Contemporary Issues in Accounting

This report discusses contemporary issues in accounting, including the measurement requirements of the conceptual framework, compliance with qualitative characteristics, and use of financial reports for users. It also explores the requirements for general purpose financial reporting. The report focuses on Pro Medicus Limited as a case study.

Running head: REPORT 0
CONTEMPORARY ISSUES IN ACCOUNTING
APRIL 16, 2019
STUDENT DETAILS:

REPORT 1
Contents
Introduction................................................................................................................................2
Background of company............................................................................................................2
Measurement requirements of the conceptual framework.........................................................3
Complied with fundamental qualitative characteristics.............................................................5
Complied with enhancing qualitative characteristics.................................................................6
Use of the financial reports for the users...................................................................................7
Requirements by the users.........................................................................................................8
Requirements for general purpose financial reporting...............................................................9
Conclusion and recommendations...........................................................................................10
References................................................................................................................................11

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Introduction
In present world, accounting is implemented in numerous areas such as own finance and
finance related to business. In these two aspects, some issues are biased and immoral
deviating from ideal and impartial features of accounting procedure. Theses contemporary
issues normally apparent in social aspects, national aspect, and accounting principle having
political nature (Lewandowski, 2016). The contemporary issues introduce the latest problems
facing by the finance and accounting professional. In the following parts, the newest issues,
which influence on the contemporary approaches in the practice and accounting, are
discussed and critically examined. This report states the measurement requirements of
conceptual framework, adoption of the enhancing qualitative characteristics, adoption of the
fundamental qualitative characteristics, use of financial reporting by the users and
requirements of general purpose financial statements (GPFSs).
Background of company
Pro Medicus Limited manufactures the assimilated software application for healthcare sector.
The major works of the corporation are to provide services to the clinics and hospitals and
make supply of the products related to healthcare. It also provides the services to Australian
organisations related to the health and diagnostic centres in North America, Europe and
Australia. The product and service of company involve the Visage 7.0 and Radiology
Information System. The Radiology Information Systems of company offer the software
related to medical for the practice management; teaching, application and service of experts;
after trade supports and service products; Promedicus.net protected mail, and digital
radiology incorporation goods. In the addition of this, the Visage 7.0 provides the software
related to medical; PACS or digital images software; teaching, application and expert service,

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and support goods. PPME IP Australia Pty Ltd, Romed (USA) Pty Ltd, and Visage Imaging
Inc. are the subsidiaries of Pro Medicus Limited.
Measurement requirements of the conceptual framework
The clear system of interconnected purposes and basics that is predictable and anticipated to
lead to reliable standards and that recommends a scope, functions and restrictions of financial
statements and financial accounting. The conceptual framework renders the recommendation
or the instruction so they may be regarded as accounting’s normative theories. This attempts
to render the accounting’s structured ‘theory. The Conceptual Framework is useful in
providing the general purpose financial statements (GPFS) and not specific purpose financial
statement. In AISB framework, there are five components of financial reporting, such as
liabilities, assets, expenses, income and equity. The company follows significant accounting
policies to form the basis for valuation of assets, liabilities, income, expenses and equity. It
can be observed from the annual report of company-

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Complied with fundamental qualitative characteristics
To make sure the financial data is helpful for the financial decisions making, it is
significantly required to consider the characteristics or merits that are required to possess by
financial information. The IASB Conceptual Framework identifies the fundamental
qualitative characteristics. The fundamental qualitative characteristics of financial reporting
data are typed as relevance and faithful representation. These are discussed as follows-
1. Relevance- According to this fundamental qualitative characteristics of financial
reporting information, it is required that data should be proper to the needs of a user
that is the case when the information influences the financial decision of users.
Something is proper in case where this affects the decision on the allocation of rare
means if this is able of creating the differences in the judgement. This may involving
reporting particularly related information, or data whose misstatements or errors may
influence the financial decision of users (Kelley and Knowles, 2016).
2. The faithful representation- the faithful representation means to the concept that
financial statement be produced that exactly state the conditions of business.
considering the annual report of Pro Medicus Limited, this is observed that financial
statements of the corporation render the relevant and faithful representation. The
entity faithfully represents the transactions and other event, states the underlying
matter of events, and prudently states the estimates and worries by the appropriate
disclosures (Kršeková and Pakšiová, 2015). For an example, the company has
complied with characteristic ‘faithful representation’ in respect of intangible assets-

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Complied with enhancing qualitative characteristics
At a subsequent level below the fundamental qualitative characteristics are enhancing
qualitative characteristics. There are 4 enhancing qualitative characteristics that helpful
financial data must possess-
 Understand ability- The data should be willingly understood to the financial
statements. According to this enhancing qualitative characteristic, the information
must be clearly stated, with additional information supplied in the supporting
footnotes as needed for helping in the clarification.
 Comparability- According to this, the information must be equal to the financial data
stated for various accounting period, so that users can identify the trends in a
performance and economic condition of the reporting entity (Henderson, et. al, 2015).

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 Timeliness- The timeliness of accounting data refers to the requirements of
information to utilise quickly proper for them to make actions. The information
become obsolete and unreasonable in a matter while this is not reported timely.
 Verifiability- the Company’s accounting is verifiable while it is reproducible, so that,
given the same data and expectation, the independent accountant can make same
result the company did. The verifiability is useful in helping that the information
faithfully states the economic portents it purports to state. In other words, it is
observed that the various experts and viewers may get consents that the particular
representation is a faithful representation.
Therefore, it is stated by annual report of Pro Medicus Limited that the company
represents the financial data in a way that the people with relevant knowledge of
finance and businesses, and willingness to study information, should be able to
understand this. Thus, the company has complied with enhancing qualitative
characteristics (Gummer and Mandinach, 2015).
Use of the financial reports for the users
The financial reporting is helpful for the users of financial statements like the investors,
creditors, lenders and potential investors (Christensen, et. al, 2016). The users may utilise the
financial statements to take decisions. The annual report of company states that the depositors
and shareholders of an entity require the financial data to take relevant decision related to the
investment and economic decisions. Furthermore, the lenders of funding for the instance
financial institutions and banks are interested to have the knowledge of capacity of entity to
make the payment of liabilities on the maturity. Furthermore, the creditors require the
financial data to know the capacity to pay obligations by a corporation on maturity. In this
way, various investors, creditors and lenders may not need reporting entity to render data to
them in a direct manner and should depended on the general purpose financial reports for

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financial data they require. Accordingly, they are key users to whom general-purpose
financial reports are directed (Sampaio and González, 2017).
Requirements by the users
It is said by conceptual framework that users require only the basic knowledge of
accounting. However, they are required more than this. It is normally accepted that the user is
anticipated to get certain skills in the financial accounting. Besides this, the financial reports
are made for the user who has proper understanding of the business and financial functions
and who assesses the data properly and thoroughly. At time, even knowledgeable, well-
versed and hardworking user can require to look for the help of the consultant to get the
knowledge of data in respect of the difficult financial phenomena. The user of entity is
required to have knowledge of the International Accounting Standards, accounting standards
of Australia and the international financial reporting statement from the company’s financial
statements. Therefore, the users may deal the accounting transaction according to the
Australian accounting standards (Geisker and Tallis, 2018).

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Requirements for general purpose financial reporting
The general-purpose financial statements are made by the year to assist the investors, lenders,
and creditors in a procedure related to the decision taking (Annual Report, 2018). As per the
IASB Conceptual Framework, the purpose of general purpose financial reporting is to render
the financial data in respect of the reporting entity, which is useful to the present investors
and potential investors, creditors and lenders in taking decision in respect of rendering the
resources to an entity. The general-purpose financial statements include the statement of cash
flow, income statement, and the statement of owner’s equity or the retained earnings
statement and balance sheet. The annual report of Pro Medicus Limited states that the
company makes the statement of cash flow, balance sheet, the statement of owner’s equity,
income statement and statement of retained earnings according to the Corporations Act 2001
(Panteli and Mancarella, 2015).

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Conclusion and recommendations
In conclusion, it can be stated that a lack of the conceptual framework may led to the
generation of accounting system on the basis of rules, whose main objective is that the
treatment of all accounting transactions should be dealt with by inclusive specific regulations
and requirements. The systems are very inflexible; however has the attraction of financial
statements being equal and consistent. It is recommended to follow the conceptual framework
of company to get understanding of IFRS and Australian Accounting Standards (Schnipper,
et. al, 2015).

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References
Annual Report (2018) Pro Medicus .[Online] Available at: < http://www.promed.com.au/wp-
content/uploads/2019/03/PME-Annual-Report-2018.pdf> [Accessed 16/04/2019]
Christensen, H.B., Nikolaev, V.V. and Wittenberg‐Moerman, R. (2016) Accounting
information in financial contracting: The incomplete contract theory perspective. Journal of
accounting research, 54(2), pp.397-435.
Geisker, J. and Tallis, J. (2018) Litigation funding in Australia: A year of review and
change?. LSJ: Law Society of NSW Journal, (46), p.81.
Gummer, E. and Mandinach, E. (2015) Building a Conceptual Framework for Data
Literacy. Teachers College Record, 117(4), p.n4.
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B. (2015) Issues in financial
accounting. Pearson Higher Education AU.
Kelley, T.R. and Knowles, J.G. (2016) A conceptual framework for integrated STEM
education. International Journal of STEM Education, 3(1), p.11.
Kršeková, M. and Pakšiová, R. (2015) Financial reporting on information about the financial
position and financial performance in the financial statements of the public sector. Finance
and risk 2015, 14(1), pp.136-145.
Lewandowski, M. (2016) Designing the business models for circular economy—Towards the
conceptual framework. Sustainability, 8(1), p.43.
Panteli, M. and Mancarella, P. (2015) The grid: Stronger bigger smarter?: Presenting a
conceptual framework of power system resilience. IEEE Power Energy Mag, 13(3), pp.58-
66.

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Sampaio, P.G.V. and González, M.O.A. (2017) Photovoltaic solar energy: Conceptual
framework. Renewable and Sustainable Energy Reviews, 74, pp.590-601.
Schnipper, L.E., Davidson, N.E., Wollins, D.S., Tyne, C., Blayney, D.W., Blum, D., Dicker,
A.P., Ganz, P.A., Hoverman, J.R., Langdon, R. and Lyman, G.H. (2015) American Society of
Clinical Oncology statement: a conceptual framework to assess the value of cancer treatment
options. Journal of Clinical Oncology, 33(23), p.2563.