Holmes Institute T1 2019: Advanced Financial Accounting Report

This report provides a comprehensive overview of advanced financial accounting, commencing with an introduction to fundamental accounting concepts, principles, and terminologies. It explores the conceptual framework, emphasizing its role in establishing accounting standards and resolving disputes. The report then analyzes National Storage REIT, examining its accounting practices, conceptual framework, and adherence to Australian Accounting Standards. Key concepts such as matching, conservatism, materiality, and the going concern principle are discussed in detail. Furthermore, the report delves into the company's financial reporting, highlighting its compliance with the Corporations Act Cth 2001 and the Australian International Financial Reporting Standards. It also examines the fundamental qualitative characteristics of financial reporting data, including relevance and faithful representation. The report concludes by emphasizing the importance of a sound conceptual framework for developing reliable accounting standards and enhancing the understanding of financial statements.

Running head: REPORT 0
ADVANCED FINANCIAL ACCOUNTING
MAY 28, 2019
STUDENT DETAILS:

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Contents
Introduction................................................................................................................................2
Company overview....................................................................................................................2
Description of accounting concepts...........................................................................................2
Conceptual framework and issue of measurement.....................................................................3
Fundamental Qualitative Characteristics...................................................................................4
Conclusion..................................................................................................................................5
References..................................................................................................................................6

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Introduction
The explanation of the accounting basics address certain fundamental concepts of accounting,
accounting principles, as well as the accounting terminologies. The accounting
concept means the fundamental rules, principles, and assumptions that work as a base of
recording the transactions related to business and making accounts. This concept assumes
that, for accounting, a business entity, and the owners are 2 distinct independent companies.
The conceptual framework of company may describe as a scheme of concepts and aims that
lead to a production of the reliable and constant set of the laws, rules, and regulations. The
agreed conceptual framework is very useful for setting the standards of accounting. The
conceptual framework of company is also useful in resolving the accounting issue (Schulze,
et. al, 2016). It also state the fundamental principles to be used. The major reason for
establishing the conceptual framework is that it provides basis for solving significant dispute,
and framework for describing the standards. In the following report the accounting concepts
followed by National Storage REIT, is discussed, and assessed. The report also state
corporation’s conceptual framework, issues of measurement, and fundamental qualitative
characteristics.
Company overview
National Storage REIT is real rstate investment trust. It is the administrated within and
incorporated the operators and owners of the Australian self-storage centres. This corporation
has about 105 self-storage centres in the administration as well as operations, rendering the
solution related to the storage to above thirty-five thousands clients in New Zealand and
Australia.

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Additionally, this company administers about 59,200 units for storage through above 542,000
square meters of net settable extent in New Zealand and Australia. National Storage Property
Trust (NSPT) owns about sixty self-storage centres. There are sixteen self-storage centres,
which are functioned as long-run leasehold centres. On the other hand, there are twenty six
thousand self-storage centres, which are administrated for the South Cross Storage Group and
over three third-people administrated the centres. The self-storage centres of corporations are
placed at the Gold Coast, Christchurch, Brisbane, North Queensland, Perth, Sunshine Coast,
Geelong, Canberra, Sydney, Hobart, Melbourne, Hamilton, Wellington, and Darwin
(Bloomberg, 2018).
Description of accounting concepts
There are various theoretical issues. It is required that one should understand the accounting
concepts to establish the entity foundation of how the accounting does work. The
fundamental accounting concepts are below:
1. The concept of matching - the expenditures related to revenues must be identified in
the similar time, where the revenues were identified. From conducting this, there are
no deferrals of expenditure identification in subsequent reporting period, with the
intention of someone viewing, the financial statements of company may be
guaranteed that all the features of the transactions have noted at the similar period.
2. The conservatism concept- Revenues are only identified while there are the proper
certainty that this would be realized, where the expenditures are identified earlier,
whenever there are the reasonable possibilities that they would be earned. The
conservatism concept inclines the outcome in conventional financial statement
(Kelley and Knowles, 2016).

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3. The materiality concept- as per this accounting concept, the transactions must be
recorded while not conducting so may change the decision taken by readers of the
financial statement of corporation. It tends to effect in comparatively smaller-size
dealings being recorded, so as to the financial statements broadly show results related
to economic outcomes, statement of cash flow related to business and financial
condition (Kršeková and Pakšiová, 2015).
4. The Economic entity concept – business transaction is to be retained isolated from the
owner’s transaction. Through making this, there are no intermixing of own
transactions and the transactions related to business in the financial statements of
corporation (Gummer and Mandinach, 2015).
5. The concept of consistency- at the time when the business selects to utilise the
particular accounting method, this must continue utilising this over the go-forward
base. Through conducting this, the financial statements of company made in the
various periods may be consistently compared (Schnipper, et. al, 2015).
6. The going concern concept- The financial statements of entity are made according to
assumption that businesses would remain in the operations in the upcoming time
(Christensen, Nikolaev and Wittenberg‐Moerman, 2016). As according to the going
concern assumption, the expenses recognition as well as the revenue recognition can
be deferred to the upcoming time, while the corporation is still running. Or else, all
the expenditure recognition in particular will be accelerated in the present time.
7. Accruals concept- according to accruals concept, the revenues are recognized at the
time while they earned. In the addition of this, this concept state that the expenditures
are recognized at the time while asset is consumed. In this way, the accruals concept
addresses that the business may can identify the revenues based on the cash accepted

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from the customer or while the cash is paid to workers as well as dealers. In this way,
the auditors would only confirm the financial statements of the company that have
been made as according to the accruals concept (Geisker, and Tallis, 2018).
By analysis of company’s annual report, this is clear that the financial reports have been
made and presented as per the basis of going concern and consistency. The directors of the
corporation believed that the group would continue to make the operating cash flow to fulfil
all the obligations related to payment in an ordinary course of business (Henderson, et. al,
2015). Further, NSR diminishes the probable influences of fluctuating the financial condition
by looking for maintaining the conservative as well as strong balance sheet and the financial
condition. In this way, the estimates as well as assumptions are depended on the existing
constraints while the consolidated financial statements of company were made. The key
assumptions regarding an upcoming period and relevant major sources of the approximation
uncertainty at a reporting date, which have important risks of resulting the material
adjustments to a carrying amount of liabilities as well as assets in upcoming financial year.
In the addition of this, the company, in preparing the financial reports, incorporates the GRI
Reporting Principles. According to the GRI Principle ‘Materiality’, the financial impacts,
environmental impacts as well as social impacts were evaluated and ranked in relation to
risks to the stakeholders and company itself. The company also follows the GRI Principle
‘Stakeholder Inclusiveness’. As per this, a review of shareholders and connected engagement
through the reporting year was made, but not particularly for composing of the report.
Furthermore, according to the GRI Principle ‘Sustainability Context’, social impacts,
environmental impacts, and financial impacts of the National Storage operation was
recognised and measured. Moreover, the GRI Principle ‘Completeness’ states the GRI and
other matters involved in the report are those, which have been recognised as material to
National Storage and the shareholders in the Financial Year 2018 (Díaz, et. al, 2015).

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Conceptual framework and issue of measurement
The major purpose to develop conceptual framework is that it delivers a framework for
setting standards of accounting, and a base for resolving accounting related dispute. A
conceptual framework of the company also provides fundamental principles that do not
require repeating again regarding accounting standards. A framework to present as well as
prepare the financial statements of the organisation as changed involves the conceptual
framework for financial reporting as provided through the IASB. Conceptual framework’s
provisions of measurement cover the general purpose financial reporting, purpose of financial
reporting, the fundamental qualitative characteristics in relation to accounting information,
corporation’s financial statements measurements, as well as fundamental elements related to
the financial statements of corporation.
According to annual report of National Storage REIT, this is analysed that financial report of
this company has prepared as well as presented according to requirements of Corporation Act
Cth 2001, and commanding announcement of he AASB, and Accounting standards of
Australia. A company made the financial report according to the Australian International
Financial Reporting Standard delivered by International Accounting Standards Board and
Accounting Standards of Australia standards (Annual Report 2018). Additionally, directors
of National Storage REIT made resolution that financial statements of organisation are made
as well as presented as per Corporation Act Cth 2001. In order to make sure the compliance
with the Corporations Act 2001 as well as constitution, the accountable entity has in place the
compliance planning that sets measures this will implement in managing NSPT (Panteli and
Mancarella, 2015).

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The financial statements of organisation show true and fair view of performances of
organisation along with financial position of organisation. The corporation’s financial
statements comply with Corporations Regulations 2001 as well as accounting. National
Storage REIT adopts the significant accounting policies to create the basis from the asset’s
value, income and expenses, value of liability and equity’s value. In the addition, the
company is independent of a group according with the requirements related to the auditor’s
independence as per the Corporations Act 2001, as well as ethical provisions of APES 110
Code of Ethics of Accounting Professional and Ethical Standards Board for Skilled
Accountant, which are associated with financial auditor’s report in Australia. Company has
also complete the other ethical duties according to the code (Lewandowski, 2016).
Fundamental Qualitative Characteristics
The financial reporting data’s fundamental qualitative characteristics of include the relevance
and faithful representation. According to the fundamental qualitative characteristics of
financial reporting data, this is essential that information must be relevant towards a
requirement of user, which is subject of concern while the data influence financial decisions
taken by users. It can include the reporting specific data, or the data whose mistake and
misstatement can affect the user’s financial decisions (Bridgett, et. al, 2015).
Further, the faithful representation is also considered as other significant fundamental
qualitative characteristic. Faithful representation means to the concept stating that financial
statement of the organisation should be generated in the way to precisely show the condition
of business. With the help of corporation’s annual report, it is clear that the financial
statements of organisation render the proper as well as faithful representation. National
Storage REIT faithfully states the transactions and different events, reflects fundamental

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matters related to the event, prudently states estimates, as well as uncertainties through the
relevant disclosures. For the instance, an organisation has complied with faithful presentation
characteristics regarding the revenues -
Conclusion
According to the above discussion, it can say that non-appearance of conceptual framework
may result into making of accounting system based on rules, whose major purpose is that
treatments of the transactions related to accounting must be dispensed with inclusive
particular requirements, laws, as well as rules. In this way, rule based accounting system is
more contracted as well as uncompromising; however has financial statement’s attraction

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being equivalent and constant (Sampaio and González, 2017). The sound conceptual
framework is capable to issue helpful and reliable standards. Additionally, deprived of the
present set of standards, this is not possible to solve the new issues that develop. The
conceptual framework also enhances the financial statements reader's knowledge of and self-
assurance in financial reporting and creates this simpler to make comparison between the
different financial statements of the corporation.

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References
Annual Report (2018). National Storage REIT. Available at:
https://www.nationalstorageinvest.com.au/wp-content/uploads/sites/5/2018/09/3.-FY18-
Annual-Report.pdf. Access on 28/05/2018
Bloomberg (2018). National Storage REIT. Available at:
https://www.bloomberg.com/profile/company/NSR:AU Access on 28/05/2019
Bridgett, D.J., Burt, N.M., Edwards, E.S. and Deater-Deckard, K. (2015) Intergenerational
transmission of self-regulation: A multidisciplinary review and integrative conceptual
framework. Psychological bulletin, 141(3), p.602.
Christensen, H.B., Nikolaev, V.V. and Wittenberg‐Moerman, R. (2016) Accounting
information in financial contracting: The incomplete contract theory perspective. Journal of
accounting research, 54(2), pp.397-435.
Díaz, S., Demissew, S., Carabias, J., Joly, C., Lonsdale, M., Ash, N., Larigauderie, A.,
Adhikari, J.R., Arico, S., Báldi, A. and Bartuska, A. (2015) The IPBES Conceptual
Framework—connecting nature and people. Current Opinion in Environmental
Sustainability, 14, pp.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. Pearson Higher Education AU.

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Kelley, T.R. and Knowles, J.G. (2016) A conceptual framework for integrated STEM
education. International Journal of STEM Education, 3(1), p.11.
Kršeková, M. and Pakšiová, R. (2015) Financial reporting on information about the financial
position and financial performance in the financial statements of the public sector. Finance
and risk 2015, 14(1), pp.136-145.
Lewandowski, M. (2016) Designing the business models for circular economy—Towards the
conceptual framework. Sustainability, 8(1), p.43.
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.
Sampaio, P.G.V. and González, M.O.A. (2017) Photovoltaic solar energy: Conceptual
framework. Renewable and Sustainable Energy Reviews, 74, pp.590-601.
Schnipper, L.E., Davidson, N.E., Wollins, D.S., Tyne, C., Blayney, D.W., Blum, D., Dicker,
A.P., Ganz, P.A., Hoverman, J.R., Langdon, R. and Lyman, G.H. (2015) American Society of
Clinical Oncology statement: a conceptual framework to assess the value of cancer treatment
options. Journal of Clinical Oncology, 33(23), p.2563.
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.

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