Accounting Report Evaluation: REA Group Limited

The assignment content discusses the preparation of accounting statements for REA Group Limited according to international accounting standards and best practices. The management has reported similar classes of items separately if material, provided clear and meaningful disclosures, and prepared the statements based on accrual accounting. Each statement has facilitated the provision of required information with a high degree of comparability. The report meets the objectives of general-purpose accounting reports. The target audience, including shareholders, stakeholders, creditors, debtors, and other third-party investors, can effectively utilize the report for decision-making. Additionally, the report demonstrates the enhancement of fundamental qualitative characteristics such as relevance, faithful representation, and verifiability.

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

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ISSUES IN CONTEMPORARY ACCOUNTING THEORY
Table of Contents
Introduction......................................................................................................................................3
Objectives of the general purpose accounting report......................................................................3
Have the target audience adequately used the report?.....................................................................5
Recognition criteria for the elements of the accounting statements................................................6
Fundamental qualitative characteristics of accounting report.........................................................6
Enhancing qualitative characteristic of the firm..............................................................................7
Conclusion.......................................................................................................................................7
References and Bibliography...........................................................................................................8

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Executive Summary
This particular study focuses upon the Australian corporate entity, REA Group Limited.
The annual report of this particular entity for the accounting year of 2017 has been evaluated in
order to find out the fact that whether accounting statements satisfy the required objectives of
accounting report, whether the company has satisfied the recognition criteria for the elements of
the accounting statements and other associated factors.
It has been found out that the management of the company has prepared the accounting
statements of the companies in regards to the issued standards of the regulatory bodies like the
Australian Accounting Standards Board.

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ISSUES IN CONTEMPORARY ACCOUNTING THEORY
Introduction
The issue that has been presented in the question is that the annual report of a listed
organization has been analyzed in order to examine the objectivity the regulatory standards that
have been applied for the objective behind the preparation of the accounting statements. It must
be noted here that the Australian Accounting Standards Board has essentially established the
particular accounting standards that are applied for the preparation of the accounting statements
of an organization in Australia.
This particular study focuses upon the Australian corporate entity, REA Group Limited.
The annual report of this particular entity for the accounting year of 2017 has been evaluated in
order to find out the fact that whether accounting statements satisfy the required objectives of
accounting report, whether the company has satisfied the criteria of recognition for the elements
of the accounting statements and other associated factors.
Objectives of the accounting report
The objectives of the accounting report have been as follows:
 The objective of the general purpose accounting report is primarily regulated around the
providence of accounting information in regards to the accounting entity that can be
useful to the third party investors, lenders and creditors for making the investment
decisions.
 Decisions in regards to the potential and existing potential investors for dealing in the
debt instruments are also facilitated by analyzing the accounting statements.
 It must be noted here that the general purpose accounting reports cannot provide all the
accounting information that is required by the investors in order to make the required
accounting decisions (Ali, Akbar & Ormrod, 2016)
The accounting statements of REA Group Limited reflect the fact that the accounting
reports have been prepared in accordance to the financial accounting standards as prescribed by
AASB. This means that the accounting statements satisfy the requirements of the accounting
report sufficiently. This can be further evidenced from the fact that the Australian Accounting

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Standards Board (AASB 101) reports that the basis for the preparation of the accounting
statements have been that the degree of comparability of the accounting statements of the
corporate entity for the previous periods and the accounting statements of other entities is high
(Ali, Akbar & Ormrod, 2016). It must be mentioned here that a sufficiently qualified accounting
statements will consist of the elements like:
 Assets
 Liabilities
 Equity statement
 Income and expenses
 Cash flows
Moreover, it must be mentioned here that a complete set of accounting statements
essentially consist of the essential elements as follows:
 accounting position statement that has been prepared at the end of the period
 Comprehensive income statement in regards to the stipulated period
 Equity statement for the stipulated period
 Statement of cash flow for the stipulated period
 Accounting disclosures
The accounting report of the company has adhered to all these standards. This means that
the financial report of the business entity has included all the above mentioned accounting
statements. These statements are the consolidated income statement, consolidated statement of
comprehensive income, consolidated of accounting position, consolidated statement of changes
in equity and consolidated statement of cash flows. The company has also provided the required
accounting disclosures. Furthermore, the general features of the annual reports of REA Group
Limited have been in accordance to the accounting report standards (Ali, Akbar & Ormrod,
2016). This can be evidenced from the fact that are as follows:
 The accounting statements have been prepared on the basis of the International
Accounting report Standards

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ISSUES IN CONTEMPORARY ACCOUNTING THEORY
 The management of the firm has properly asserted the fact that the corporate entity is a
going concern and has resulted in the execution of the preparation of the accounting
statements accordingly
 Furthermore, the management of the firm has prepared the accounting statements in such
a way that the similar classes of items have been reported separately if material
 The accounting disclosures that have been provided by the companies have been reported
separately and the accounting information revealed by the particular disclosures have
been clear and meaningful
 It must be noted here that the accounting statements of the company has been prepared on
the basis of accrual accounting
 The administration of the firm has been such that it has facilitated in the providence of
the required information in regards to the offset of the assets and the liabilities of the firm
 Each of the statements that have been included in the financial report of the company has
facilitated the providence of the required information that has been featured by a high
degree of comparability
Therefore, it can be deduced that the company has met the objectives of the general
purpose accounting report (Balsmeier & Vanhaverbeke, 2018).
Have the target audience adequately used the report?
The target audience that are the shareholders, stakeholders, creditors, debtors and the
other third party investors of the firm have been able to utilize the accounting report for the
purpose of taking the accounting decisions effectively. This can be evidenced from the fact that
the accounting report prepared by the management of REA Group Limited has been providing
enough information into the accounting condition of the company. The accounting disclosures
provide enough overview in to the past performance of the company. The investors of the
company and the other potential stakeholders get enough overview into the operations of the
company on the basis of the information that has been provided in the accounting statements of
the companies. Moreover, it has been provided in the accounting report of the company that the
shareholders have received enough remuneration thus ensuring welfare of the shareholders of the
firm (Balsmeier & Vanhaverbeke, 2018).

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ISSUES IN CONTEMPORARY ACCOUNTING THEORY
Recognition criteria for the elements of the accounting statements
The criteria of recognition in regards to the elements of the accounting statements that
has been provided in the annual report of the corporate entity. The revenue recognition in the
accounting statements of the companies have been carried out by the particular method of fair
value measurement. This means that the different types of revenues that have been included in
the accounting statements of the companies. Moreover, the other income and the income tax
have also been valued by the utilization of the accounting statements. The different accounting
Australian standards that have been applied in case of the measurement of the different
accounting components have also been mentioned in the accounting report of the company. A
particular disclosure that has been provided in the annual report of the company has been as
follows:
Figure: revenue recognition criteria
Fundamental qualitative characteristics in regards to accounting report
The fundamental qualitative characteristics in regards to accounting report can be defined
as follows:

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ISSUES IN CONTEMPORARY ACCOUNTING THEORY
 Relevance – the relevance of the accounting statements have sufficiently satisfied the
fundamental quality standards of the company
 Faithful representation – it can be certainly deduced that the conveyed accounting
information reflect a true and fair image of the accounting position of the company.
It can be evidently stated that the accounting statements of the REA Group has been
prepared on the basis of the fundamental qualitative features of accounting report. This means
that the accounting report provides enough information in regards to the different accounting
components. This can be further evidenced by the auditor’s report that has stated the fact that the
accounting statements of REA Group has adhered to the qualitative features satisfactorily.
Moreover, the information that has been conveyed by the accounting statements reflect the fact
that the accounting statement represent a true and fair image of the corporate entity.
Enhancing qualitative characteristic of the firm
The enhancing characteristic of accounting report can be defined as follows:
 Comparability – the degree of the comparability of the accounting statement of the
company have been high.
 Clarity – the clarity of the information that has been obtained from the accounting
statements of the companies has been of a high degree
 Conciseness – the provided information in the accounting report of the company has been
concise which has facilitated the economic decision making by the stakeholders and the
shareholders of the firm
 Verifiability – the verifiability of the information that has been disclosed in the
accounting report of the company has been of a high degree. This has increased the trust
between the management and the stakeholders of the firm (Balsmeier & Vanhaverbeke,
2018).
The degree of comparability of the accounting statements have been high. This is
because the accounting statements of REA Group have been prepared on the basis of the
Australian Accounting Standards Board. The clarity of the information conveyed by the
accounting report has also been high resulting in the reflection of the accounting

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statements of the particular corporate entity with an optimum degree of verifiability. This
fact has also been confirmed by the auditor of the company.
Conclusion
The particular conclusion that can be arrived at is that the accounting statements of REA
Group Limited for the accounting year of 2017 have been prepared in accordance to the
regulatory standards as conveyed by the Australian Accounting Standards Board. Therefore, no
such recommendation is required for the management of the corporate entity. However, a
particular fact that should be noted is that the adoption of the new accounting policies should be
properly revealed in the financial report in a proper way.

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References and Bibliography
Ali, A., Akbar, S., & Ormrod, P. (2016, March). Impact of international accounting report
standards on the profit and equity of AIM listed companies in the UK. In Accounting
Forum (Vol. 40, No. 1, pp. 45-62). Elsevier.
Balsmeier, B., & Vanhaverbeke, S. (2018). International accounting report standards and private
firms’ access to bank loans. European Accounting Review, 27(1), 75-104.
Dye, R., Glover, J., & Sunder, S. (2014). How Can Accounting report Standards Resist
Accounting-Motivated Accounting Engineering?.
Graham, A., Nandialath, A. M., Skaradzinski, D., & Rustambekov, E. (2017). Macroeconomic
Determinants of International Accounting report Standards (IFRS) Adoption: Evidence
from the Middle East North Africa (MENA) Region.
Jibril, M. A., & Abubakar, M. (2016, October). Effect Of International Accounting report
Standards (Ifrs) On Corporate Financing In Nigerian Banking Industry. In Proceedings of
Economics and Finance Conferences (No. 4206880). International Institute of Social and
Economic Sciences.
Kim, J. B., Shi, H., & Zhou, J. (2014). International Accounting report Standards, institutional
infrastructures, and implied cost of equity capital around the world. Review of
Quantitative Finance and Accounting, 42(3), 469-507.
Lestari, D. (2015). The Effect OF Implementation OF Convergence International Accounting
report Standards (ifrs), Good Corporate Governance, And Disclosure OF Corporate
Social Responsibility (csr) ON Investor Reactions (in Manufacturing Companies Listed
ON Indonesia Stock Exchange Period 2011-2013).
Perkins, J. D. (2016). Discussion of “Security Returns and Volume Responses around
International Accounting report Standards (IFRS) Earnings Announcements”. The
International Journal of Accounting, 51(2), 266-270.

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Sunder, S. (2016). Rethinking accounting report: standards, norms and institutions. Foundations
and Trends® in Accounting, 11(1–2), 1-118.
Tsunogaya, N. (2016). Issues affecting decisions on mandatory adoption of International
Accounting report Standards (IFRS) in Japan. Accounting, Auditing & Accountability
Journal, 29(5), 828-860.