes.

9CONTEMPORARY ISSUES IN ACCOUNTING
Revenue recognition
When increase in the upcoming economic benefits related with the item taken place in
the financial year for which the amount can be measured reliable, the item is recognized as
revenue in the income statement of company. It is observed that Flight centre Travel Group
Limited recognizes the revenues when amount of revenue can be reliably measured and
particular requirement met for each activity.
Expenses recognition
The company recognizes its expenses if the company has to spend the economic
resources for obtaining economic benefits and that are associated with the reduction in assets
or increase in the liability and can be reliably measured. It is observed that the company
segregated its expenses under various heads like finance costs, other expenses. Further, the
heads are subdivided under various other heads.

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Therefore, the company is complying with all the requirements of conceptual
framework for recognising the items under the financial statement of the company.
Qualitative characteristics
Qualitative characteristics of the useful financial reporting recognizes the information
types, that are expected as most crucial to the users for making decisions regarding the
reporting company based on the financial statement information
Relevance
The financial information shall be presented in such a way that the information shall
be relevant to the users for making useful decisions. It is observed that the financial
information of the company reported in such a way that it is relevant to the users for the
purpose of decision making. The items are properly segregated under appropriate head with
their respective amounts.
Materiality
Information presented in the financial statement will be regarded as material if the
omission or misstatement can have an impact on the decision of the users. It is observed that
the company has included all the material information in the disclosure notes associated with
the financial report of the company. Further, as per the report of the auditors there were no
material misstatement found in the financial report of the company.
Comparability
As per the qualitative characteristics of the conceptual framework the report shall
allow the users to compare the financial performances of the company with the previous
years as well as with the industry peers (Deegan 2013). It is observed that the company
presents the information for previous year also along with the current year. Further, the key

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information is presented for last 5 years. Moreover the data are presented through graphs,
table and ratio to enable the users to compare the performances.
Timeliness
Finance related information shall be presented with the time to which it relates so that
the users can evaluate the performances for the particular period of time. It is observed that
the company issue their reports annually as well as for half-year period. Further, the annual
report is presented for the period ended 30th June 2017 (Cheng et al. 2014).
Verifiability
The requirement of conceptual framework is that the items presented under the
financial statements shall verifiable with the supporting notes. It can be observed that the
company’s financial information are segregated under appropriate heads and can be verified
with the disclosed notes (Chen et al. 2013).
Conclusion
From the above analysis it can be concluded that Flight Centre Travel Group Limited
is complying with all the requirements stated under the conceptual framework for GPRSs.
The company presented its financial information in such a way that it can be used by the
users effectively for decision making purpose. Further all the items like expenses, revenues,
assets, equities and liabilities have been recognized as per the requirement of recognition
criteria mentioned in conceptual framework. Moreover, all the fundamental qualitative

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characteristics requirements are fulfilled by the company while prepared the financial
statement.
References
Bebbington, J. and Larrinaga, C., 2014. Accounting and sustainable development: An
exploration. Accounting, Organizations and Society, 39(6), pp.395-413.
Chen, L.H., Folsom, D.M., Paek, W. and Sami, H., 2013. Accounting conservatism, earnings
persistence, and pricing multiples on earnings. Accounting Horizons, 28(2), pp.233-260.
Cheng, M., Green, W., Conradie, P., Konishi, N. and Romi, A., 2014. The international
integrated reporting framework: key issues and future research opportunities. Journal of
International Financial Management & Accounting, 25(1), pp.90-119.
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
Fctgl.com., 2018. [online] Available at:
http://www.fctgl.com/wp-content/uploads/2017/09/Flight-Centre-Travel-Group-Annual-
Report-2017.pdf [Accessed 17 Apr. 2018].
Francis, B., Hasan, I. and Wu, Q., 2013. The benefits of conservative accounting to
shareholders: Evidence from the financial crisis. Accounting Horizons, 27(2), pp.319-346.
Frias‐Aceituno, J.V., Rodriguez‐Ariza, L. and Garcia‐Sanchez, I.M., 2013. The role of the
board in the dissemination of integrated corporate social reporting. Corporate Social
Responsibility and Environmental Management, 20(4), pp.219-233.
Griffith, E.E., Hammersley, J.S. and Kadous, K., 2015. Audits of complex estimates as
verification of management numbers: How institutional pressures shape
practice. Contemporary Accounting Research, 32(3), pp.833-863.

13CONTEMPORARY ISSUES IN ACCOUNTING
Li, J., 2013. Accounting conservatism and debt contracts: Efficient liquidation and covenant
renegotiation. Contemporary Accounting Research, 30(3), pp.1082-1098.
Miller, P. and Power, M., 2013. Accounting, organizing, and economizing: Connecting
accounting research and organization theory. Academy of Management Annals, 7(1), pp.557-
605.
Noon, M., Blyton, P. and Morrell, K., 2013. The realities of work: Experiencing work and
employment in contemporary society. Palgrave Macmillan.