Corporate Accounting: Financial Reporting and Compliance with IFRSs and IASs

Running head: CORPORATE ACCOUNTING
Contemporary Accounting
Name of the Student:
Name of the University:
Authors Note:

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CORPORATE ACCOUNTING
Executive summary:
In order to improve the quality of financial reporting and improve comparability of financial
reports of different entities in all across the globe International Accounting Standards Board
(IASB) has issued accounting standards (IFRSs and IASs). Complying with these standards
helps in improving the quality of financial reporting of entities. A detailed discussion here shows
that how the financial reports of Santos Limited, an Australian energy company and Vivo Energy
Plc., a South African company are prepared. Whether the financial statements including
integrated reports are in compliance with applicable accounting standards shall be verified to
state the financial performance and position of these entities fairly and truthfully.

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Contents
Executive summary:........................................................................................................................1
Introduction:....................................................................................................................................3
Part A:..............................................................................................................................................3
Literature Review:.......................................................................................................................3
Concerns of Australian Accounting profession in respect of application of IFRSs and IASs:...4
Academic concerns:.....................................................................................................................5
Practical application of conceptual framework in an entity:.......................................................6
Part B – Integrated and Sustainability Reporting:.........................................................................16
Comparison of sustainability reporting under different frameworks:.......................................16
Rigour of conventional accounting:...........................................................................................17
Applicability of theory:..............................................................................................................18
Index of various components of an integrated reporting:..........................................................18
Appraisal of practical entity’s integrated reporting:..................................................................20
Conclusion:....................................................................................................................................20
References:....................................................................................................................................22

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Introduction:
IASB is the highest accounting standards board internationally responsible to formulate and issue
accounting standards globally. The national accounting standards boards of different nations are
members of IASB. The objective of issuing globally acceptable accounting standards is to reduce
alternative accounting principles and policies to record financial transactions and in preparing
financial statements from such accounting records. This will help in increasing the qualitative
characteristics of financial reports such as comparability, completeness and objectivity of
financial statements. A detailed discussion in respect to the development and application of
IASB and IFRSs is provided below.
Part A:
Literature Review:
A conceptual framework in financial reporting can be defined as the summary of accounting
principles and policies developed to reduce the limitations in financial reporting to improve the
quality of financial reports. The objectives of conceptual financial reporting framework include
developing a framework for setting accounting standards, resolving disputes in accounting
related matters and strengthening fundamental accounting principles to ensure there is no
requirement to repeat the accounting standards. Most of the ASB standards issued in the United
Kingdom in last few years are based on rules rather than principles. Rule based accounting
standards increase the tick box mentality in financial reporting instead of looking to improve the
quality of financial reporting. This is because the accountants are mainly concerned with
following the rules instead of improving the quality of financial reporting under rule based
accounting standards (Alzoubi, 2012). As a result UK is moving towards a principle based

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accounting standards from rule based accounting standards to enhance the quality financial
reports.
In United States of America, the accounting standards are completely based on the accounting
rules and regulations with US GAAP as the premier accounting standards to be followed in
preparation and presentation of financial reports in the country. Thus, US based accounting
concept is more rigid as compared to the accounting standards in different countries which are
principle based. US GAAP sets out detailed and specific rules to be followed for specific
accounting problems. UK though is moving towards a principle based accounting standards US
has yet to implement the principle based IFRSs and IASs issued by the IASB to show any real
intent of moving towards principle based accounting standards (Azam, 2017).
Australian Accounting Standards Board (AASB) on the other hand has taken a middle route
where it has used both principles and rules to develop accounting standards to be followed by
business non business entities to comply with the conceptual framework of financial reporting in
the country. AASBs have the characteristics of principles and rules. Thus, the conceptual
framework of financial reporting in Australia is one which is flexible yet rigid in its own way.
The objective of AASB is to ensure that the entities operating in the country are complying with
applicable accounting standards to record, summarize and classify financial transactions properly
(Bertoni & De Rosa, 2013).
Concerns of Australian Accounting profession in respect of application of IFRSs and IASs:
Australian accounting professionals are obliged to comply with the professional and ethical
standards while discharging their attest responsibilities as professional accountants in the
country. The accountants in the country must adhere to the applicable standards in the country

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issued by the AASB. The accounting information must compliment the applicable standards of
accounting in the country to ensure these are in line with the conceptual framework of financial
reporting in the country. The accounting professionals are mainly concerned with the
implications of compliance of accounting and financial reports with IFRSs and IASs issued by
the IASB. Currently the entities operating in the country are following AASBs issued by the
AASB. However, with ever increasing role of IASB in achieving global harmony in financial
reporting the AASBs are also aligning with IFRSs and IASs. This is certainly a concern for the
accounting profession in the country as the existing qualified accountants in the country are not
fully aware of all IFRSs and IASs. Thus, before the complete adoption of IFRSs and IASs to
prepare and present financial reports in the country the professional accountants in the country
must be equipped to understand the implications of different IFRSs and IASs. Providing
appropriate training to the professionals on IFRSs and IASs and keeping them informed about
new amendments and changes in these standards shall be helpful to the accounting professionals
in the country (Botez, 2014).
Academic concerns:
Marthinus C. Gerber, Aurona J. Gerber and Alta van der Merwe have discussed the importance
of a quality financial reporting framework in the article, “The conceptual framework for financial
reporting as a domain ontology.” The objective behind development of conceptual framework of
financial reporting is to provide the users and preparers of financial reports proper guidelines.
However, the accounting community in general believes that the conceptual framework has
failed to achieve that objective. This is because the alternative accounting principles and policies
despite development and issuance of number of accounting standards are still more than few in
many specific areas of accounting. As a result the confusion and lack of standardization in