Accounting Concepts and Framework: A Case Study of Lend Lease Group

This report discusses the accounting concepts and framework followed by Lend Lease Group, a global property and infrastructure organization. It covers the description of accounting concepts, conceptual framework and measurement related issues, and fundamental qualitative characteristics such as representational faithfulness and relevance. The report also provides insights into the company profile and its use of accounting principles in financial reporting.

Running head: REPORT 1
Advance Financial Accounting
STUDENT DETAILS:
5/24/2019

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Contents
Introduction......................................................................................................................................3
Company Profile..............................................................................................................................3
Description of accounting concepts.................................................................................................4
Conceptual framework and measurement related issues.................................................................4
Fundamental qualitative characteristics: understanding of representational faithfulness and
relevance..........................................................................................................................................4
1. Representational Faithfulness...............................................................................................4
2. Relevance..............................................................................................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

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Introduction
The description of the accounting fundamentals states some basic accounting concepts, the
principles related to accounting, and the accounting terminologies. The accounting concepts are
considered as the fundamental principles, basic rules, as well as basic assumptions, which work
as the basis of recording the business related transactions (Schulze, et. al, 2016). The accounting
concept supposes that, for accounting, the business owners and business entity are two separate
independent entities. The accounting concepts and the accounting principles have significant
role in business affairs of corporation. For preparing the financial statements of corporation, this
is very significant to adhere to various basic accounting concepts. A conceptual framework
of accounting explains the fundamental assumption related to going concern. Additionally,
the accrual concept, concept of accounting entity, concept of monetary unit, and time period are
very significant in making and understanding financial statements of organisation (Kanodia and
Sapra, 2016).
The conceptual framework of organisation may be described as the system of concept as well as
the purposes that may result into production of the constant and invariable set of the regulations,
laws and rules. A key motive for developing the agreed conceptual framework is for setting
accounting standards. The conceptual framework of the organisation is very helpful in solving
the problems of accounting. The conceptual framework of entity also addresses the useful
fundamental principles. The main aim for developing the agreed conceptual framework is that it
renders basis for the solution of severe disputes, and framework to define accounting standards.
The following parts state the accounting concepts followed by Lend Lease Group. In this report,

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the conceptual framework of organisation, measurement related issues, and fundamental
qualitative characteristics such as relevance as well as faithful representation is discussed and
examined.
Company Profile
Lend Lease Group is the incorporated worldwide property as well as infrastructure organization.
Lend Lease Group contains the Lend Lease Corporation Limited and other corporations
controlled by it, such as the Lend Lease Trust. The divisions of this company cover the
Construction as well as Investment Management, Infrastructure Development and Property
Development. Lend Lease Group is involved within establishing, designing, building, owning,
financing, co-investing, working and handling the infrastructure assets and properties. The
Infrastructure Development business makes handles and makes investment in the private
partnership projects and public partnership project. Further, the Construction business includes
the project administration, services related to engineering as well as services of construction.
Furthermore, the Property Development business includes establishment of internal urban
development and external urban development, commercial office, retailing center, apartments,
and services related to health, and retirement rural communities. The Investment Management
business includes the property administration, asset’s management and property and
infrastructure investment management.
Lend Lease Group and its businesses have been delegated with various developments, which
have become the foundation stone of towns and the groups projects such as the Athletes’
Villages in London, September 11 museums or memorials in New York, Petronas Towers in
Kuala Lumpur, significant infrastructure, opera house in Sydney, stadium as well as amusement

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amenities all over the world, schools, shopping centers, clinics, housing community along with
higher rise apartments and many others. This is mentioned in the annual report of the company
that in recent time, significance of the entity’s business is testimony to forethought of the
founder. The company also ensures that it had all elements essential to develop Lend Lease well
in the upcoming period. The company is creative and strong. It values the knowledge (Reuters,
2018).
Description of accounting concepts
The accounting concepts play the important role in the financial reporting (Melnyk, 2018). These
are some significant accounting concepts followed by company. These are below-
1. Going concern assumption- it is explained by this assumption states that company’s
business would continue to run forever. So it assumes that for the expected future, the
business would not be terminated.
2. The concept of matching- This concept tells that the revenue and expenditure of a
transaction should be included in the same accounting period. So to measure the income
of the period the revenue as well as expense (if paid or not) should be involved.
3. Conservatism Concept- the conservatism Concept encourages the prudence in the
accounting. The concepts explain that profits must not be included until this is realized.
4. Materiality Concept- Materiality concept states that all the material facts should be the
part of accounting procedure. However the immaterial facts such as irrelevant data must
be left out

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5. Consistency concept- the consistency concept permits the readers to create inter-firm and
inter-period comparison. Furthermore, the regular modifications in the approaches can be
to influence the accounts and it should be not permitted.
It is analyzed from the annual report of Lend Lease Group that the directors are liable to assess
the capability of Lend Lease Group to stay as the going concern basis and whether utilization of
the going concern basis of accounting is proper. It covers revealing, as appropriate, cases linked
to going concern as well as utilizing the going concern accounting assumption except they either
desired to settle Lend Lease Group or for ending the functions related to business, or have no
actual substitutes however to do accordingly. Additionally, the company delivers return to the
holders of security and follows the prudent approach to capital management for maintaining the
solid balance sheet through the marketplace cycle (Panteli and Mancarella, 2015).
Furthermore, consolidated financial report is the general purpose financial report, which is made
under historical cost basis apart from for liabilities as well as assets that are recorded on the FV;
derivative financial instruments, investment related property, fair value by P & L investment,
resident liability, and liability for cash advanced compensation plan based on shares. Moreover,
the identified liabilities and assets, which are hedged, are represented at fair value regarding the
risks, which are exposed. Refer to the specific accounting approaches in the notes to the financial
statements for base of measurement, liabilities and assets are assessed at FV. A company also
confirms that the procedure and the international trends affecting the approaches are relevant and
consistent with gathered data.

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Conceptual framework and measurement related issues
The central object to frame agreed conceptual framework is that this delivers the framework to
set the accounting standards, as well as base to get the solution for relevant problems of
accounting. The conceptual framework of the company renders the fundamental principles that
are not required to take place again in relation to the accounting standards. A conceptual
framework for presentation of the financial statement and the representation of the financial
statement of entity as changed contains the conceptual framework in respect of financial
reporting as provided through International Accounting Standard Board. The provisions related
to measurement of conceptual framework cover fundamental qualitative characteristics regarding
accounting information, the general purpose financial reporting, financial reporting’s purpose,
the company’s financial statements measurements, as well as the basic components in relation to
financial statement of an entity.
According to annual report of Lend Lease Group, this is analysed that consolidated financial
report is the general purpose financial report that has made according to and the Corporations
Act 2001 and the Australian Accounting Standards followed by Accounting Standards Board of
Australia. It also fulfils the requirements of International Financial Reporting Standards (IFRS)
followed by IASB. It is presented in Australian $, with all values rounded off to nearest 10 th of
million dollars except stated, according to the ASIC Corporation (rounding in report of directors
or financial report) Instrument 2016/191. In the addition of this, the preparation of the financial
report complies with Australian Accounting Standards needs administration for creating
judgment, estimates as well as the assumption.
In this way, it may influence the implementation of the accounting policies as well as the asset’s
reported amount, incomes and expenditures, as well as liabilities. The real outcomes can vary

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from the estimates. The Directors’ Report for FY ending 30/06/2018 has been made as per the
requirements of Corporations Act 2001. According to the Corporations Act 2001, Rule 12 of
Constitution allows this organization for acquiring and keeping insurance or make payment or
ready to make payment of the premium for insurance for officer against the liabilities earned as
the officers of organization or of associated body corporate (Gummer and Mandinach, 2015).
Fundamental qualitative characteristics: understanding of representational faithfulness
and relevance
To make the financial statements useful for the company’s shareholders, the statements are
required to represent some qualitative characteristics (Nishikawa, Kamiya and Kawanishi, 2016).
A requirement for accounting data by the lender, investor as well as creditor makes fundamental
qualitative characteristics, which are advantageous and wanted in the data related to accounting.
There are 6 qualitative characteristics related to accounting data. There are two qualitative
characteristics, which are fundamental characteristics. On other hand, other 4 characteristics are
enhancing qualitative characteristics (Henderson, et. al, 2015). These two fundamental
qualitative characteristics are defied as below-
1. Representational Faithfulness
The representational faithfulness is also known as reliability, is an extent to that data precisely
states the means of organizations, compulsory entitlements as well as dealings. To help, think of
the symbolic representation of somewhat in actual time – how exactly does the depiction state
what a person observes in the actual period? For accounting data to have faithful representation,
a. It should be neutral – The level to that data is free from partiality. The most important
thing to consider that is there is subjectivity and assessment involved in an entity’s

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financial statement, so data may not be really impartial. On the other hand, if the
corporation polled one thousand accountants and took the average of the replies, that will
be regarded neutral and free from unfairness (Gallizo Larraz and Saladrigues Sole, 2016).
b. It must be complete – financial statements of an entity must not exclude the
transactions.
c. It should be free from error – The level to that data is free from error or mistake.
In this way, it can say that this is not easy to determine faithful representation in direct manner
by only measuring a company’s annual report, since data regarding the real financial fact is
essential to reassure faithful representation. It is also argued by maintain that estimate as well as
convention that closely agree to fundamental financial constructs and standards followed may
improve the faithful representation (Sampaio and González, 2017).
2. Relevance
The other fundamental qualitative characteristic is relevance. The relevance means how useful
the data is for economic decision-taking procedure. To ensure the relevance of the accounting
information, it is required to possess:
a. Predictive value – renders predictive powers in relation to the probable events of
upcoming period
b. Confirmatory value – renders data in relation to previous events
In this way, the accounting data is relevant if this may render useful data in relation to the
previous events and help to predict the upcoming events or in taking step for handling the
possible upcoming events. For the instance, the corporation experiencing the solid quarter as

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well as stating the enhanced outcomes to the creditor is relevant to a decision-taking process of
creditor to expand or increase credits presented to an organization. Further, along with the
predictive value, the confirmatory value makes contribution to the relevancy of financial data. As
per the IASB (2008), the data has confirmatory value in a case, when this confirms or alters the
current or present expectation on the basis of past assessment. The relevant financial report must
involve both data such as non-financial data and financial data. These data must be able to render
view in the opportunities related to business, risks and probable upcoming scenario for a
corporation (Oulasvirta, 2016).
Furthermore, the previous study states that in comparison to historical cost, the FV states best
analytical value of financial reporting data in comparison of the historical cost. The accounting
based on FV renders more relevant data in comparison of the historical cost. The reason is that
this signifies the asset’s present value, in place of the purchasing cost. Additionally, the fair
value is an accounting measure advocated by International Accounting Standards Board and
Financial Accounting Standard Board. These frameworks regard fair value as one of the
significant methods to improve the relevance (Carson, Fargher and Zhang, 2017). If data in
annual report renders feedbacks to readers of annual report in relation to past transaction or
event, it will help them to verify or alter the expectation. The data related to confirmatory value
are generally enclosed in the administration, conversation and evaluation section of the annual
report of company (Annual Report, 2018). From the annual report of Lend Lease Group, it is
analyzed that the company uses these fundamental qualitative characteristics like faithful
representation and relevance in recording along with presentation of other incomes-

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Conclusion
According to this discussion, this can say that accounting principles depended on various
concepts, traditions and conventions have advanced by accounting bodies and administrators,
and are adopted globally. The significance of accounting conventions and concepts in preparing
and presenting financial statements may be seen in evaluation of financial viability of an
organization. An accountant makes the financial statements of most of the entities. The
accounting conventions and the accounting concepts help the accountants in providing proper
financial reports to the administration of the company as regards financial reports to the
administration of company. The absence of the conceptual framework can result in creating the

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accounting system based on rules, whose major aim is that the treatment of every accounting
transaction must be dealt with by comprehensive particular needs, provisions and rules (Geisker
and Tallis, 2018).
Therefore, the accounting system based on rule is much contracted; though has desirability of
financial statement being corresponding, equivalent along with constant. The sound conceptual
framework is able to solve the problems by the helpful and consistent standards. In addition,
deprived of the current set of standards, this is impossible to resolve the more issues that
establish. The conceptual framework also improves the understanding of the users of financial
statement of entity, and faith in financial reporting and makes it easier to make evaluation
between the various financial statements of an entity.

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References
Annual Report (2018) The Lend Lease Group. Available at:
https://www.lendlease.com/uk/-/media/llcom/investor-relations/annual-reports-and-
securityholder-reviews/2018/2018-annual-report-lendlease.pdf. Access on 31 May 2018
Carson, E., Fargher, N. and Zhang, Y. (2017) Explaining auditors’ propensity to issue going‐
concern opinions in Australia after the global financial crisis. Accounting & Finance.
Gallizo Larraz, J.L. and Saladrigues Solé, R. (2016) An analysis of determinants of going
concern audit opinion: Evidence from Spain stock exchange. Intangible Capital, 2016, vol. 12,
núm. 1, p. 1-16.
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.
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Kanodia, C. and Sapra, H. (2016) A real effects perspective to accounting measurement and
disclosure: Implications and insights for future research. Journal of Accounting Research, 54(2),
pp.623-676.
Melnyk, O. (2018) Accounting for Profit or Loss from the Initial Recognition and Measurement
of Biological Assets. Accounting and Finance, (3), pp.60-68.

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Nishikawa, I., Kamiya, T. and Kawanishi, Y. (2016) The definitions of net income and
comprehensive income and their implications for measurement. Accounting Horizons, 30(4),
pp.511-516.
Oulasvirta, L. (2016) Accounting Principles. Global Encyclopedia of Public Administration,
Public Policy, and Governance, pp.1-9.
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.
Reuters (2018) Lend Lease Group (LLC.AX. Available at:
https://www.reuters.com/finance/stocks/company-profile/LLC.AX. Access on 31 May 2018
Sampaio, P.G.V. and González, M.O.A. (2017) Photovoltaic solar energy: Conceptual
framework. Renewable and Sustainable Energy Reviews, 74, pp.590-601.
Schulze, M., Nehler, H., Ottosson, M. and Thollander, P. (2016) Energy management in
industry–a systematic review of previous findings and an integrative conceptual
framework. Journal of Cleaner Production, 112, pp.3692-3708.