Contemporary Issues in Accounting

This assessment analyzes the financial report of Retail Food Group Ltd for compliance with the conceptual framework of business, recognition criteria, and qualitative characteristics of financial statements. The report concludes that the business follows all relevant accounting standards and regulations.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
Name of the Student:
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CONTEMPORARY ISSUES IN ACCOUNTING
Executive Summary
The main purpose of this assessment is to analyze the financial report of Retail Food Group Ltd
for the purpose of analyzing whether the financial statement is prepared complying the
requirements of conceptual framework of the business. In addition to this, the recognition criteria
of different items which is shown in the annual reports will be judged. The qualitative
characteristic of financial statements will also be stated in the annual reports of the business. The
annual reports of Retail Food Group ltd will be analyzed for ensuring whether the elements
which are mentioned above.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Objectives of Conceptual Framework.........................................................................................3
Recognition Criteria of Conceptual Framework..........................................................................6
Qualitative Characteristics of Financial Statement......................................................................7
Conclusion.......................................................................................................................................9
Reference.......................................................................................................................................10

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Introduction
Conceptual Framework may be defined as the general framework which is used by
businesses for the purpose of reporting of financial information in the business. The conceptual
frameworks are used by business for the purpose of developing and preparing annual reports of
the company (Macve, 2015). With the help of an effective conceptual framework numerous
business problems can be solved and the same can result better management of the business.
Therefore, the role of conceptual framework is important in bring about consistency and
accountability in the reporting process for financial information.
The report will be concentrating on the characteristics which should be present in a
financial statement which are both fundamental qualitative characteristics and enhancing
qualitative characteristics which forms a part of the conceptual framework. In this assessment,
Retail Food Group Ltd is taken as the company which will be analyzed. Retail Food Group Ltd is
an Australian Multinational Company which is engaged in running of numerous businesses
which provides food products to the customers (Retail Food Group., 2018).
Discussion
Objectives of Conceptual Framework
The role of conceptual framework in a business is evident from preparation of the
financial statements which are prepared by the business. As per the requirement of the
conceptual framework, the management of the Retail Food Group Ltd has effectively prepared
the financial statements of the business following all relevant provisions of Australian
Accounting Standard Board (AASB) and Corporate Act 2001.

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In addition to this, the annual reports of the business is prepared after adhering to the
provisions which are applicable in International Accounting Standard Board (IASB) and
International Financial Reporting (IFRS) Framework (Baker and Burlaud, 2015). The objectives
of conceptual framework are specific and the same needs to be satisfied by the Retail Food
Group Ltd while preparing the annual reports of the business. The objectives are stated below in
details:
 One of the main objectives of Conceptual framework which is followed by businesses is
to be accountability of every business to provide useful and valuable information to the
users of the financial statements (Zhang and Andrew, 2014). As per the financial reports
which are prepared by the business for the year all crucial information regarding
important treatments, complex transactions and appropriate notes to accounts are shown
in the annual reports of the business (Weil, Schipper and Francis, 2013). The financial
statements of any business mainly comprise of income statement, balance sheet and cash
flow statement and all these statements are shown in the annual reports of Retail Food
Group Ltd.
 Another objective which is associated with the conceptual framework for preparing a
financial statement is to supply the users with all necessary information in a timely
manner and also provide information which are related to uncertainties which might be
present in the cash flow statement of the business (Lawson et al. 2013). In the case Retail
Food Group ltd, the cash flow statement is showing a clear view of the cash inflows and
outflows of the business depicting all the items and uncertainties if any present in the
annual report of the business. An extract of the cash flow statement is shown below:

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The cash flow statement which is prepared by the business for the year 2017 is shown
above which represents all the cash flows of the business and also depicts the major sources of
funds and major expenses which lead to cash outflow of the business.
 Th third important objective of the conceptual framework is to reveal to the users of the
financial statements all the crucial information of the businesses such as what activities

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are undertaken by the business, how much funds are invested in the business, what are
major expenses which the business needs to incur. The profit and loss statement which is
prepared by the business for the year 2017 shows all relevant income and expenses which
are undertaken by the management during the period. Therefore, it can be said that the
annual report of the business reveals all relevant information and therefore the business
of Retail Food Group Ltd is in compliance.
Recognition Criteria of Conceptual Framework
The recognition criteria of conceptual framework refer to the important items which are
to be recognized and represented in the financial statement of the business and these are to be
mandatorily recognized in the annual reports of the business. The items which are to be
recognized in the financial statements are income, expenses, assets and liabilities of the business.
The items should be fairly represented and should be showing true view of the financial situation
of the business (Barth, 2013). The significant items which are recognized in the financial
statements of the company are listed below:
 Assets: The assets of the business are used by businesses to earn revenues and profits for
the business. The balance sheet of the company shows property, plant and equipment,
intangible assets and other significant current assets of the business which are cash,
debtors, inventories and the same are fairly represented. The depreciation and impairment
amount which are incurred on the assets are also shown in the financial statements of the
business. Therefore, the assets section of the annual reports are fairly represented as per
the recognition criteria of the business.
 Liabilities: The liabilities of the business are also shown in the balance sheet which is
prepared for the year 2017. The liabilities comprise of provisions, borrowings and other

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current liabilities of the business. In addition to this, proper notes are maintained in the
annual reports of the business (Müller, 2014).
 Equity: The equity of the business represents the capital fund which is available for the
managing the day to day finance requirements of the business. The equity sections of the
business shows issued capital, reserves and retained earnings of the business.
 Revenues: The revenues of the business are shown in the profit and loss statements of
the business. The main source of revenue for the business is sales of inventories from
different business sources of Retail Food Group Ltd.
 Expenses: The expenses of the Retail Food Group Ltd are shown in the profit and loss of
the company for the year 2017. The major expenses of the business are cost of sales and
other operating expenses which are shown in the profit and loss statement of the business.
Thus, on the basis of the discussion of the various aspects which are shown in the financial
statements of the business, it is evident that the business has effectively followed all the relevant
provisions which are associated with the recognition criteria of a financial statement.
Qualitative Characteristics of Financial Statement
The qualitative characteristics which should be present in a financial statement to be
effective are shown below in details:
 Relevance: This feature states that the financial statements should contain relevant
information which are present in the annual reports of the business as to ensure that
annual report of the business are presented in a fair manner (Khan, 2015). The
management of Retail Food Group Ltd has effectively followed all the relevant

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accounting standards, policies and practices which are necessary for preparing the
financial statements of the company.
 Faithful Representation: This principle states that the annual report should be showing
financial information in a fair manner and the same should be transparently displayed by
the management. As per the audit report of PwC, the financial statements of the business
are showing correct view and therefore the same proves that the data which is displayed
in the annual reports of the business are faithfully represented.
 Comparability: This principle recognizes that financial statements which are prepared
by the company should be such that financial information are comparable from one year
to another and also with financial information of other businesses (Kim, Kraft and Ryan,
2013). The financial statement of Retail Food Group Ltd contains notes to accounts and
various graphs and presentations which help in comparability of the financial
information.
 Verifiability: This principle states that the financial information which is shown in
annual reports of Retail Food Group Ltd must be capable of being verified by the users of
financial statements (Kim et al. 2016). The business has also provided proper notes to
financial statements in the annual reports of the business.
 Timeliness: This shows that the financial statements of the business should be prepared
and published in a timely manner. The financial reports which are prepared by the
business are shown on yearly basis (Cascino et al. 2014). And interim reports are
prepared by the business on quarterly basis.
 Understandability: The financial statements of the business should be such that the
same are understandable and simple for the users to understand. The annual reports of

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Retail Food Group ltd is shown in a precise format and the same contains appropriate
notes and the same is understandable for the users.
Conclusion
As per the discussion above, the financial statement which is prepared by the
management of Retail Food Group Ltd follows all relevant accounting standards which are as per
AASB and the corporation Act 2001. In addition to this, the business follows IFRS and IASB
framework for the purpose of preparation and presentation of financial statements of the
business. The business also follows recognition criteria for all expenses, incomes, assets and
liabilities of the business which adds more creditability to the annual reports which is prepared
by the business.
The business follows all relevant rules and regulations with relation to tax, depreciation
and other regulations as well. The conceptual framework of the business should be followed
effectively for ensuring all relevant information are shown in the annual reports of the business.

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Reference
Baker, C.R. and Burlaud, A., 2015. The historical evolution from accounting theory to
conceptual framework in financial standards setting. The CPA Journal, 85(8), p.54.
Barth, M.E., 2013. Measurement in financial reporting: The need for concepts. Accounting
Horizons, 28(2), pp.331-352.
Cascino, S., Clatworthy, M., Garcia Osma, B., Gassen, J., Imam, S. and Jeanjean, T., 2014. Who
uses financial reports and for what purpose? Evidence from capital providers. Accounting in
Europe, 11(2), pp.185-209.
Khan, M., 2015. Accounting: Financial. In Encyclopedia of Public Administration and Public
Policy, Third Edition-5 Volume Set (pp. 1-6). Routledge.
Kim, J.B., Li, L., Lu, L.Y. and Yu, Y., 2016. Financial statement comparability and expected
crash risk. Journal of Accounting and Economics, 61(2-3), pp.294-312.
Kim, S., Kraft, P. and Ryan, S.G., 2013. Financial statement comparability and credit
risk. Review of Accounting Studies, 18(3), pp.783-823.\
Lawson, R.A., Blocher, E.J., Brewer, P.C., Cokins, G., Sorensen, J.E., Stout, D.E., Sundem,
G.L., Wolcott, S.K. and Wouters, M.J., 2013. Focusing accounting curricula on students' long-
run careers: Recommendations for an integrated competency-based framework for accounting
education. Issues in Accounting Education, 29(2), pp.295-317.
Macve, R., 2015. A Conceptual Framework for Financial Accounting and Reporting: Vision,
Tool, Or Threat?. Routledge.

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Müller, J., 2014. An accounting revolution? The financialisation of standard setting. Critical
Perspectives on Accounting, 25(7), pp.539-557.
Retail Food Group. 2018. Annual Reports - Retail Food Group. [online] Available at:
http://www.rfg.com.au/shareholder-center/annual-reports/ [Accessed 11 Aug. 2018].
Weil, R.L., Schipper, K. and Francis, J., 2013. Financial accounting: an introduction to
concepts, methods and uses. Cengage Learning.
Zhang, Y. and Andrew, J., 2014. Financialisation and the conceptual framework. Critical
perspectives on accounting, 25(1), pp.17-26.