Conceptual Framework for Financial Reporting and Integrated Reporting

Executive summary
The business environment has seen drastic improvements since the introduction of the
conceptual framework of financial reporting. The manner of adoption of the framework and
the development of it over global locations is discussed briefly in the report. The focus of the
business giants nowadays is to constitute a positive brand image and reflect their concerns for
the planet through alternative reporting patterns for social responsibility. Two popular ways
trending currently are Sustainability Reporting and Integrated Reporting. Two corporate
giants are studied, one from Australia and one from South Africa being Diversified United
Investment Limited and PSG Group respectively. the Australian company prepares a
sustainability report while the PSG Group presents an integrated report.

Contents
Executive summary...............................................................................................................................1
Introduction...........................................................................................................................................3
Part-A....................................................................................................................................................3
(a) History and development of the conceptual framework for financial reporting............................3
(b) The concerns of Australian Accounting Profession.....................................................................4
(c) Potential benefits and limitations of Conceptual Framework for Financial Reporting.................5
I) How many statements/reports have been prepared as per the Conceptual Framework and
what are their major components...................................................................................................5
ii) Which recognition principles and measurement bases have been applied for revenue, assets
and liabilities.................................................................................................................................6
(iii) What qualitative characteristics of information exhibit in company’s various financial
reports............................................................................................................................................7
Part B: Integrated/sustainability reporting.............................................................................................8
(a) Compare and contrast the Sustainability Reporting Guidelines of the Global Reporting
Initiative (GRI) and the International Integrated Reporting Framework of the International
Integrated Reporting Council (IIRC) for explaining a holistic view (broader view) of corporate
social responsibility reporting in addition to reporting of corporate financial performance...............8
(b) Explain the rigour (strengths and limitations) of the conventional accounting, based upon the
Conceptual Framework for Financial Reporting, to explain the contents of sustainability as well as
integrated reports...............................................................................................................................9
(c) Discuss the applicability (usefulness or limitations) of the theories you learned to explain the
contents of sustainability as well as integrated reports....................................................................10
(d) Prepare an index (a table or checklist) of various components (criteria) of an integrated report,
and then discuss whether and how the selected South African company has disclosed information
against each of those components (criteria).....................................................................................10
Conclusion...........................................................................................................................................12
References...........................................................................................................................................13

Introduction
With the diverse range of risks and transactional uncertainties, it is seen that it is
mandatory to hold on a power to operate as per the IASB and accounting guide polices. It is
important to inspect whether the companies adopt conceptual frameworks and proper
accounting in Australia (Ahi, & Searcy, 2015). While foreseeing the adoption of conceptual
framework, firstly it is important to set up proper harmonisation among the domestic and
international accounting with the reporting framework. It is seen that it is quite difficult to
adapt with the laid down changes and acceptance becomes difficult as regulated by the AAPC
(Australian Accounting Profession Community). This report details the study in regards to
conceptual frameworks to accept the changes of newly laid conceptual framework to take
into consideration (Ahi, & Searcy, 2015).
Part-A
(a) History and development of the conceptual framework for financial reporting
International Financial Reporting Standards (IFRS) first came to operational existence in
Australian in the year 2005, which marked the Australia’s first attempt to comply with a
framework that was based upon the conceptual Framework laid by International Accounting
Standards Board (IASB). The new framework framed by AASB by based upon the guidelines
set by the IASB. Th conceptual framework set by IASB was however a result of an
agreement that took place between FASB and IASB to revise the manner in which financial
reporting was undertaken then. The agreement was entered in year 2004 jointly by these two
organisations. On completion of the agreed proposals of the agreement, AASB presented its
own conceptual framework based upon the IASB’s framework.
However, in 2013 end certain revisions were made in the existing framework by AASB. The
IASB’s conceptual framework originally had 4 chapters, and the revision made by AASB
was meant to incorporate Chapter 1 and 3 of the original framework to the framework
developed by AASB.
U.S. however has not yet adopted the conceptual framework as developed by IASB, rather is
following a joint concept for financial reporting which is being collaborated by FASB and
IASB jointly. U.S. has shown reluctance to converge its financial reporting as required by the