Accounting Theory Research Project Report: ASX Listed Companies

This report conducts a comprehensive evaluation of accounting practices, focusing on the application of accounting theory and regulatory compliance among ten ASX-listed companies within the financial sector. It examines whether these companies adhere to the Australian Accounting Standards Board (AASB) framework and the International Financial Reporting Standards (IFRS). The report analyzes the companies' financial statements, assessing their adherence to accounting principles, corporate governance, and ethical standards. It identifies and evaluates specific accounting practices, including the treatment of financial instruments, revenue recognition, and impairment. The analysis covers key aspects such as the going concern assumption, accrual accounting, and the use of historical cost methods. The report also discusses the impact of adopting new and amended accounting standards like AASB 9 and AASB 15 on the financial statements. Ultimately, the report concludes that the selected companies generally follow the prescribed accounting standards and make necessary disclosures to provide accurate financial information to stakeholders.

Running head: ACCOUNTING THEORY RESEARCH PROJECT
Accounting Theory Research project
Name of the Student
Name of the University
Author note

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ACCOUNTING THEORY RESEARCH PROJECT
Executive Summary:
The aim of this report is to evaluate the applicability of accounting practices and to analyze whether the
10 ASX Listed companies comply with all the regulatory requirements or not. The analysis is about the
accounting theory and its relevant applicability and significance. The organization must adhere to the
framework and must disclose if there is any deviation from any practice or policy. It must report if there
is any material impact due to any changes and the reasons for such material departure.

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ACCOUNTING THEORY RESEARCH PROJECT
Table of Contents
Introduction:................................................................................................................................................3
Discussion:..................................................................................................................................................4
Identification of Practices........................................................................................................................4
Evaluation of Practices............................................................................................................................4
Discussion on findings.............................................................................................................................4
Conclusion :.................................................................................................................................................9
References:................................................................................................................................................10

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ACCOUNTING THEORY RESEARCH PROJECT
Introduction:
The “Australian Accounting Standards Board” (AASB) governs the Australian accounting
standards, and the entities must comply with all the accounting standards and principles for the
preparation of financial statements. This report aims to analyze whether the 10 ASX listed companies
from the Financial sector have applied all the accounting principles and standards or not and whether
there is any difference in the presentation of the framework. The reporting entities should prepare
“General Purpose Financial Statements” for the users of financial statements to provide them with more
accurate financial information, which helps them in decision making. The report aims to examine the
application of accounting practices theoretically and to analyze the regulatory and sustainability issues.

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ACCOUNTING THEORY RESEARCH PROJECT
Discussion:
The financial reports must provide financial information to users about the economic resources of
the entity. The financial information contained in accounts will be relevant for users if they possess
qualitative characteristics like relevance and faithful representation. The information presented in
financial statements must be material and should be comparable, verifiable, and understandable to the
users of financial statements (Aasb.gov.au 2020). The companies must abide by corporate governance
and ethics to operate efficiently and effectively.
The analysis of accounting policies, practices as per the regulatory requirement for 10 listed
companies are as follows:
Basic accounting requirements: The financial statements are generally prepared
based on the Going Concern assumption, and
hence no disclosure required, but if due to any
factors, the assumption is different, then a
disclosure must be made (Kumor and
Poniatowska 2017). The accounts must be
prepared on the accrual concept and must be in
Australian Dollars, and the entity must be a
separate entity from its owners. The financial
information is accounted for under the Historical
Cost method (except certain assets and liabilities),
and companies must follow standards as per AAS
issued by AASB and interpretations as per IFRS
and IASB. All ten groups of financial sector
follow these practices.
Name:
Identification of
Practices
Evaluation of
Practices
Discussion on
findings
1. Australia and New
Zealand Banking
Group (Anz.com
The group prepares
the general-purpose
financial report as per
The useful lives are
evaluated at the end
of each accounting
The essential matters
for the current
period were

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ACCOUNTING THEORY RESEARCH PROJECT
2020) the AASs governed
by AASB, IFRS, and
IASB. The group
recognizes the
financial instruments
as per AASB 9 and
AASB 2017-6 for
impairment and
classification and
recognition of
financial assets and
liabilities
period, and the test
of impairment is
performed for
intangible assets. The
liquid assets
portfolio’s
composition
complies with the
rules and regulations
as per the board.
accounting of
Financial
Instruments, which
are held at fair
value, recognition of
divestments, and
provision for
remediation. The
group has adopted
AASB 15 due to
which some items
are now shown at
the gross amount,
which was
previously shown as
net figures in the
group’s operating
income and
expenses.
2. Australian Finance
Group Ltd
(Afgonline.com.au
2020)
The principal
activities are
mortgage origination
and lending, and the
group prepares the
report in compliance
with new and
amended standards
issued by AASB.
They have applied
AASB 9 and AASB
15 retrospectively for
recognition of
financial instruments
and revenue
The financial
instruments are
measured at fair
value through profit
or loss. The non-
traded equity
investments are
recorded at fair value
through Other
Comprehensive
Income. The group
since adopted new
amended AASB 9
and AASB 15, the
trail commission
The revised and new
standards which are
adopted by the
group does not have
any material impact
on the measurement
and disclosures on
current or earlier
periods. The trail
commission
receivable is now
not shown under
“trade and other
receivable” but
recognized as a

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ACCOUNTING THEORY RESEARCH PROJECT
recognition. The
group has presented
the segment
information in
accordance with
AASB 8.
receivable, is not
recognized as a
financial asset
anymore.
“contract asset.”
3. Westpac Banking
Corporation
(Westpac.com.au
2020)
They prepare
consolidated financial
statements as per the
regulatory
requirement report,
and the report
includes additional
disclosures made as
per USEC for their
foreign registrants.
Westpac for the yeard
ended (2019) exited
for personal financial
advice.
The group has
adopted amended
AASB 9, which
increased provision
for impairment with
consequent reduction
of retained earnings
by $722 million (net)
and due to AASB 15
reduction in retained
earnings by $5
million (net).
They consistently
apply the accounting
policies every year
unless there is any
statutory
requirement or for
better presentation.
The adoption of
revised and new
standards has a
material impact on
the group, which can
be seen by the
reduction in retained
earnings.
4. QBE Insurance Group
Limited (QBE
US 2020)
The group prepares its
financial report in US
Dollars. The premium
is accounted for as
revenue income in
P/L according to the
incidence of risk
pattern, which is
relevant for insurance.
The recoveries are
recorded at present
value based on the
The accounting
estimates and
judgments are
applied for intangible
assets, outstanding
claims liability (net),
recoverability of
deferred tax assets.
The group has not
implemented the
standards which are
revised but not
effective yet. The
group’s
underwriting profit
showed an increase
due to a decrease in
catastrophe activity.

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ACCOUNTING THEORY RESEARCH PROJECT
anticipated future
receipts
5. Australian Securities
Exchange
(Asx.com.au 2020)
The organization sets
high standards for the
execution of
Corporate
Governance and
ethics in the entity.
There is a change in
accounting policy due
to the modification of
AASB 15, which
leads to a reduction in
Listing and Issuer
Services revenue by
$11.8 million.
The accounting
policies are applied
retrospectively
without restating the
last year. The
revenue from
customers is
recorded at
transaction price, and
rebates (net amount)
will be refunded to
the customers.
Due to its corporate
responsibility and
sustainability
framework, it is a
constituent of the
FTSE4 Good Index
Series. The changes
can be seen in tax
expense and service
revenue.
6. Suncorp Group
Limited
(Suncorpgroup.com.a
u 2020)
The financial position
is reflected in
consolidated
statements in liquidity
format. There is a
change in presentation
due to the
discontinued
operations of
Australian Life
Business, according
to AASB 5.
The group has made
changes in payment
to shareholders. The
dividend (2019) will
be paid by direct
credit to
shareholder’s
Australian or New
Zealand bank
account, as this is
cost-efficient.
They have opted not
to re-state last year's
financial statement
due to changes in
standard AASB 9.
7. National Australia
Bank: (Nab.com.au
2020)
There is a change in
accounting policies
since the group for the
year ended 2019 has
followed AASB 15
The group accounts
for the interest and
expenses based on
the effective interest
method. The
There was no
material impact of
AASB 15 on the
financial statements.
The accounts are

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ACCOUNTING THEORY RESEARCH PROJECT
(Revenue from
Contracts with
Customers) for the
recording of revenues
at the time when
customer’s
requirements are met.
The group recognizes
the financial
instruments as per
AASB 9, and for
recording the
investments in equity
instruments in a
business combination,
AASB 3 applied.
significant revenue
comes from the
difference between
interest earned and
paid on financial
assets and liabilities,
respectively.
prepared on the
accounting
principles and
making the best
estimates and
judgments.
8. Insurance Australia
Group Limited
(Iag.com.au 2020)
There are significant
changes in the affairs
of the organization,
like issuance of $450
million of the
subordinated
convertible term
notes, completed its
capital management
initiative, and sale of
Thailand operations
for $515 million.
The subordinates are
recognized as Tier II
Capital. The
amortization rates
are regularly
reviewed, and
residual values are
adequately evaluated
with prospective
effect.
The significant
changes are
appropriately
accounted for and
adequately
disclosed.
9. Macquarie Group
Limited
(Static.macquarie.com
2020)
The group applies
AASB 2, for all the
PSUs offered to the
KMP. The group has
made changes in the
The fair value of
PSUs is amortized
equally over the
vesting period and
disclosed as part of
The appropriate
disclosures have
been made in the
report as per
standards. The

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ACCOUNTING THEORY RESEARCH PROJECT
presentation of its
Income Statements.
KMP’s
remuneration.
changes in the
presentation do not
affect any item or
profits.
10. Commonwealth Bank
of Australia
(Commbank.com.au
2020)
The group issues loan
capital and are
qualified as regulatory
capital under
regulations governed
by the ARPA and
RBNZ.
The issue costs,
transaction costs, and
fees will be
capitalized if they are
expended,
particularly for assets
and liabilities over its
expected life.
They have a variety
of instruments and
methods for
managing capital
effectively and
efficiently. The
capital position is
regularly monitored
and reported.
Conclusion:
However, it is to be concluded that every organization must follow accounting practices and
policies issued by the regulatory Boards for the proper conduct of operations and are responsible for
accountability and transparency. The organizations are responsible for acting ethically and maintaining
high standards for corporate governance and responsibility since they exist in a society and must
efficiently utilize the resources. All the companies which are selected are listed in the Australian Stock
Exchange, executes, and implements sustainability and environmental accounting. The organizations
follow the accounting standards as prescribed by the AASB and in accordance with IFRS and IASB. They
prepare the accounts and make necessary disclosures to provide the users of Financial Statements with
essential and accurate information, which helps them in decision making. Most of them have adopted the
new and amended standards and have accounted for significant changes in the financial statements.

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ACCOUNTING THEORY RESEARCH PROJECT
References:
Aasb.gov.au 2020. Australian Accounting Standards Board (AASB) - Home. [online] Aasb.gov.au.
Available at: https://www.aasb.gov.au/ [Accessed 14 Feb. 2020].
Afgonline.com.au 2020 Afgonline.com.au. Available at:
https://www.afgonline.com.au/wp-content/uploads/2019/08/afg-annual-report-2019.pdf (Accessed: 11
February 2020).
Anz.com 2020 Anz.com. Available at: https://www.anz.com/content/dam/anzcom/shareholder/ANZ-
2019-Annual-Report.pdf (Accessed: 11 February 2020).
Asx.com.au 2020 Asx.com.au. Available at:
https://www.asx.com.au/documents/investor-relations/AnnualReport2019.pdf (Accessed: 11 February
2020).
Commbank.com.au 2020Commbank.com.au. Available at:
https://www.commbank.com.au/content/dam/commbank/about-us/shareholders/pdfs/shareholder-
information/CBA-2019-Annual-Review.pdf (Accessed: 11 February 2020).
Iag.com.au 2020)Iag.com.au. Available at: https://www.iag.com.au/sites/default/files/Documents/Results
%20%26%20reports/IAGL-FY19-The-Numbers.pdf (Accessed: 11 February 2020).
Kumor, I. and Poniatowska, L., 2017. The going-concern assumption in the assessment of management
and auditors. Economic and Social Development: Book of Proceedings, pp.804-812.
Nab.com.au 2020 Nab.com.au. Available at:
https://www.nab.com.au/content/dam/nabrwd/documents/reports/corporate/2019-annual-financial-report-
pdf.pdf (Accessed: 11 February 2020).
QBE US 2020 Financial reports | QBE US . Available at: https://www.qbe.com/us/about-qbe/financial-
reports (Accessed: 11 February 2020).
Static.macquarie.com 2020 Static.macquarie.com. Available at:
https://static.macquarie.com/dafiles/Internet/mgl/global/shared/about/investors/results/2019/Macquarie-
Group-FY19-Annual-Report.pdf?v=9 (Accessed: 11 February 2020).
Suncorpgroup.com.au 2020Suncorpgroup.com.au. Available at:
https://www.suncorpgroup.com.au/uploads/FY19-Annual-Report_1.pdf (Accessed: 11 February 2020).

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ACCOUNTING THEORY RESEARCH PROJECT
Westpac.com.au 2020 Westpac.com.au. Available at:
https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/ic/
2019_Westpac_Group_Annual_Report.pdf (Accessed: 11 February 2020).