Compliance of Myer with Conceptual Framework for Financial Reporting

This study aims to analyze the compliance of Myer with various requirements of conceptual framework. It examines the adherence with the objectives, recognition criteria and qualitative characteristics of conceptual framework by the company. The report analyzes Myer’s compliance with various requirements of conceptual framework for financial reporting.

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

1Introduction
CONTEMPORARY ISSUES IN ACCOUNTING
Abstract
This study aims to analyze the compliance of Myer with various requirements of conceptual
framework. First part of this report shows the compliance of Myer with the objectives of
conceptual framework. The second part indicates the adherence of Myer with the recognition
criteria of assets, liabilities, equity, expenses and revenue. The last part of the report shows the
compliance of Myer with the qualitative enhancing characteristic of conceptual framework.

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CONTEMPORARY ISSUES IN ACCOUNTING
Table of Contents
Introduction......................................................................................................................................3
Meeting Conceptual Framework Objectives...................................................................................3
Meeting the Recognition Criteria of Conceptual Framework.........................................................6
Assets...........................................................................................................................................7
Liabilities.....................................................................................................................................8
Equity...........................................................................................................................................8
Revenue.......................................................................................................................................9
Expenses......................................................................................................................................9
Satisfaction of Qualitative Characteristic of Conceptual Framework...........................................10
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

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CONTEMPORARY ISSUES IN ACCOUNTING
Introduction
Conceptual Framework for Financial Reporting provides great assistance to the business
organizations in the preparation of financial statements. It provides the businesses with necessary
outline along with principles and standards in order to prepare the financial statements
(Abeysekera 2013). Apart from this, many organizational issues regarding financial reporting
can be solved by applying the principles and standards of conceptual framework. Thus, it is
evident that conceptual framework has many roles to play in the financial aspects of the
companies. In the year 1989, International Accounting Standard Board (IASB) introduced the
framework of conceptual framework of financial reporting (Cheng et al. 2014). Thus, this
particular study aims to examine the adherence with the objectives, recognition criteria and
qualitative characteristics of conceptual framework by the companies. For the effective
completion of this report, Myer is taken into consideration. Myer is considered as a major
departmental store of Australia established in the year of 1900. The company is headquarter at
Melbourne, Sydney. The company operates in the retail industry of Australia (myer.com.au
2017). It needs to be mentioned that Myer is listed among the top hundred companies in
Australia Stock Exchange (ASX) with code name of MYR (m.asx.com.au 2017). The report
analyzes Myer’s compliance with various requirements of conceptual framework for financial
reporting.
Meeting Conceptual Framework Objectives
According to the above discussion, it can be observed that conceptual framework for
financial reporting is an essential element for financial reporting of the business organizations.
The annual report of Myer contains essential information regarding the adherence with various

4Introduction
CONTEMPORARY ISSUES IN ACCOUNTING
aspects of conceptual framework. According to 2017 annual report of Myer, it can be observed
that the company has adopted the principles and regulations of Australian Accounting Standard
Board (AASB) and Corporations Act 2001 for general purpose financial reporting (aasb.gov.au
2017). Apart from this, the consolidated financial statements of the company are developed
based on the principles and standards of International Financial Reporting Standards (IFRS) and
International Accounting Standard Board (IASB). Thus, on the overall basis, it can be observed
that Myer follows the conceptual framework issues by IFRS for their financial reporting. In this
context, it needs to be mentioned that conceptual framework for financial reporting has three
major objectives that are required to be satisfied by Myer (aasb.gov.au 2017). The following
discussion shows the extent of adherence with conceptual framework objectives by Myer.
The first objective of conceptual framework indicate the responsibility of the business
organizations in delivering useful as well as purposeful financial information to their
stakeholders in order to make effective financial decisions (aasb.gov.au 2017). In case of Myer,
it is required to be mentioned that the company provides all the necessary financial information
in their financial statements on a timely basis. The company provides useful financial
information through various financial statements; they are income statement, statement of
comprehensive income, balance sheet, statement of change in equity and statement of cash flows.
In addition, the company provides financial notes that are a major source of financial
information. The next objective states that the provided financial information should be helpful
in the assessing amount, timing and uncertainties related to organizational cash flows
(aasb.gov.au 2017). In this context, it needs to be mentioned that Myer uses to release their cash
flow statement on timely that provides the users with al necessary information related with the
cash flow of the company.

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CONTEMPORARY ISSUES IN ACCOUNTING
The third objective of conceptual framework indicates that the companies are required to publish
all the necessary information regarding organizational resources so that they can become
supportive for financial decision-making process. In case of Myer, it can be seen that the
company prepares their balance sheet as per the regulation of AASB that includes all the
required information about the economic resources of the company (aasb.gov.au 2017).

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CONTEMPORARY ISSUES IN ACCOUNTING
Thus, from the above discussion, it is clear that Myer has well met all the major
objectives of conceptual framework.
Meeting the Recognition Criteria of Conceptual Framework
According to the conceptual framework for financial reporting, it is the responsibility of
the business organizations to meet the recognition criteria of assets, liabilities, equity, revenue
and expenses. There are three major requirements. First, there needs to be relevant information

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CONTEMPORARY ISSUES IN ACCOUNTING
about these financial aspects. Second, all these aspects are required to be presented faithfully.
Third, information related to these aspects must be helpful for the users. Following discussion
shows the meeting of recognition criteria by Myer.
Assets
Different kinds of assets are there in Myer. In case of property, plant and equipment
(PPE), they are recorded by deducting depreciation from cost of assets. Costs related to these
assets are recognized in case the future benefits are flown in favor of the company (myer.com.au
2017).
In case of the intangible assets of the company, they are subject to impairment.
Impairment losses are recognized against the carrying amount of those particular assets. In Myer,
Intangible assets have specific useful life and they are not subject to amortization (myer.com.au
2017).

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CONTEMPORARY ISSUES IN ACCOUNTING
Liabilities
There are different liabilities in Myer. In case of differed tax liabilities, they are
recognized based on the difference in tax rates (myer.com.au 2017).
Myer recognizes their inventories at lower cost with net reliable value. The cost of
inventories is determined with the help of weighted average cost method. Trade and other
receivables are paid within 30 to 90 days after recognition process (myer.com.au 2017).
Equity
Myer classifies the ordinary shares as equity. The attribution of incremental costs can be
seen to the issues of shares of Myer. All these incremental costs are deducted from the equity of
Myer (myer.com.au 2017).

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CONTEMPORARY ISSUES IN ACCOUNTING
Revenue
In case of revenues, the management of Myer recognizes them at the time of the point of
sale after the deduction of taxes. In addition, sales provisions are recognized based on
assessment. Thus, the sales value includes the revenue from the sale of goods (myer.com.au
2017).
Expenses
In case of the expenses of Myer, they are recognized based on certain categories. They
are employee benefit expenses, depreciation and amortization expenses, financial costs, rental

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CONTEMPORARY ISSUES IN ACCOUNTING
expenses related to operating leases and net foreign exchange gains. All these expenses are
recognized and recorded at the time of their occurrence (myer.com.au 2017).
Hence, the above discussion shows that Myer has satisfied all recognition criteria of
concept framework for reporting of assets, liabilities, equity, revenues and expenses
(myer.com.au 2017).
Satisfaction of Qualitative Characteristic of Conceptual Framework
There are some major qualitative characteristic of conceptual framework in order to
enhance the quality of financial reporting. It is essential for Myer to satisfy all these qualitative
characteristics. Following discussions shows the extent of adherence with these qualitative
characteristics of conceptual framework by Myer.
Relevance: This characteristic state that provided financial information is required to be relevant
so that they can be helpful for financial decision-making. Myer complies with all recent
principles and regulations of AASB, IFRS, Corporations Act 2001 and others. In addition, the
company takes into consideration all the recent rates of depreciation, tax and others (ey.com

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CONTEMPORARY ISSUES IN ACCOUNTING
2017). Thus, it can be said that the provided financial information of Myer is relevant to financial
decisions.
Faithful Representation: According to this characteristic, business organizations are needed to
present their financial information in true and fair basis (fasb.org 2017). It implies that they need
to be able to acquire the faith of their stakeholders. The audit report of Myer by PWC states that
the company has faithfully represented their financial statements by complying with all required
accounting standards. Thus, it can be said that Myer has faithfully represented their financial
statements.
Comparability: According to this characteristic, provided financial information should make the
stakeholders able to identify the similarities and differences among various financial statements
(fasb.org 2017). It needs to be mentioned that Myer has presented their financial statements in
simple tabular form along with graphs and charts. This aspect makes it easier for the investors
and creditors compare the financial position of Myer with other companies.
Verifiability: It implies that the users of financial statements need to be able to verify provided
financial information by the company (iasplus.com 2017). For this purpose, Myer provides the
classification of almost every accounting aspect in the notes of financial statements.
Timeliness: It indicates that financial information is provided in timely manner. In case of Myer,
it can be seen that the company publishes their financial statements yearly as well as quarterly
basis (ifrs.org 2017). Thus, it can be seen that the users can get timely financial information from
the financial statements of Myer.

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CONTEMPORARY ISSUES IN ACCOUNTING
Understandability: As per this characteristic companies are required to make their financial
statements in such a way so that they can become easy understandable for the users. Myer
publishes their financial statements in simple formal for the ease of their users (ifrs.org 2017).
Conclusion
The above discussions shows that Myer follows the conceptual framework of AASB for
the purpose of their financial reporting. Apart from this, Myer has adopted the principles and
standards of IFRS, IASB and Corporations Act 2001 for the preparation of consolidated financial
statements. As per the above discussion, it is evident that Myer has satisfied three major
objectives of conceptual framework as a part of their financial reporting. In case of recognition
criteria for asset, liability, equity, revenue and expenses, Myer also follows the principle of
AASB. Lastly, Myer has fulfilled the major qualitative characteristic of conceptual framework
for enhancing the quality of financial reporting.

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CONTEMPORARY ISSUES IN ACCOUNTING
References
Aasb.gov.au. (2017). Conceptual Framework for Financial Reporting. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf [Accessed 3 Dec.
2017].
Abeysekera, I., 2013. A template for integrated reporting. Journal of Intellectual Capital, 14(2),
pp.227-245.
Australian Securities Exchange - www.asx.com.au. (2017). Company details - MYR - ASX -
Australian Securities Exchange. [online] Available at: http://m.asx.com.au/m/company-
info.xhtml?issuerCode=MYR [Accessed 4 Dec. 2017].
Cheng, M., Green, W., Conradie, P., Konishi, N. and Romi, A., 2014. The international
integrated reporting framework: key issues and future research opportunities. Journal of
International Financial Management & Accounting, 25(1), pp.90-119.
Ey.com. (2017). Conceptual Framework: Objectives and Qualitative Characteristics. [online]
Available at: http://www.ey.com/Publication/vwLUAssets/Supplement_86_GL_IFRS/$FILE/
Supplement_86_GL_IFRS.pdf [Accessed 3 Dec. 2017].
Fasb.org. (2017). Conceptual Framework for Financial Reporting: Objective of Financial
Reporting and Qualitative Characteristics of Decision-Useful Financial Reporting Information.
[online] Available at: http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?
cid=1218220340119&acceptedDisclaimer=true [Accessed 3 Dec. 2017].

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CONTEMPORARY ISSUES IN ACCOUNTING
Fasb.org. (2017). Conceptual Framework-Objective and Qualitative Characteristics. [online]
Available at: http://www.fasb.org/project/cf_phase-a.shtml [Accessed 3 Dec. 2017].
Iasplus.com. (2017). Conceptual Framework Phase A – Objective and qualitative
characteristics. [online] Available at:
https://www.iasplus.com/en/projects/completed/framework/framework-a [Accessed 3 Dec.
2017].
Ifrs.org. (2017). IFRS . [online] Available at: http://www.ifrs.org/issued-standards/list-of-
standards/conceptual-framework/ [Accessed 3 Dec. 2017].
Myer. (2017). About Us. [online] Available at: https://www.myer.com.au/p/about-myer/
[Accessed 4 Dec. 2017].
Rankin, M., Stanton, P.A., McGowan, S.C., Ferlauto, K. and Tilling, M., 2012. Contemporary
issues in accounting. Milton, Australia: Wiley.

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