Contemporary Issues in Accounting

This report analyzes the adherence of Astron Corporation with various requirements of accounting conceptual framework such as measurement requirements, qualitative characteristics of financial reporting, general purpose financial reporting requirements and others.

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

1CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction......................................................................................................................................2
1. Adherence to the Measurement Requirements............................................................................2
2. Adherence to the Fundamental Qualitative Characteristics.........................................................5
3. Adherence to the Enhancing Qualitative Characteristics..........................................................10
4. Are the Users of Financial Reports Able to Use the Report to Make Decisions?.....................12
5. Required Basic Knowledge.......................................................................................................16
6. General Purpose Financial Reporting Requirements.................................................................17
Conclusion.....................................................................................................................................19
References......................................................................................................................................20

2CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
Accounting conceptual framework provides the companies with the required standards,
principles and guidelines for the correct preparation and presentation of the financial statements
so that the users can extract required information about the companies for decision-making
purposes (Weil, Schipper and Francis 2013). In this report, the adherence of one Australian
company with various requirements of accounting conceptual framework is considered. For this
specific purpose, Astron Corporations Limited (Astron Corporation) is taken into
consideration. There are certain aspects that this study considers such as the requirements of
general purpose financial reporting, measurement requirements, requirement of knowledge for
the analysis of the financial statements, qualitative characteristics of financial reporting and
others.
1. Adherence to the Measurement Requirements
As per International Accounting Standards Board (IASB), measurement can be
considered as the process to determine the amounts that are required to be included in the
financial statements (aasb.gov.au 2018). Thus, the measurement of assets and liabilities has
direct implications on the recognition of income and expenses and profit as well. According to
the conceptual framework of IASB, companies should not adopt one single measurement
mechanism for measuring all of their assets and liabilities as the adoption of one single approach
for all assets and liabilities fails to provide the relevant information for decision-making
(aasb.gov.au 2018). According to the conceptual framework of IASB, there are four basis
available for measuring the assets and liabilities; they are Historical Cost Method, Current Cost
Method, Realizable Value Method and Present value or Fair Value Method. The following

3CONTEMPORARY ISSUES IN ACCOUNTING
discussion shows the compliance of Astron Corporation with these measurement requirements of
IASB:
(Source: astronlimited.com.au 2018)
Through the above statement, Astron Corporation has mentioned that they have not
adopted a single mechanism of measurement for different aspects of their financial statements as
the company has used both the historical cost method and fair value method for measurement
purposes. More evidences of this compliance can be obtained from below discussion:
(Source: astronlimited.com.au 2018)

4CONTEMPORARY ISSUES IN ACCOUNTING
(Source: astronlimited.com.au 2018)
(Source: astronlimited.com.au 2018)
(Source: astronlimited.com.au 2018)
(Source: astronlimited.com.au 2018)

5CONTEMPORARY ISSUES IN ACCOUNTING
(Source: astronlimited.com.au 2018)
The images from the annual report of the company provides the evidence that the
company has complied with the prime requirements of IASB conceptual framework that is not to
adopt a single measurement mechanism for all assets and liabilities. It can be seen that Astron
Corporation has adopted both the historical cost method and fair value method for the
measurement of different assets and liabilities with the aim to provide the users with the relevant
financial information about the asset and liability position of the company (astronlimited.com.au
2018).
2. Adherence to the Fundamental Qualitative Characteristics
Relevance and Faithful Representation are the two fundamental qualitative characteristics
of financial reporting; and the discussion is shown below:
Relevance: Financial information is relevant in case it can influence the decision of the users for
the allocation of scarce resources. In addition, relevant information is capable to make positive
difference in the decision-making process. For this reason, financial information must have
predictive and confirmatory values. In the presence of predictive value, the users can make their
own prediction; and in case of confirmatory value, users can get the feedback of previous
evaluation (Maimbo and Melecky 2014).

6CONTEMPORARY ISSUES IN ACCOUNTING
(Source: astronlimited.com.au 2018)
According to the above image, Astron Corporation has provided the information about
revenue for the current year; and the users can use this information as a basis to predict revenue
in future years. The users can also compare this information with revenue prediction for the
current years that was made in the past years. The users can correctly improve the processes with
the help of the result of the comparison.
Faithful Representation: Financial information of the companies must be complete, neutral and
free from errors in order to be faithfully represented (Zhang and Andrew 2014).
(Source: astronlimited.com.au 2018)

7CONTEMPORARY ISSUES IN ACCOUNTING
(Source: astronlimited.com.au 2018)

8CONTEMPORARY ISSUES IN ACCOUNTING
(Source: astronlimited.com.au 2018)
As per the above table, property, plant and equipment is considered as example. It can be
seen that Astron Corporation has provided complete description of the asset, description of the
nature of the asset and the complete numerical description of the asset.

9CONTEMPORARY ISSUES IN ACCOUNTING
(Source: astronlimited.com.au 2018)
The above discussion shows that the auditors of Astron Corporation has confirmed that
there is not material misstatements in the financial statements of the company. All these aspects
together support that the financial statements are faithfully represented.

10CONTEMPORARY ISSUES IN ACCOUNTING
3. Adherence to the Enhancing Qualitative Characteristics
Comparability, verifiability, timeliness and understandability are the four enhancing
qualitative characteristics; and the discussion is shown below:
Comparability: Financial information of the companies become more useful when they can be
compared with the similar information about the other companies and with the similar
information of the same company for another accounting period (Wang 2014).
(Source: astronlimited.com.au 2018 and annualreports.com 2018)

11CONTEMPORARY ISSUES IN ACCOUNTING
(Source: astronlimited.com.au 2018 and annualreports.com 2018)
The above images provide the evidence that the financial information of Astron
Corporation can be compared with the same class of financial information another company of
the same industry, Orica Limited. In addition, the company provides the financial information of
the previous year in the current annual report so that they can compare the financial information
of the same company from another financial period.
Verifiability: Verifiability refers to the ability that ensures that the represented information has
been provided as per the chosen method of measurement for eliminating the errors or bias (Barth
2013). It can be seen from the annual report of Astron Corporation that the company has
disclosed all the required assumptions and judgments for the preparation and presentation of the
financial statements.

12CONTEMPORARY ISSUES IN ACCOUNTING
(Source: astronlimited.com.au 2018)
As per the above image, impairment can be considered as an example where the company
has provided the required assumptions and estimates for impairment.
Timeliness: It is the responsibility of the companies to deliver the financial information of them
in such a manner so that the users can obtain them at the time to make decisions; and it is due to
the fact that older information does not have the same importance to them as the current
information (Abernathy et al. 2014). In case of Astron Corporation, all the recent financial
information of the company is available in their annual report.
Understandability: Financial information must be presented in clear and concise manner for the
ease of understanding of the users (Sytnik 2014). The presence of notes can be seen in the annual
report of Astron Limited that includes the required justifications and clarifications for the ease of
understudying of the clients.
4. Are the Users of Financial Reports Able to Use the Report to Make Decisions?
It is needed for the users of the financial reports to acquire the required financial
information of the companies for the purpose of decision-making. The presence of certain

13CONTEMPORARY ISSUES IN ACCOUNTING
financial reports can be seen in the annual report of Astron Corporation that contain the required
financial information about the company; they are shown below:
(Source: astronlimited.com.au 2018)

14CONTEMPORARY ISSUES IN ACCOUNTING
(Source: astronlimited.com.au 2018)

15CONTEMPORARY ISSUES IN ACCOUNTING
(Source: astronlimited.com.au 2018)
It needs to be mentioned that the users of the financial statements can obtain the
information about the financial performance of the company from the statements of the statement
of profit and loss and other comprehensive income. After that, they can obtain information about
the financial position and cash flow position from the statement of financial position and the
statement of cash flow. In addition, they can obtain addition information about these financial
statements from the notes as they contain the required justifications and clarifications
(astronlimited.com.au 2018).

16CONTEMPORARY ISSUES IN ACCOUNTING
5. Required Basic Knowledge
As per the compliance of Astron Corporation with the ‘understandability’ characteristic,
the users of the financial statements can understand the financial information with the application
of basic accounting knowledge and independent observation. Apart from this, the principles of
IASB and IFRS help the company in disclosing the financial information in user-friendly
manner. However, the presence of certain items in the annual report can be seen that need
expert’s opinion to understand such as foreign currency transactions and others (Henderson et al.
2015).
(Source: astronlimited.com.au 2018)
These aspects require advanced financial knowledge to understand. However, most of the
aspects can be understood with the application of basic knowledge.

17CONTEMPORARY ISSUES IN ACCOUNTING
6. General Purpose Financial Reporting Requirements
The requirement of general purpose financial reporting is to deliver financial information
about the reporting company that is useful for the existing as well as potential investors, lenders
and other creditors so that they can make effective decisions about the resources of the company
(ey.com 2018). Following are the evidence of the compliance with this requirement by Astron
Corporation:
(Source: astronlimited.com.au 2018)
Astron Corporation has provided all the financial information related to revenue,
expenses, profitability and others from the above statement (astronlimited.com.au 2018).

18CONTEMPORARY ISSUES IN ACCOUNTING
(Source: astronlimited.com.au 2018)
After that, the company has delivered information about their assets, liabilities and equity
from the above financial statement (astronlimited.com.au 2018).
(Source: astronlimited.com.au 2018)

19CONTEMPORARY ISSUES IN ACCOUNTING
The users of the financial statements can ascertain the inflows as well as outflow of the
company from the analysis of the above statement.
(Source: astronlimited.com.au 2018)
Lastly, users can analyze the change in the financial performance of Astron Corporation
from the analysis of the above statement.
Conclusion
By complying with the measurement requirements of IASB conceptual framework,
Astron Corporation has not adopted the same measurement requirement for their assets and
liabilities. After that, the compliance with the fundamental and enhancing qualitative
characteristics makes the financial information of the company more acceptable to the users for
the decision making purpose. In addition, by complying with the requirements of general
purpose financial reporting, the company has provided all the required financial statements like
the statement of profit and loss, statement of financial position, cash flow statement and others.

20CONTEMPORARY ISSUES IN ACCOUNTING
References
Aasb.gov.au., 2018. [online] Conceptual Framework for Financial Reporting. Available at:
https://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf [Accessed 12 Dec.
2018].
Abernathy, J.L., Beyer, B., Masli, A. and Stefaniak, C., 2014. The association between
characteristics of audit committee accounting experts, audit committee chairs, and financial
reporting timeliness. Advances in Accounting, 30(2), pp.283-297.
Annualreports.com., 2018. Orica: Annual Report 2015. [online] Available at:
http://www.annualreports.com/HostedData/AnnualReportArchive/o/ASX_ORI_2015.pdf
[Accessed 12 Dec. 2018].
Astronlimited.com.au., 2018. Annual Report for the year ended 30 June 2017. [online]
Available at: http://www.astronlimited.com.au/getattachment/4448a261-a8b7-49fa-91a3-
1c2d22a2d2c4/2017-Annual-report-to-shareholders.aspx [Accessed 12 Dec. 2018].
Barth, M.E., 2013. Measurement in financial reporting: The need for concepts. Accounting
Horizons, 28(2), pp.331-352.
Ey.com., 2018. Conceptual Framework: Objectives and Qualitative Characteristics. [online]
Available at: https://www.ey.com/Publication/vwLUAssets/Supplement_86_GL_IFRS/$FILE/
Supplement_86_GL_IFRS.pdf [Accessed 12 Dec. 2018].
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting.
Pearson Higher Education AU.

21CONTEMPORARY ISSUES IN ACCOUNTING
Maimbo, S.M. and Melecky, M., 2014. Financial sector policy in practice: benchmarking
financial sector strategies around the world. The World Bank.
Sytnik, O.E., 2014. Comparative analysis of the guidelines for the preparation of financial
statements in accordance with IFRS and formed the Russian accounting rules. Сборник
научных трудов Sworld, 27(2), pp.27-31.
Wang, C., 2014. Accounting standards harmonization and financial statement comparability:
Evidence from transnational information transfer. Journal of Accounting Research, 52(4),
pp.955-992.
Weil, R.L., Schipper, K. and Francis, J., 2013. Financial accounting: an introduction to
concepts, methods and uses. Cengage Learning.
Zhang, Y. and Andrew, J., 2014. Financialisation and the conceptual framework. Critical
perspectives on accounting, 25(1), pp.17-26.