Accounting Theory and Issues: Compliance Analysis Report 2017

This report analyzes contemporary accounting issues, focusing on compliance with general purpose accounting standards. It examines how organizations, particularly TPG Telecom, adhere to these standards and the impact on financial statements. The report explores key concepts like prudence and fair value, assessing their application in financial reporting. It includes an analysis of TPG Telecom's annual report, evaluating its compliance with Australian Accounting Standards (AASB) and the Corporations Regulation 2001. The report concludes that the company generally adheres to these standards, providing clear and concise financial statements. It also highlights the importance of auditor's reports in verifying the accuracy of financial disclosures and offers recommendations for continued compliance and transparency in financial reporting. The report emphasizes the significance of general-purpose reporting frameworks in providing a basis for comparison and ensuring accurate information for stakeholders.

Accounting theory
and issues

1
By student name
Professor
Date: 31 August, 2017.
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Executive Summary
In this project, we will be discussing the concerns in modern contemporary accounting,
and whether or not the standards that are set by the general purpose accounting standards are
followed by the organisation. In addition, what implications do it has in the overall accounting
policies and the impact it has on the profit of the company. These standards are developed by
eminent bodies to support the organisations in showing the true state of affairs of their
financial statements. It consists of an in-depth analysis of the standards that are followed by
the organisations and to what extent they have successful in doing that. These standards often
require a lot of technical clarity to be followed and the same must be practiced by the
organisation in large. This report will analyse the overall effectiveness of the companies
involved in complying with the set standards as per the reporting framework that has been
issued by the major bodies. In this the extracted reports from the annual report of the company
has been attached to know how the company is functioning and to what level, it has complied
with the set standards.
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Contents
Introduction………………………………………………………………………………………………….….4
Concept and Analysis……………………...................................................................... 5
Conclusions and recommendations......................................................................13
References............................................................................................................ 15
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Introduction
The modern day accounting framework has laid down, certain measures that must be
followed for the preparation and presentation of the financial statements; this is for the benefit
of the user, so that they can take important decisions without any issues. These standards are
designed in such a way so that the business is able to reflect their true position and proper
disclosure regarding these policies must be given in the books of account. This is the beauty of
the modern day accounting system, where the complicated issues can be presented in the
simplest of form by following certain principles (Maynard, 2017) The same is very importat
because the users of these financial statements depends on the same to take majord ecsions,
hence these statements must be prepared with utmost clarity and free from all issues (Guragai
et al., 2017).
The general purpose accounting framework has been designed to support the general
purpose financial reporting, in which the accrual method of accounting is followed. Where the
transactions are recorded in the financial statement and than they are disclosed based on what
relates to that specific period. The general-purpose financial reports are prepared by the
organisations that contain all the details of the company’s financial, and consist of major
financial statements, like the income statement, the balance sheet and the equity statement.
They are prepared to help the investors in taking important decisions with regard to the
company (Malone et al., 2016). It provides a snapshot of the entire financials of the company
and where the company stands in the financial world. A conceptual framework consists of a
large number of variations and analytical tools and contexts that helps the organisations in
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making conceptual decisions. It helps in organizing the overall idea that the main purpose of the
financial reporting is to show and fair view of the financial position of the company. In this
report we will analyse the financial report of atop listing company and see how far the company
was successful in reporting its financials as per the general purpose reporting framework that
was followed in that organisation (Minnis & Sutherland, 2017).
Analysis
Prudence is an important factor that must be followed by these companies at large. It
relates to the fact that the companies must reflect and disclose only that income or expense in
their financial statements that is related to that specific period for which the report has been
prepared. It helps in disclosing the accurate profit that relates to acertain period and hence
reduces the overall errors or discrpencies that might be involved in the system.It is important to
follow the same, to make sure that the company do not recognise the future profit or loss that
they may incur in their present books of accounts. This will lead to non-disclosure of genuine
profits and affect the overall profitability of the company concerned, and the decisions of the
investors (Auken, 2016). The main concept behind this principle of prudence is to prevent the
recording and measure of the assets, liabilities, incomes and expenses on the linearity basis
Which menas that the figures that are incurred in the current eriod are recorded in the future.r
(Werner, 2017) It is done to prevent the wrong disclosure of the overall profit but to also help
the management of the in preparation of the financial reports. Example like internally
generated intangibles recognition in the books are being prevented in the IFRS. In adition to
that there is also major disclosures in reation to what items should be part of the OCI and what
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items should be shown in the PL of the company. As per the reporting framework the company
must prepare its report on the basis of the current cost assumption that pertains to adoption of
the total fair value and abolition of the overall historical cost. These are the few methods by
which the company can reinstate the concept of framework reporting in the accounts that they
prepare. By following this methods, they can comply with the general purpose accounting.
(Venezia, 2017).
TPG telecom limited is a leading Australian telecommunication and IT Company. It
provides a large number of services to the people that include mobile telephone services along
with consumer and business internet services. It is the one of the largest internet providers in
the country and is listed in the top 100 countries in Australia.The company prepares its annual
report as per the guidelines that has been issued by the AASB, that states the general
framework reprting principles and method (Werner, 2017). In this report, we will analyse the
financial reporting of the company and see to what level was it in sync with the general-
purpose reporting framework that was designed for these reporting entities. As per the
consolidated statements for the year ending 2016, the total assets of the company are $3771m,
the total share capital is $1051.9m and the total reserves of the company are $41.2 million. It
also shows that the profit for the year is $384.6m, where as in 2015 it was $256.0m , so it
shows that there has been an increase in the overall profit that the company has earned. Now
the facts to be seen are how much was the company successful in following the frameworks
that were issued of for the financial statements reporting. An extract of the financial reports
have been given below (Gerrans & Hershey, 2016).
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Going by the specified details it can be said that, the company has prepared its
consolidated financial statements following the Australian Accounting Standards and the
Corporations Regulation, 2001in its accounting framework. It has successfully complied with the
major guidelines that has been issued by these boards and prepared its annual report keeping
in mind the same.The major principles that the company has followed have been applied in
the preparation of the financial statements and disclosed in the notes to account. Fair value
measurement has been followed instead of historical costs (Chiapello, 2017).
All the necessary explanation shave been given in the notes to account of the company.
In case of any material departure, the same ahs was stated in the books of account, and
disclosure has been given. The books are prepared in such manner that it is easy to understand
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and reliable. All the necessary qualities like relevancy and appropriateness have been taken into
consideration while formation of these financial reports (Lo & Rogo, 2017). The same can be
cross checked by the auditor’s report that has given an opinion that the reports are free from
any kind of dicripenices are showing the true and fair state of the company’s financial. The
accounts have been prepared as per the fair value assumptions and major disclosures regarding
the same have been given. The properly plant equipment, the intangible assets and the
inventories all are valued as per the basic fair value assumptions and other trade receivables
are also valued on the basis of the fair value. Thus, this shows that the company is complying
with the standards that have been set up by the AASB, and following the policy to prudence
that supports fair value assumptions (Chariri, 2017).
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Few important disclosures that has been given in the auditor’s report is that the overall
reporting of the company is true and fair, basic highlights includes- Disclosure on the basis of
fair value of accounting, presentation of the consolidated statements with proper following of
the prudence principles (Bond et al., 2016). The auditor has steed in his opinion that the
accounts of the company has been prepared as per the Corporation Act 2001, it has followed
the International Financial Reporting Standards that has been disclosed as per the directors
report. The directors have stated in their declaration that the accounts of the company has
been prepared as per the financial reporting framework and proper disclosures in regard to the
same has been given in the books of account. The same has been recognised by the auditor of
the company and has been stated in the independent audit report (Birt et al., 2017)
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.
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Recommendation
After examination of the specified company, it can be said that the most important aim
of the government is to prepare the financial statements that are as per the needs of the
management and that helps in providing accurate information to the stakeholders. The
companies prepare this report so that the stakeholders that include the government, the public
at large, the investors, important decisions with regard to their investing policies. Therefore,
these reports help in providing the accurate information when they are prepared as per the
standards that have been set up by the reporting entities. It is important that the companies
must comply for the same and should see that the businesses are able to follow the various
details that have been mentioned in these reporting frameworks (Aithal, 2017). Any kind of
deviation must be properly reported and disclosed so that the people who use these
statements and aware of the same. Audit of the financial statements is very important so that,
any kind of errors can be easily identified and rectified by the company. Therefore, by this the
companies will be able to show the true and fair view of their exsisting financial conditions and
can make a declaration of the same in their financial statements. Following the concept of
prudence is very important it discloses the true facts of the business, disclosing what is related
to that period of accounting and eliminating the same (Appiah et al., 2017).
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Conclusion
After the entire analysis, it can be concluded that the given company was successful in
following the principles that were laid down by the general purpose reporting entities. It also
disclosed all the necessary assumptions and stated all the relevant facts about the same. The
statements that are prepared are clear and concise and show the true state of affairs of the
business. It is very helpful for the investors to take important decisions, an s it is very open to
the facts. In case of any discrepancies, the management can be held and the auditor has given a
disclosure from his end that the statements are free from all errors. This general purpose-
reporting framework helps in making the work of the people who prepare these statements
and the auditors who comments on the same, by giving them a basis and standard for
comparison and reporting. This will help the companies in understanding the areas where there
might be some kind of error, and what is important that the companies should focus on these
areas with complain aces to the general-purpose reporting framework. This is the way these
frameworks can be helpful to the companies and to the people who sues these statements at
large. It will help in improving the overall viability and relevance of the financial statements that
are prepared by the companies at large (Abbott & Kantor, 2017).
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References
Abbott, M. & Kantor, A.T., 2017. Fair Value Measurement and Mandated Accounting Changes: The Case
of the Victorian Rail Track Corporation. Australian accounting Review.
Aithal, P.S., 2017. Industry Analysis – the First Step in Business Management Scholarly Research.
International Journal of Case Studies in Business, IT and Education, 1(1), pp.1-13.
Appiah et al., 2017. Corporate governance and records management in private and public hospitals in
Ghana. Records Management Journal, 27(1), pp.42-56.
Auken, S.V., 2016. Assessing the role of business faculty values and background in the recognition of an
ethical dilemma. Journal of Education for Business, 91(4), pp.211-18.
Birt, J.L., Muthusamy, K. & Bir, P., 2017. "XBRL and the qualitative characteristics of useful financial
information". Accounting Research Journal, 30(1), pp.107-26.
Bond, D., Govendir, B. & Wells, P., 2016. An evaluation of asset impairments by Australian firms and
whether they were impacted by AASB 136. Accounting and Finance, 56(1), pp.259-88.
Chariri, A., 2017. FINANCIAL REPORTING PRACTICE AS A RITUAL: UNDERSTANDING ACCOUNTING
WITHIN INSTITUTIONAL FRAMEWORK. Journal of Economics, Business and Accountancy, 14(1).
Chiapello, E., 2017. Critical accounting research and neoliberalism. Critical Perspectives on Accounting,
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Gerrans, P. & Hershey, D.A., 2016. Financial Adviser Anxiety, Financial Literacy, and Financial Advice
Seeking. Journal of Consumer Affairs, 51(1), pp.54-90.
Guragai, B., Hunt, N.C., Neri, M.P. & Taylor, E.Z., 2017. Accounting Information Systems and Ethics
Research: Review, Synthesis, and the Future. Journal of Information Systems: Summer 2017, 31(2),
pp.65-81.
Lo, K. & Rogo, R., 2017. Earnnings management and report readability. Journal Of Accouting and
Economics, 63(1), pp.1-25.
Malone, L., Tarca, A. & Wee, M., 2016. IFRS non-GAAP earnings disclosures and fair value measurement.
Accounting and Finance/, 56(1), pp.59-97.
Maynard, J., 2017. Financial accounting reporting and analysis. 2nd ed. United Kingdom: Oxford
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Minnis, M. & Sutherland, A., 2017. Financial Statements as Monitoring Mechanism: Evidence from small
Commercial loans. Journal Of Accounting Research, 55(1), pp.197-233.
Venezia, I., 2017. Behavioral Finance: 'Where Do Investors'' Biases Come From?'. Singapore: WORLD
SCIENTIFIC.
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Werner, M., 2017. Financial process mining - Accounting data structure dependent control flow
inference. International Journal of Accounting Information Systems, 25, pp.57-80.
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