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Contemporary Issues in Accounting

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Added on  2023/06/15

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The study evaluates AGL Energy Ltd's compliance with the conceptual framework of accounting and the quality characteristics of its financial report. The report adheres to the recognition criteria for reporting assets, liabilities, equity, revenue and expenses. The study also examines the enhancing characteristics of financial reporting and the comparability and timeliness of information presented in the financial report.

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Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
Name of Student:
Name of University:
Author’s Note:

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CONTEMPORARY ISSUES IN ACCOUNTING
Executive Summary
The study has led importance on the compliance of AGL with conceptual framework of
accounting. The important aspects of the study have emphasised on adherence of AGL for
recognition of “assets, liabilities, equities, expenses and revenues”. The next section of the study
will deal with evaluating the quality of characteristics in the financial report which has been
discerned in form of reliability and faithfulness in description of the financial events. The last
section of the study has been able to depict the quality characteristics of the report which has
shown the comparability and timeliness of information presented in the financial report. The
significant depictions from the discourse has been able to state that complying with the
objectives of the conceptual framework is evident with standards set by AASB and all the other
kinds of standards has been acceptable to ASX. The preparation of concise financial statement is
done in compliance with “Corporations Act 2001 and Accounting Standard AASB 1039 Concise
Financial Reports”. The study has also been able to find that “Australian Accounting Standard
AASB 139 Financial Instruments: Recognition and Measurement” is one of the important
recognition criteria for reporting Assets, Liabilities, Equity, Revenue and Expenses. Quality
characteristics of the report is prominent with clear comparison of present your data of the
previous year or five years ago.
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CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction......................................................................................................................................3
Adherence to the objectives of the conceptual framework with its reporting.................................3
Adherence with the recognition criteria for reporting Assets, Liabilities, Equity, Revenue and
Expenses..........................................................................................................................................5
Adherence with the qualitative enhancing characteristics of financial reporting............................6
Adherence with enhancing characteristics of financial reporting....................................................7
Conclusion.....................................................................................................................................10
References......................................................................................................................................11
List of appendix.............................................................................................................................13
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CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
“AGL Energy Ltd” has been discerned as one of the most notable Australian public listed
company under ASX 100 is responsible for retailing, consideration and generation of electricity
for commercial use. The source of the energy generated by AGL has been mainly depicted in
form a hydroelectricity, thermal Power, power stations, solar energy and coal steam. It has been
depicted that the company is having an overall customer base of “3.6 million both residential and
business” located in “New South Wales, Victoria, South Australia and Queensland”. In July
2017, AGL decided to enter commercial gas market sector located in Western Australia (Drew
and Dollery 2015).
The report has selected AGL Energy Ltd to depict whether the company has been able to
meet the objective of theoretical background for reporting. The study will be able to recognise
the observance of the company for recognition of “assets, liabilities, equities, expenses and
revenues”. The next section of the study will deal with evaluating the quality of characteristics in
the financial report which has been discerned in form of reliability and authenticity in description
of the financial events. The last section of the study has been able to depict the excellence
characteristics of the report which has shown the comparability and timeliness of information
presented in the financial report (Guthrie, Evans and Burritt 2014).
Adherence to the objectives of the conceptual framework with its reporting
The main governing body of conceptual framework in Australia is “Australian
Accounting Standards Board (AASB)” is responsible for developing financial report in both
public and private sectors. The important form of the contributing role of AASB has been taken

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CONTEMPORARY ISSUES IN ACCOUNTING
into consideration with the financial reporting of “Australian securities and investment
commission at 2001”. As per the data published in December 2013, significant number of
amendments had brought the existing reporting framework which aimed at improving
measurement, presentation, reporting entity and de-recognition. The important amendments have
also brought in significant changes in management stewardship associated to several entities
(Goodacre, Gaunt and Henry 2017).
As per the information depicted in AGL financial report 2017, it has been discerned that
the reports are prepared as per the standards prescribed by AASB and all the other types of
standards has been acceptable to ASX. The preparation of concise financial statement is done in
compliance with “Corporations Act 2001 and Accounting Standard AASB 1039 Concise
Financial Reports”. The report associated to the financial statements is seen to be based on
audited report and the same is attached with the AGL financial report 2017. The primary
operating segment of the company has been further depicted with group operations, investments
and markets. In addition to this, the preparation of the product segments has been done as per
“Australian Accounting Standard AASB 8” (Lodhia 2015). The company has been seen to report
segment information as per internal as structure. This has been seen to be evident with the fact
that company has operating segment seen majority locations and margin of AGL’s activity
exhibited with operating segments taken from variety of expenses group. It has been further
discerned that company has implemented the conceptual framework of AASB in terms of
recognition and measurement of financial instruments (Henderson et al. 2015).
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CONTEMPORARY ISSUES IN ACCOUNTING
Figure: Information on conceptual framework
(Source: Navarro-García and Madrid-Guijarro 2014)
Adherence with the recognition criteria for reporting Assets, Liabilities, Equity, Revenue
and Expenses
The significant amount of deviations in the financial instrument has been considered with
“Australian Accounting Standard AASB 139 Financial Instruments: Recognition and
Measurement”. This particular standard has been further considered with liabilities and
derivatives reported as per fair value and the values in financial statements. “Australian
Accounting Standard AASB 139 Financial Instruments” is seen as the main equity taken into
consideration for adjusting the hedging reserve is seen to be effective for conducting hedges and
determining any changes in the fair value of the item which is being held at fair value of
derivative (Guthrie and Parker 2014). A significant consideration of the deviations of fair value
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CONTEMPORARY ISSUES IN ACCOUNTING
of the derivatives as depicted the need for liquidity adjustment in the hedge reserve. The
important form of changes in the value of derivatives in the reported period is seen to be carried
as per fair value and considered with P/L statement of the company. It has been further seen that
the AGL has restated about the information on adoption of accounting standards for employee
benefits which is seen with “AASB 119 Employee Benefits” in the financial year 2013
(Dellaportas, Kanapathippillai, Khan and Leung 2014).
Adherence with the qualitative enhancing characteristics of financial reporting
Considering the numerous changes in the current energy system, the financial attention of
cost for AGL is considered to be powerful enough with “affordable, reliable and orderly
depiction of the financial data”. The important reflection for deviations in fair value is seen as an
added enhancing quality characteristic of financial report. The changes in the fair value of the
derivatives along with the periodic reporting it is seen to be based on ineffective hedges and the
assets and liabilities has been carried out at fair value for which the acknowledgement of same is
needed for the assessment of profit or loss. As per the consideration of AASB 139 definition the
results of hedge have been seen with the appropriate outputs for interest rate and foreign
exchange rate. The significant variations in the fair value and financial instrument is further seen
to be discerned with P/L statement published for the year ended 30 June 2017. The main form of
the consistency of the data is evident with consideration of total changes in the fair value
(Martin- Biondi and Lapsley 2014)
It has been further seen that the immersion outcome of the various result discerned with
statutory profit and the board has been able to access the statutory profit for different types of
non-cash fair value movements. The board has been able to determine the several outcomes of

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CONTEMPORARY ISSUES IN ACCOUNTING
immersion as per long-term and short-term incentives which has been able to ensure that
management is not taking any undue advantage by getting things outside their control (Jacobs
and Cuganesan 2014).
Adherence with enhancing characteristics of financial reporting
The comparability aspect of the data has been discerned with resultant value in the
present year and comparing the same with previous year. This particular facet has been
implemented across several areas of financial reporting including “earnings before interest and
tax, underlying profits every, net finance cost and income tax benefit”. In a similar way, the
company has been able to review the operations as per comparing the financial data with
previous year. The consideration of the chart for depiction of long-term and short-term incentive
has shown the timeliness consideration and proper segregation of the data (COOPER and
Guthrie 2017). Furthermore, executive immigration and performance outcomes has been clearly
depicted with the results of previous five years of financial data. This has been able to include
several aspects of elements such as “statutory profit or loss, underlying profit, statutory EPS,
underlying EPS, closing price of shares” etc. along with the aforementioned elements, the actual
growth in the last five years of AGL has been shown with bar diagram. In addition to this, the
line chart has been able to give a clear picture of qualitative enhancing characteristics thereby
depicting total shareholder return for AGL vs. ASX 100 index from a time period of five years
(Benson, Clarkson, Smith and Tutticci 2015).
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Figure: Using Bar Graph as qualitative enchanting characteristics
(Source: Navarro-García and Madrid-Guijarro 2014)
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CONTEMPORARY ISSUES IN ACCOUNTING
Figure: Using doughnut graph as qualitative enchanting characteristics
(Source: Benson, Clarkson, Smith and Tutticci 2015)

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CONTEMPORARY ISSUES IN ACCOUNTING
Conclusion
Based on the analysis of the report the main compliance of the company with Australian
conceptual framework is evident. the reports are prepared as per the standards agreed by AASB
and all the other types of standards has been acceptable to ASX. The preparation of concise
financial statement is done in compliance with “Corporations Act 2001 and Accounting Standard
AASB 1039 Concise Financial Reports”. The acknowledgement of criteria for reporting “Assets,
Liabilities, Equity, Revenue and Expenses” has been prominent with “Australian Accounting
Standard AASB 139 Financial Instruments: Recognition and Measurement”. This particular
standard has been further considered with liabilities and derivatives reported as per fair value and
the values in financial statements. The various types of characteristics relating to quality of
financial reporting has been evident with consideration of “affordable, reliable and orderly
depiction of the financial data”. The important consideration for deviations in fair value is seen
as an added enhancing quality characteristic of financial report. Enhancing characteristics of
financial reporting is apparent with resultant value in the current year and relating the same with
previous year. The presentation of the data has been regarded as an important aspect of quality
and this has been prominent with the use of bar graph, doughnut chart and pie chart.
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CONTEMPORARY ISSUES IN ACCOUNTING
References
Benson, K., Clarkson, P.M., Smith, T. and Tutticci, I., 2015. A review of accounting research in
the Asia Pacific region. Australian Journal of Management, 40(1), pp.36-88.
Biondi, L. and Lapsley, I., 2014. Accounting, transparency and governance: the heritage assets
problem. Qualitative Research in Accounting & Management, 11(2), pp.146-164.
COOPER, B.J. and Guthrie, J., 2017. Post the Watt review–Australian business schools and
collaboration with industry. Improving collaboration and innovation between industry and
business schools in Australia.
Dellaportas, S., Kanapathippillai, S., Khan, A. and Leung, P., 2014. Ethics education in the
Australian accounting curriculum: A longitudinal study examining barriers and enablers.
Accounting Education, 23(4), pp.362-382.
Drew, J. and Dollery, B., 2015. Inconsistent depreciation practice and public policymaking:
Local government reform in New South Wales. Australian Accounting Review, 25(1), pp.28-37.
Goodacre, A., Gaunt, C. and Henry, D., 2017. Publication Records of Australian Accounting and
Finance Faculty Promoted to Full Professor, Set within an International Context.
Guthrie, J. and D. Parker, L., 2014. The global accounting academic: what counts!. Accounting,
Auditing & Accountability Journal, 27(1), pp.2-14.
Guthrie, J., Evans, E. and Burritt, R., 2014. Australian accounting academics: challenges and
possibilities. Meditari Accountancy Research, 22(1), pp.20-37.
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CONTEMPORARY ISSUES IN ACCOUNTING
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting.
Pearson Higher Education AU.
Jacobs, K. and Cuganesan, S., 2014. Interdisciplinary accounting research in the public sector:
dissolving boundaries to tackle wicked problems. Accounting, Auditing & Accountability
Journal, 27(8), pp.1250-1256.
Lodhia, S., 2015. Exploring the transition to integrated reporting through a practice lens: An
Australian customer owned bank perspective. Journal of Business Ethics, 129(3), pp.585-598.
Martin-Sardesai, A., Irvine, H., Tooley, S. and Guthrie, J., 2017. Organizational change in an
Australian university: Responses to a research assessment exercise. The British Accounting
Review.

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List of appendix
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