ACC301: Analysis of Contemporary Accounting Framework Issues

This report analyzes the revised (2018) conceptual framework for financial reporting, focusing on its role in assisting the IASB in creating and reviewing IFRS, and its utility for financial statement makers. It addresses criticisms of the 2010 framework, highlighting issues such as lack of clarity and insufficient data for users. The report examines key concepts like general-purpose financial reporting, emphasizing the need for relevant data for primary users. It also discusses prudence, including asymmetrical prudence, and the importance of substance over form. The report uses references to support its analysis, providing a comprehensive overview of the framework's evolution and key elements. The report provides a critical review of the conceptual framework, offering suggestions for improvement and highlighting its importance in financial reporting.

Company Accounting

Role of Conceptual Framework
 A conceptual framework has important role in the accounting.
 A main purpose of conceptual framework is helping International
Accounting Standards Board to create IFRS along with reviewing
existing International Financial Reporting Standards.
 It can be more useful for financial statements makers for establishing
accounting policies to deal along with event not involved by current
standards.

Issues of
conceptual framework 2010
 For various reasons, the conceptual framework 2010 was criticized.
The conceptual framework 2010 has no clarity.
 It is not in support of updated thinking of AASB. It also does not have
certain important concepts related to accounting.
 It lacks the important data and information for the users.
 Due to the challenges and issues of conceptual framework 2010, the
new conceptual framework are adopted by AMP GROUP LTD.

General Purpose Financial
Reporting
 In new conceptual framework, an objective of General purpose
financial reporting is for rendering data data, which is useful for
future along with current equity investors, creditors and lenders for
taking decision in the capital provider’s capacity.
 General purpose financial reports cannot capable to render the data
required by users for making economical decisions.

 It may be helpful for other people like prudential regulators along with
market regulators, but not for primary users
 In my opinion, the general-purpose financial reports are required to
consider relevant data from different sources along with financial
resources.
 It is suggested to AMP GROUP LTD that general-purpose financial
reports should have all the data that can be relevant for primary
users.

Prudence
 The prudence is one of the very
significant concept concepts
(Henderson, et. al, 2015).
 The prudence refers to certain cautious
level, which ends overstatement of
assets along with incomes, as well as
understatement of liabilities along with
expenditures.

Asymmetrical Prudent
 The other important accounting concept is Asymmetrical Prudent.
 The asymmetrical prudence takes place while the accountants
make judgments regarding the liabilities and assets in
uncertainty’s conditions But there is difference amid cautious
prudence and asymmetrical prudence (ifrs.org., 2017b).
 A major function of asymmetrical prudence is for making
accounting treatments for liabilities and incomes for the one time.

 As per the new conceptual framework, the company is advised
to describe the prudence as the caution’s exercise while
passing judgement regarding the uncertainty (Glockner,
2016).
 It can say that the redefinition of prudence is better concept in
the conceptual framework from the side board.

Substance over form
 The substance over form is one of the major
accounting concept (Disle, et. al, 2016).
 It is stated by the substance over form that the
accountant of corporation have lot of
accountabilities at accounting period.
 With having the substance over form, all the
liabilities along with assets of the company state
the true value of them.

 While International Accounting Standards Board drafted Substance
over form and faithful representation in 2010, this clarification was
considered as dismissed in light of the faithful representation concept.
 According to the my opinion, the contract’s terms should normally be
read in the light of laws on that the contract is based.

References
 Henderson, S., Peirson, G., Herbohn, K. and Howieson, B. (2015)
Issues in financial accounting. Australia: Pearson Higher Education AU
 ifrs.org. (2017) STAFF PAPER May 2014 REG IASB Meeting. [online]
Available at:
https://www.ifrs.org/Meetings/MeetingDocs/IASB/2014/May/AP10I-
Conceptual%20Framework.pdf [Accessed on: 03/09/2019].
 Disle, C., Périer, S., Bertrand, F., Gonthier-Besacier, N. and Protin, P.
(2016) Business Model and Financial Reporting: How has the Concept
been Integrated into the IFRS Framework?. Comptabilité-Contrôle-
Audit, 22(1), pp.85-119.
 Glockner, A. (2016) New development: The protective role of
conservatism in public sector accounting. Public Money &
Management, 36(7), pp.527-530.