Contemporary Issues in Accounting

This report analyzes the various aspects of general purpose financial reporting of Genworth Mortgage, a leading provider of mortgage insurance in Australia. It examines compliance with measurement requirements, fundamental and enhancing qualitative characteristics, and the ability of users to make decisions based on the financial reports.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
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Executive Summary:
For this report, emphasis would be placed on analysing the various aspects of general purpose
financial reporting of Genworth Mortgage, which is a leading provider of lenders mortgage
insurance in Australia. The organisation has conducted accurate application of the fundamental
qualitative characteristics by disclosing the required information regarding various economic
phenomena. Along with this, the organisation has met the enhancing qualitative features related
to financial reporting. The above analysis has made it evident that Genworth Mortgage has
disclosed the needed financial statements in its annual reports so that the users could obtain the
necessary information that would assist them in undertaking significant decisions. Finally, it has
been analysed that Genworth Mortgage has adhered to the guidelines and norms mentioned in
IFRS, IASB, AASB and Corporations Act 2001 for complying with the needs related to general
purpose financial reporting.

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Table of Contents
Introduction:....................................................................................................................................3
1. Compliance with the measurement requirements of the conceptual framework:........................3
2. Compliance with the fundamental qualitative characteristics:....................................................7
3. Compliance with the enhancing qualitative characteristics:........................................................8
4. Ability of the users of financial reports to use the report in making decisions:........................10
5. Required accounting knowledge of conceptual framework for company analysis:..................12
6. Requirements for general purpose financial reporting:.............................................................13
Conclusion:....................................................................................................................................13
References:....................................................................................................................................15

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Introduction:
The global companies adopt general purpose financial reporting so that they could deliver
financial information to their main shareholders for assisting them in undertaking decisions.
When these financial reports are prepared, the organisations are liable to adhere to the needed
standards and guidelines of financial reporting so that they could avoid various financial
reporting issues. In Australia, the organisations listed in ASX have to adhere to the financial
reporting standards developed by the “Australian Accounting Standards Board (AASB)” for
preparing and presenting their financial reports. Along with this, they have to adhere to the
AASB conceptual framework standards and “International Financial Reporting Standards
(IFRS)”. For this report, emphasis would be placed on analysing the various aspects of general
purpose financial reporting of Genworth Mortgage, which is a leading provider of mortgage
insurance for the lenders in Australia (Genworth.com.au 2019).
1. Compliance with the measurement requirements of the conceptual framework:
The ASX listed firms are obliged by AASN for adhering to the recognition and
measurement requirements in accordance with the conceptual framework for financial reporting.
As per the AASB conceptual framework, the organisations have to adopt between different bases
of measurement, which include current value and historical cost. The bases of measurement
under current value include value-in-use and fair value (Brouwer, Faramarzi and Hoogendoorn
2014).
Moreover, the organisations bear the liability to adhere to the recognition criteria
mentioned in the AASB conceptual framework in order to recognise their liabilities, assets,

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expenses, income and equity. Therefore, there are two particular requirements to be considered
in order to recognise these accounts. Firstly, there is a chance that the economic benefits
expected in future related to the financial items would flow from or to the concern. Secondly, the
items have values or costs and they could be gauged with precision (Cheng et al. 2014). In this
case, it is crucial to determine whether Genworth Mortgage has adhered to the bases of
measurement and recognition criteria mentioned in the conceptual framework.
According to the annual report of Genoworth Mortgage in 2018, it could be seen that the
organisation uses fair value as well as historical cost (Investor.genworth.com.au 2019). Some
extracts from the latest annual report of the organisation are shown below:

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From the above extracts, it is clearly seen that Genworth Mortgage has used both fair
value and historical cost methods for measuring and recognising their assets depending on the
composition and nature of those assets (Investor.genworth.com.au 2019).

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From the above extracts, it could be seen that Genwworth Mortgage has used fair value
and amortised cost basis in order to gauge and recognise its business liabilities. In this regard, it
is to be mentioned that amortised cost is the process of historical cost (Gordon et al. 2015).
Based on the above discussion, it could be said that Genworth Mortgage has adhered to the
recognition and measurement requirements of the AASB conceptual framework for general
purpose financial reporting,
2. Compliance with the fundamental qualitative characteristics:
In accordance with the conceptual framework of AASB, fundamental qualitative
characteristics are of two types, which include the following:
Relevance:

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Relevant financial information has the ability of making a difference in the process of
undertaking decisions for the users (Gebhardt, Mora and Wagenhofer 2014).
Faithful representation:
For becoming useful, it is necessary to ensure the faithful representation of the financial
statements along with relevance (Henderson et al. 2015).
These fundamental qualitative characteristics are crucial for the organisations and
Genworth Mortgage is not an exception to the situation as well. For appropriate application of
these characteristics, the organisation has to detect an economic phenomenon necessary for the
user decision-making process, as in the case of assets of Genworth Mortgage. Secondly, it is
necessary to detect the kind of information associated with assets that contain high relevance, if
they are available and represented faithfully. These include process of measurement, values,
impairment, recognition criteria and impairment (Investor.genworth.com.au 2019). Genworth
Mortgage has reported its assets in the balance sheet statement and all relevant information
regarding the same has been disclosed in the form of financial footnotes in its annual report. Like
these assets, the organisation has reported all pertinent information regarding the economic
phenomena of the financial statements.
3. Compliance with the enhancing qualitative characteristics:
Enhancing qualitative characteristics are of four types, which include verifiability,
comparability, understandability and timeliness. It is necessary to state these characteristics
could not ensure the financial information useful alone, if they are not represented faithfully and
relevant (Nobes 2014).

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Verifiability:
With the help of verifiability, the users of the financial statements are ensured that the
financial information represents faithfully the economic phenomena. Genworth Mortgage could
not provide direct verification of certain financial information. Hence, for maintaining
verifiability, the organisation has reported underlying assumptions for its different line items in
its notes to consolidated financial statements.
Comparability:
According to this characteristic, users find financial information to be useful at the time
they could be contrasted to identical information of the other organisation or different timeline of
the same organisation (Simnett and Huggins 2015). In the annual report of 2018, Genworth
Mortgage has reported information of the past year in order to enable the users in comparing
information with other organisations or past year.
Understandability:
In accordance with this characteristic, the financial information is categorised,
characterised and presented in concise and clear way for ensuring its understandability (Van
Mourik and Katsuo 2014). Genworth Mortgage has assured the exclusion of complicated
financial information from the financial reports for making the same understandable to the
financial report users.
Timeliness:
As per this characteristic, there needs to be availability of financial information to the
decision-makers timely for affecting the process of decision-making. Thus, the users do not find

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relevance in older information. According to the 2018 annual report of Genworth Mortgage, it
contains the information of the current year and the past year. Moreover, the organisation
discloses its financial reports timely in order to assist the users for undertaking better decisions.
4. Ability of the users of financial reports to use the report in making decisions:
General purpose financial reporting contains three objectives. These mainly include
providing information regarding the financial position of the organisations, financial
performance of the organisations and cash flows of the organisations valuable in the process of
undertaking decisions (Wahlen, Baginski and Bradshaw 2014).

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From the above tables, it could be cited that Genworth Mortgage has reported its
consolidated income statement, consolidated statement of financial position and consolidated
statement of cash flows for providing the users with the requited financial information in order to
make decisions. The initial statement has disclosed information on the financial performance, the
second statement has provided information on financial position and the final statement delivers
information regarding the cash position of the organisation.
5. Required accounting knowledge of conceptual framework for company analysis:
It is noteworthy to mention that Genworth Mortgage prepares its financial statements in a
way that the users having considerable knowledge on economic and business activities could
gain an insight of the elements in the reports. On the other hand, the reports contain some
information, which would seek assistance from the advisers owing to the presence of different

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complicated economic phenomena in them. Some aspects constitute of hedging, financial
instruments, derivatives and others. Besides such aspects, the users could be able to obtain an
overview of the aspects related to the financial reports of Genworth Mortgage by providing
necessary clarifications and explanations in notes to the consolidated financial reports.
6. Requirements for general purpose financial reporting:
One of the primary requirements of general purpose financial reporting is to assure the
adherence with the required financial reporting standards and guidelines at the time of
developing and presenting such reports (Zhang and Andrew 2014). From the 2018 annual report
of Genworth Mortgage, it could be seen that the organisation has conformed to the guidelines
and standards mentioned in AASB, Corporations Act 2001 and the required the required
pronouncements of IFRS. Moreover, the organisation has followed the necessary principles and
guidelines laid down in ‘International Accounting Standards Board (IASB)”.
Conclusion:
Based on the above discussion, it could be stated that the AASB and IFRS conceptual
framework has placed certain significant obligations on the Australian organisation for
conforming to the required standards and guidelines in accordance with general purpose financial
reporting. It is further evident that Genworth Mortgage has gauged and recognised its financial
elements of general purpose financial reporting, as per the recognition criteria and measurement
of the IFRS and AASB conceptual framework. Besides, the organisation has conducted accurate
application of the fundamental qualitative characteristics by disclosing the required information
regarding various economic phenomena. Along with this, the organisation has met the enhancing
qualitative features related to financial reporting. The above analysis has made it evident that

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Genworth Mortgage has disclosed the needed financial statements in its annual reports so that the
users could obtain the necessary information that would assist them in undertaking significant
decisions. Finally, it has been analysed that Genworth Mortgage has adhered to the guidelines
and norms mentioned in IFRS, IASB, AASB and Corporations Act 2001 for complying with the
needs related to general purpose financial reporting.

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References:
Brouwer, A., Faramarzi, A. and Hoogendoorn, M., 2014. Does the new conceptual framework
provide adequate concepts for reporting relevant information about performance?. Accounting in
Europe, 11(2), pp.235-257.
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.
Gebhardt, G., Mora, A. and Wagenhofer, A., 2014. Revisiting the fundamental concepts of
IFRS. Abacus, 50(1), pp.107-116.
Genworth.com.au., 2019. Genworth - lenders mortgage insurance (LMI). [online] Available at:
https://www.genworth.com.au/ [Accessed 17 Apr. 2019].
Gordon, E.A., Bischof, J., Daske, H., Munter, P., Saka, C., Smith, K.J. and Venter, E.R., 2015.
The IASB's discussion paper on the Conceptual framework for financial reporting: a
commentary and research review. Journal of International Financial Management &
Accounting, 26(1), pp.72-110.
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting.
Pearson Higher Education AU.
Investor.genworth.com.au., 2019. [online] Available at:
http://investor.genworth.com.au/FormBuilder/_Resource/_module/xYwS6fnYy0Cz3sNm05J0fw
/file/2018-Annual-Report.pdf [Accessed 17 Apr. 2019].
Nobes, C., 2014. International classification of financial reporting. Routledge.

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Simnett, R. and Huggins, A.L., 2015. Integrated reporting and assurance: where can research add
value?. Sustainability Accounting, Management and Policy Journal, 6(1), pp.29-53.
Van Mourik, C. and Katsuo, Y., 2014. The IASB and ASBJ conceptual frameworks: same
objective, different financial performance concepts. Accounting Horizons, 29(1), pp.199-216.
Wahlen, J., Baginski, S. and Bradshaw, M., 2014. Financial reporting, financial statement
analysis and valuation. Nelson Education.
Zhang, Y. and Andrew, J., 2014. Financialisation and the conceptual framework. Critical
perspectives on accounting, 25(1), pp.17-26.