Contemporary Issues in Accounting: Analysis of Crown Resorts Compliance with Conceptual Framework

The report analyses the compliance of Crown Resorts with the conceptual framework requirements of financial statements. It discusses the appropriate theory for the company, measurement requirements, and compliance with qualitative characteristics.

Running head: ACCOUNTING THEORIES AND ISSUES
Contemporary issues in accounting
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1ACCOUNTING THEORIES AND ISSUES
Executive summary
Main objective of the report is to analyse the conceptual framework requirement of the
financial statements and to find out whether Crown Resorts is complying with all the
requirements of GPFR (general purpose financial reporting).
Conceptual framework assists in assuring that standard are conceptually consistent and
similar type of transactions are considered in same way for providing useful information to
the lenders, investors and various other creditors.
Crown Resorts is one of the largest entertainment groups in Australia that majorly contributes
to the Australian tourism, training, programs related to social responsibility and employment.
Core investments and business of the company is in the sector of integrated sectors. It can be
identified from the annual statement of the company for the year ended 2018 that the
company records the assets, liabilities, expenses and incomes in its balance sheet and income
only when its value can be measured reliably. Further, it complies with the qualitative
characteristics of conceptual framework.

2ACCOUNTING THEORIES AND ISSUES
Table of Contents
Introduction................................................................................................................................3
Conceptual framework...............................................................................................................3
Critical analysis and discussion.................................................................................................4
Theory appropriate to the company.......................................................................................4
Measurement requirement......................................................................................................5
Compliance with fundamental qualitative characteristics......................................................9
Compliance with enhancing qualitative characteristics.......................................................12
Users of financial reports.....................................................................................................14
Requirement of basic knowledge.........................................................................................15
Requirement of GPFR (general purpose financial reporting)..............................................15
Recommendation......................................................................................................................15
Conclusion................................................................................................................................16
Reference..................................................................................................................................17

3ACCOUNTING THEORIES AND ISSUES
Introduction
Crown Resorts Limited, the ASX listed company operates in entertainment industry
of Australia. It conducts its operation through 4 segments – Crown Perth, Crown Melbourne,
Wagering and online and Crown Aspinalls. It is one of the largest entertainment groups in
Australia that majorly contributes to the Australian tourism, training, programs related to
social responsibility and employment. Core investments and business of the company is in
the sector of integrated sectors. The development projects of the company include Crown
Sydney Hotel Resort at Barangaroo and are proposed One queens bridge project in
Melbourne (Crownresorts.com.au 2018).
Conceptual framework
Revised Conceptual framework that is issued on March 2018 and is effective
immediately are used for the purpose of preparing the financial reports sets out fundamental
concepts for the purpose of financial reporting provides guidance to the board for developing
the IFRS standards. It assists in assuring that standard are conceptually consistent and similar
type of transactions are considered in same way for providing useful information to the
lenders, investors and various other creditors. It also assists in developing the accounting
policies when IFRS standards are not applicable to particular transactions and more
specifically, it helps the shareholders in understanding as well as interpreting the standards
(Mca.gov.in 2018).
Main objectives of conceptual framework is to deliver the financial information those
are useful to the users for making decisions related to providing the resources to the
company. Decision of the users involve selling, buying or holding the debt or equity
instruments, settling or providing loans and credit in any other forms, voting or influencing

4ACCOUNTING THEORIES AND ISSUES
the management’s decisions in other way. For making these decisions the users access the
annual reports of the company including various financial statements (Li 2013).
Major components of conceptual framework is elements of the financial statements,
recognition and measurements of the items included in the income statements and balance
sheet of the company and the qualitative characteristics required to follow by the reporting
entity. Main objective of GPFR (general purpose financial reporting) is delivering financial
information regarding the reporting organization those are useful to the potential as well as
the existing shareholders, creditors and lenders while making decisions regarding extending
credit to the organization (Wu, Ramesh and Howlett 2015).
Critical analysis and discussion
Theory appropriate to the company
From analysing the financial reports of Crown Resorts it can be identified that
stakeholder theory is appropriate for the entity. The reason behind this is that the stakeholder
theory focuses on interconnected relationships among the business and its customers,
employees, communities, investors and other people who have stake in the entity.
Stakeholder theory argues that the organization shall create value for all the stakeholders and
not for the shareholders only (Henderson et al. 2015). Further, this theory has now become
the key consideration in complying with the business ethics and it served as the platform for
further development of business.
Accounting issues associated with the stakeholder’s theory are as follows –
 Determination of the stakeholders – under this theory, interest of the outsiders shall be
exogenously determined that is irrespective of the management or company board’s

5ACCOUNTING THEORIES AND ISSUES
view. How variety of the groups of such people shall be identified legitimately is not
at all clear.
 Stake measurement – success shall be associated with the purpose. While any
company is considered as successful it is said based on its performance, returns and
revenues. Implication of the stakeholder’s theory is the society and not the company
that can be used to determine the success (Salema et al. 2015).
Measurement requirement
As per the conceptual framework recognition criteria of any items is that it shall
possess value or cost and the value shall be reliably measured. However, using the reasonable
estimates is essential part of financial statement preparation. If reasonable estimates are not
possible to make the item shall not be recognised in the balance sheet or in income statement.
However, if the value of the item cannot be measured reliably it shall not be considered as
asset or income (Zhang and Andrew 2014)
Measurements of asset
Assets shall be reported in the balance sheet only if its value can be measured reliably
and it is expected that economic benefits from the asset for the future period will be flown to
the organization. It can be identified from the annual statement of the company for the year
ended 2018 that the company records the assets in its balance sheet only when its value can
be measured reliably. For instance, the plant, equipment and property are stated at cost
reduced by the impairment and depreciation (Schulze et al. 2016). Values of the assets are
clearly mentioned in the balance sheet like plant, equipment and property is reported at $
3880.7 million and intangible assets are reported at $ 1080.6 million. Further, the carrying
amounts of some of the assets are generally determined on the basis of estimates, judgements
and assumptions of the future events.

6ACCOUNTING THEORIES AND ISSUES
Measurements of liabilities
Liabilities shall be reported in the balance sheet only if its value can be measured
reliably and it is expected that economic outflow for the future period will be out flown from
the organization for meeting an obligation. It can be identified from the annual statement of
the company for the year ended 2018 that the company records the liabilities in its balance
sheet only when its value can be measured reliably. For instance, trade and other payables are
recorded at $ 427.5 million and provisions have been recorded at $ 32.6 million. Further, the
carrying amounts of some of the liabilities are generally determined on the basis of estimates,
judgements and assumptions of the future events (Crownresorts.com.au 2018).

7ACCOUNTING THEORIES AND ISSUES
Measurements of incomes
Incomes shall be reported in the income statement while the enhancement of
economic resources along with increase of assets and decrease in liability and its value can be
measured reliably. It can be identified from the annual statement of the company for the year
ended 2018 that the company records the incomes in its income statement only when its value
can be measured reliably. For instance, revenues are measured at fair values of consideration
receivable or received to the extent that it is predictable that economic benefits will be inflow
to the entity and it can be measured reliably (Schaltegger and Burritt 2017). Further, revenue
is reported only when significant rewards and risks of goods passed to buyer and the value
can be measured reliably.

8ACCOUNTING THEORIES AND ISSUES
Measurement of expenses
Expenses shall be measured at the values paid for generating economic benefits or
resources and the value for which shall be measured reliably. It can be identified from the
annual statement of the company for the year ended 2018 that the company records the
expenses in its income statement only when its value can be measured reliably. Further, the
expenses are reported as the reduction to the revenues (Crownresorts.com.au 2018).

9ACCOUNTING THEORIES AND ISSUES
Hence, it can be stated that Crown resorts is complying with the measurement criteria
as per the conceptual framework with regard to assets, liabilities, expenses and incomes.
Compliance with fundamental qualitative characteristics
The information to be useful for the user while making decisions it must be relevant,
presented in a faithful manner and material items shall be separately identified.
 Materiality – the concept of materiality states that accounting standard can be ignored
if the net impact of doing that will have such small impact on the financial statement
that it will not have any impact on the decision making of the users. Hence, the
information is material if its omission has an impact on the decisions made by the
users. It is identified from the annual report of Crown Resorts for the year ended 2018
that it ensures that any information that may have material regulatory risks or issues
are informed to the disclosure officer (Spiceland et al. 2016). Further, the entity does

10ACCOUNTING THEORIES AND ISSUES
not consider that outcome of any ongoing proceedings at the date of balance sheet
have any material impact on individual basis or in aggregate.
 Relevance – relevant information in the financial report can make a difference in
user’s decision making. Information may make the differences in decision making
even if the users decides not to take the advantages of it or are well known of the fact.
However, financial information to be eligible for making the difference fir decisions it
must have predictive value and confirmatory value or both of them. Crown Resorts
present the financial information with proper value whether it is confirmatory or
predictive or both (Crownresorts.com.au 2018).

11ACCOUNTING THEORIES AND ISSUES
 Faithful representation – financial reports are presented with economic phenomena in
numbers as well as in words. However, to be useful, the information shall not only be
presented with relevant phenomena, it shall also be presented in faithful manner. To
be presented it faithfully, depiction shall have 3 characteristics – free from error,
neutral and complete. The objective of the board is to maximise the qualities to the
possible extent. Looking into the annual reports of the company it can be identified
that it complies with the appropriate standards of accounting and provides true and
fair view of financial performance and position (Ifrs.org 2018).

12ACCOUNTING THEORIES AND ISSUES
Compliance with enhancing qualitative characteristics
Understandability, timeliness, verifiability and comparability are considered as the
qualitative characteristics those enhance the information’s usefulness that is represented
faithfully and relevantly.
 Comparability – decision of the users involve selecting one alternative for instance,
holding or selling the investments in any of the reporting organization or other. In the
same way, information is more useful if it is comparable with peers or with previous
year’s information (Sterling 2014). Looking into the company’s annual report it can
be noticed that the company presents its valuable data through graphs and tables that
can be used for comparison.

13ACCOUNTING THEORIES AND ISSUES
 Verifiability – it helps to assure that different independent and knowledgeable
observers may reach consensus that the presented information have been presented
faithfully. However, the quantified information is not required to be the single point
estimate for becoming verifiable. Looking into the annual report of Crown Resorts it
can be stated that the information has been presented with appropriate details and the
break up for the item’s amount have been disclosed through notes (Cheng et al. 2014).
 Understandability – presenting, characterising and classifying the financial
information in clear and concise manner make it understandable. Though some
information are complex and cannot be understood easily, excluding those may make
the financial information easier to be understood. However, these types of reports are
considered as incomplete and misleading (Ifrs.org 2018). Looking into the annual

14ACCOUNTING THEORIES AND ISSUES
report of Crown Resorts it can be stated that the information has been presented with
required details to make it understandable.
 Timeliness – information shall be available to the decision makers in proper time to
make it capable for influencing the decisions. Information becomes less useful with
elapse of time. However, the decision makers may look for old data to assess the
trends. To comply with the requirement the company publishes its financial
information annually on 30th June each year and semi-annually on 31st December each
year (Ball 2013).
Users of financial reports
As Crown Resorts comply with all the requirements of conceptual framework for
preparing presenting its financial statements like recognition and measurement criteria,

15ACCOUNTING THEORIES AND ISSUES
fundamental and enhancing qualitative characteristics and presents all the data with
appropriate details and disclosures it can be used by potential and existing investors, creditors
and lenders for making decisions (Ifrs.org 2018).
Requirement of basic knowledge
Financial reports are presented for the users with reasonable knowledge regarding
economic activities and business. However, sometimes they require seeking help of the
advisers for understanding the complex information.
Requirement of GPFR (general purpose financial reporting)
The financial report of the company is a GPFR prepared in compliance with
requirement of Corporation Act 2001, AASB and other pronouncement of AASB.
Recommendation
As the company is complying with all the requirements no such accounting problems
or issues found for Crown Resorts. However, for improving the accounting practices
efficiency of disclosures shall be enhanced trough including only that information which is
most relevant for the users. Further, the basis of considering the market value for some of the
items like inventories shall be clearly disclosed.

16ACCOUNTING THEORIES AND ISSUES
Conclusion
From the above analysis and interpretation it can be stated that the company is
complying with all the requirements of conceptual framework for preparing presenting its
financial statements like recognition and measurement criteria, fundamental and enhancing
qualitative characteristics and presents all the data with appropriate details and disclosures it
can be used by potential and existing investors, creditors and lenders for making decisions.

17ACCOUNTING THEORIES AND ISSUES
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18ACCOUNTING THEORIES AND ISSUES
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