Accounting Theory: Frameworks, IFRS, and Sustainability Report

This report delves into contemporary accounting theory, examining the evolution of conceptual frameworks in the USA, UK, Australia, and globally under the International Accounting Standard Boards (IASB). It discusses the concerns of Australian accounting professionals regarding the application of IASB and IFRS, and analyzes academic perspectives on the quality of financial reporting. The report explores the adoption of conceptual accounting frameworks by Synlait Milk Limited, including the preparation of financial statements and the use of IFRS. It also compares and contrasts sustainability reporting guidelines of the Global Reporting Initiative and the International Integrated Reporting Frameworks, examining the rigour of conventional accounting in relation to these reports. Furthermore, it discusses the applicability of sustainability theories, and presents an index of integrated report components, using Pioneer Food Group Ltd. as an example. The report concludes with an analysis of Synlait Milk Limited's integrated reporting practices and a comparison with Pioneer Food Group Ltd. This report provides a comprehensive overview of accounting theories and their practical applications.

Contemporary Accounting Theory

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
A) History and development of Conceptual frameworks of financial reporting in USA, UK,
Australia and globally under International Accounting Standard Boards...................................1
B) Discussing concerns of various Australian professions in context to application of IASB
and IFRS for financial reporting purpose. ..................................................................................3
C) Discussing academic's concerns about quality of financial reporting as per the reviews of
Journal articles.............................................................................................................................4
D) Explaining adoption of conceptual accounting frameworks by Synlait Milk Limited
Foreign Exempt NZX for preparing various financial reports of the company..........................5
PART B............................................................................................................................................7
A) Comparing and contrasting sustainability reporting of global reporting initiative and
international integrated reporting frameworks of international reporting council for reporting
corporate social responsibility ....................................................................................................7
B) Explaining rigour of conventional accounting for conceptual framework for financial
reporting in context to sustainability and integrated reports........................................................7
C) Discussing applicability of theories of sustainability as well as integrated reports................8
D) Preparing index of various components of integrated reports and adoption of these
components in Pioneer Food Group Ltd. For disclosing information.........................................9
E) Discussing preparation of integrated reports by Synlait Milk Limited Foreign Exempt NZX
for reporting corporate social responsibilities along with comparison of Pioneer Food Group
Ltd.'s adoption of integrated reports ........................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Accounting theories are combination of a range of assumptions, guidelines and
methodologies that are needed to be adopted by each companies of a country on which these
theories are applicable (GABIE, 2018) . Further, contemporary accounting theories are those
assumptions and methodologies that are being used by the organisations for the purpose of
determining the values of assets and liabilities of business. In the present assignment, a brief
review of the history and development of conceptual framework for financial reporting of in
different countries and at global level has been shown. It provides a brief discussion about
concerns of different Australian accounting professionals regarding application of IASB and
IFRS over various companies for developing their financial reporting. It provides information
about how Synlait Milk Limited Foreign Exempt NZX uses IASB and IFRS for the purpose of
preparing its financial statements and several notes to the accounts.
Furthermore, the study provides information about a comparison and contrast of sustainability
reporting guidelines of Global reporting initiative and along with rigour of the conventional accounting
and major contents of sustainability and integrates reports. Moreover, it provides a brief discussion about
applicability of different accounting theories. At the end of report it also shows how Pioneer Food Group
Ltd. Adopts accounting theories and principles of IASB and IFRS for preparing its integrated reports for
the purpose of reporting the corporate social responsibilities fulfilled by it.
PART A
A) History and development of Conceptual frameworks of financial reporting in USA, UK,
Australia and globally under International Accounting Standard Boards
Accounting reports developed by the companies before 1929, when no accounting
reporting frameworks was in existence, the business units were not able to develop effective
accounting statements. In addition, the reports developed by the companies were unable to be
compared. In the earliest time the concept and principles of conceptual frameworks was
developed in USA (Zeelie, 2018) . It was combination of a range of basic assumptions of
financial reporting. The assumptions were about valuation of numerous assets, and liabilities on
the basis of their life and forecasting of company.
In USA some regulations were developed in this regard. Securities and Exchange Act
1934 was one of the major standards developed by the USA accounting committee. The key goal
of this Act was to develop controlling measures and accounting standards regarding reporting of
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various financial activities of business. Further, between 1940 and 1950, Accounting institute's
committee and staff of SEC' committee put various controversial issues regarding existing
accounting theories and frameworks regarding development of unusual income statements and
balance sheets due to ineffectiveness of the conceptual accounting theories and frameworks. It
resulted in development of effective conceptual frameworks by financial accounting statendard
boards (FASB) of USA. A range of conceptual accounting standards were developed by FASB
with a aim to improve efficiency in the accounting reports developed by all the firms of the
country and developing Qualitative characteristics in them as well.
After development of conceptual frameworks in USA, UK also take various steps for
developing accounting theories for providing effective guidelines to the companies of UK. A
committee council of various accounting professionals was framed by the Government of UK
with the name Financial reporting Council (FRC) the major objective behind development of this
council was to promote all the accounting theories and their importance with the view of quality
in company's financial reports (The Conceptual Framework in the United Kingdom and the
Introduction of the Statement of Principles, 2018). In between 1995 and 1999, the Accounting
standard board developed various conceptual accounting frameworks on the basis of working of
the Financial Accounting standards Boards (FASB). It results in development of more effective
frameworks for financial reporting of UK's company. All these standards and accounting
frameworks helped in development of same mindset of each company towards preparation of
accounting their financial reports so as ti improve comparability of the income statements.
Analysing the interest of stakeholders towards more effective and comparable accounting
reports, the Australian government also realized the need of developing conceptual accounting
frameworks. In order to this, Australian Accounting standard board (AASB) was given
responsibility to derive effective frameworks, guidelines and methodologies for improving
sustainability, comparability and other qualitative characteristics of accounting reports generated
by numerous companies (Garba, and Oviosa, 2019).
After realizing improvement in the quality of accounting frameworks, the International
accounting standard board realized the need of development of the conceptual framework in the
accounting theories at international level so as to developing comparability in the financial
statements of the companies working at global market. Development of global level accounting
standards helped international companies in maintenance of sustainability in the financial
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statements of all the businesses held by them in the global market and analysing their actual
profitability.
B) Discussing concerns of various Australian professions in context to application of IASB and
IFRS for financial reporting purpose.
The Australian Government adopted International Financial Reporting Standards (IFRS)
in the year 2005. Although, the Australian Accounting standard Board made several changes in
the IFRS as per the needs of Australian companies before implementing them into the country. S
on the adoption of IFRS by Australia, a range of accounting professions provided their
views as under:
as per the views of (Zafiropoulos, Alison and Heard, 2019) All those companies that
adopts guidelines mentioned in the conceptual accounting theories becomes able to improve the
quality of determining fair values of all the assets and liabilities held by it. In addition their also
effectively fulfills all the disclosure requirements of the company. In contrary to this,
(Shiyanbola, Adeyemi, and Adelakun, 2015) says that in Australia number of public companies
adopting methodologies and guidelines provided by IFRS are very low.
Further, (Mita, Utama, and Wulandari, 2018) says that implementation of IFRS and
fulfillment of all the requirements while preparing financial reports helps in providing all the
major and relevant information to the users of financial reports. It improves the productivity of
all the financial statements of the company. Moreover, as per the views of (Dhliwayo, 2018)
IFRS makes the company to disclose all the major changes made by the business during the
specific time period including expansion, change in implementation of methods and other
concepts adopted by t5he company, etc. it helps the company in providing making its investors,
stakeholders and other key persons of the company about each major effects made within the
company's financial reports.
In addition to these comments, (San-Jose, and Retolaza, 2018) says that as various
guidelines of Australian accounting standards and international accounting standards, there may
be occurrence of differences in the assumptions of companies adopted for the purpose of
preparing the financial reports. It can be resulted in reducing comparability of the company's
financial reporting which is the one of the main goal behind creation of a large number of
conceptual accounting theoretical principles and implementing them within the country.
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C) Discussing academic's concerns about quality of financial reporting as per the reviews of
Journal articles
Australian Government has developed Australian Accounting standard boards that deals
with development of effective accounting theories, guidelines and methodologies whenever it is
needed in the country along with monitoring and controlling adoption of these theories by
various companies (Journal of Accountancy,3500 2019.). In addition, guidelines of International
Financial reporting standards (IFRS) has been within all over the country by AASB so as to
improving the quality of the financial reports of country. Further, all those companies that adopts
these standards helps their stakeholders in improving the efficiency of the decision making of
stakeholders.
As per the article published for showing the qualitative characteristics of the financial
reports, a report developed by adopting the accounting standards and methodologies of
accounting frameworks, can be termed as more relevant, as the IFRS provides various disclosure
and valuation guidelines that makes the companies in disclosing all the major information about
the financial and non financial activities performed by a business organisation. In this order, it
also helps in developing faith and trusts of all the stakeholders, investors and other key persons
of the company.
Furthermore, the IFRS and IASB provides various guidelines for countries for the
purpose of valuing assets and liabilities. It helps in improving the recognition of the overall
financial statements of the firms (Hillier, Hodgson, and Ngole, 2016). In addition, it also
includes numerous guidelines for companies so as to help them in measuring value of various
assets held by the business organisation. In this regard, it improves quality of valuation method
adopted by the business. Further, it also includes a range of factors that are needed to be taken
into consideration while valuing the assets so that actual value of all the assets and liabilities
could be recognised by the business and its financial statements could show the actual results of
the firm's performance.
In this regard, it can be analysed that adoption of IFRS and IASB while preparation of
accounting and financial reports can help in improving their qualitative characteristics as well.
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D) Explaining adoption of conceptual accounting frameworks by Synlait Milk Limited Foreign
Exempt NZX for preparing various financial reports of the company
The Synlait Milk Limited Foreign Exempt NZX company adopts all the conceptual
frameworks that are important to be followed by the company. Adoption of IFRS and IASB
helps in improving the quality of its financial statements and accounting reports along with
enhancing their relevance.
As per the guidelines of AASB, each company which is registered under ASX, would be
required to adopt each guidelines and methodologies provided included in the conceptual
frameworks of the accounting theories (Van Der Linde, 2017)..
In this regard, The annual reports of Synlait Milk Limited Foreign Exempt NZX shows that
the company has adopted several conceptual frameworks in the year 2018. The annual reports of
the firm for the year 2018 shows that it has prepared various reports due to the requirements of
IFRS and AASB.
Different statements prepared by the company:
Due to application of IFRS, IASB and conceptual framework accounting theories, the
Synlait Milk Limited Foreign Exempt NZX company prepares the following statements for the
purpose of showing its financial and non financial activities and determining actual amount of
profit generated by it:
Income statements
This statement contains all the operating and non operating incomes and expesnes of
made by the company during the year. In this regard, it helps in determining the actual amount of
profit and losses of the business during the financial year. The Synlait Milk Limited Foreign
Exempt NZX have adopted a policy to record the sales in the income statement at the time when the
actual recognition of sales is being occurred by the company.
statement of Comprehensive income
This statement includes all the changes made in the fair value of various assets and
liabilities of the company due to which the company has gained additional profits or additional
losses within the specific period.
Statement of change in equity
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The IFRS states that each company registered under ASX needs to prepare this statement
at the end of each financial year. This statement shows various business activities that resulted in
changing the equity or the wealth of stakeholders of the company.
Statement of financial position
Statement of financial position shows value of various assets and liabilities held by a
business organisation at the end of each year. This statement shows the actual financial position
of the company on a specific date (Larson, and Sale, 2016) . The IFRS and IASB provides
numerous guidelines with the help of which the company becomes able to develop the
appropriate value of the assets and liabilities held by the company on a specific day.
For the purpose of determining value of assets and liabilities held by the company as on a
specific date, the company reviews the value of all the assets and liabilities of the company.
Further, all the changes occurred during the year are being recognized in the statement of
financial position. In improves the accountability of the company.
Statement of cash flows
The Synlait Milk Limited Foreign Exempt NZX also prepared the statement of cash flow
statement. In this statement company records various financial activities of the business during a
particular day that resulted in the movement of cash within or outside the business organisation. In this
order, this statement helps the shareholders of the company in determining where their funds has been
used by the company.
Statement of accounting polices
It is an important statement required to be prepared by a business organisation registered
at ASX. In this statement, the company records various policies and standards adopted by the
company (Eloff, and de Villiers, 2015) . Involvement of this statement improves the
accountability and reliability of the company's accounting reports. In addition, it also improves
comparability of annual reports of the company.
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PART B
A) Comparing and contrasting sustainability reporting of global reporting initiative and
international integrated reporting frameworks of international reporting council for
reporting corporate social responsibility
Comparison between Global reporting initiative and international integrated reporting
frameworks
The Global reporting initiative provides guidelines to the company about analysing the
actual sustainability of various business activities performed by the company (GRI works with
IIRC and leading companies to eliminate reporting confusion. 2017). It is a corporate leadership
group which has been framed by the business for the purpose of providing clarification of a
range of international frameworks that can be used by a business organisation at a time and gain
the benefit of creating values and transparency within the business organisation.
On the other hand, international integrated reporting frameworks provides an effective
perspective to the companies for analysing and evaluating various risks involved in each of the
business activities of the company.
Contrasting of sustainability reporting of GRI and international integrated reporting
frameworks
Talking about the contrasting view of both GRI and international integrated reporting
frameworks, it can be analysed that key goal of improving the sustainability of the company and
providing long term benefits to the company as well.
B) Explaining rigour of conventional accounting for conceptual framework for financial
reporting in context to sustainability and integrated reports.
Conventional accounting conceptual frameworks refers to set of guidelines provided to a
company for the purpose of helping the companies in effective valuation of the company's assets
and liabilities. At the time of developing sustainability and integrated reporting, a company
needs to determine the value of all the financial and non financial changes in the company's
financial reports. Rigour of conventional accounting reporting can be analysed as under:
Advantages of conventional reporting
 It helps the company in creating simplicity in the preparation of financial reports.
 Various methodologies provided by the conventional reporting results in improving the
effectiveness of the financial reports of business (Van Niekerk, 2018) .
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 It improves the accuracy in the financial statements.
 It enhances the relevancy and transparency in various transactions recorded in the books.
Limitations of conventional reporting
 Preparation of financial reporting using these standards results in enhancing the working
accountants of company.
 Further, these reports also fails to take into consideration all the socio-economic and non
financial benefits of the company.
C) Discussing applicability of theories of sustainability as well as integrated reports
The international financial reporting standards assist in providing the organisation with the
standards for the treatment of transaction in the financial reporting. It make the financial
statement accurate and helps in easy comparison of of the financial reports of different
companies located in different countries.
Benefits of IFRS
 International financial reporting standards assist in easy comparability of the financial
reports on the basis of which the investors are able to make effective decision regarding
their investment.
 It assist in offering flexible accounting practices which can be adopted by different
organisation around the globle.
Limitation of IFRS
 Implementation of international financial reporting standards is costly due to which many
of the small business are not able to adopt this standards (Baptista, 2016).
 It is not globally accepted by many of the organisation because different countries have
their won accounting standards which are being followed by the companies.
Benefit of IAS
 International accounting standard assist in improving reporting system of the
organisation which assist in proper treatment of the transaction in the accounting records.
 It helps in comparing the statement which are prepared by different countries in order to
make effective decision.
Limitation of International accounting standard
 It is difficult to choose between different alternatives available for the treatment of
transaction (De Clercq, and Scheepers, 2016). For example, for the valuation of
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inventory there are different methods which can be adopted by the firm that consist of
LIFO , FIFO, weighted average method etc.
 The international accounting standards is the old version as there are many transaction for
which the standards are not prepared and thus International financial reporting standards
was developed.
Benefits of Conceptual framework of accounting standards
 It Guide the FASB for establishing the accounting standards and thus standards assist to
be more consistent with one another.
 It helps in improving the communication between the accountants and standard setting
authorities.
 It assist in enhancing the comparability of financial statement by reducing the alternative
accounting methods.
 It helps in enhancing the credibility of financial reporting and also assist in reducing the
accounting vulnerability.
Limitation of conceptual framework of accounting standards
 It is a time consuming and difficult to set up the conceptual framework of the accounting
standards.
 The conceptual framework may provide more guidance to the accounting and standards
setting which increases the rigidity by making it difficult to introduce new ideas.
 There may be situation were the conflict can arise between the conceptual framework
and the accounting standards that were already in use before the conceptual framework
was established.
D) Preparing index of various components of integrated reports and adoption of these
components in Pioneer Food Group Ltd. For disclosing information
The index of various components of the integrated reports of Pioneer Food Group Ltd. Are as
under:
Components of integrated reports Disclosure of information by Pioneer
Food Group Ltd.
Ethical standards The company provides higher level of
ethical consideration to its employees and
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other members. It analyses all the codes and
standards in this regard and fulfills the
responsibilities accordingly (Kamala, 2016).
Reporting and disclosures Company maintains the effective quality and
standards in the financial statements by
valuing various assets, liabilities, incomes
and expenses as well.
Remuneration Synlait Milk Limited Foreign Exempt NZX
provides appropriate amount of remuneration to
the employees for the purpose of providing
effective amount of satisfaction to them.
E) Discussing preparation of integrated reports by Synlait Milk Limited Foreign Exempt NZX for
reporting corporate social responsibilities along with comparison of Pioneer Food Group
Ltd.'s adoption of integrated reports
The annual reports of Synlait Milk Limited Foreign Exempt NZX states that for the purpose
of showing corporate social responsibility of the company, it does not prepares the integrated
reports or sustainability reports. Rather, the company prepares corporate governance reports each
year. As per the annual report 2018 of the company, it includes all the areas in which the
company fulfills the corporate social responsibilities during the year. In addition it also provides
the way in which the company has fulfilled the specific responsibility (ASX_SML_2017.pdf). In
addition, the report also shows the legal requirement of such corporate social responsibility.
The major contrast Pioneer Food Group Ltd. And Synlait Milk Limited Foreign Exempt
NZX company is that both the companies adopts methodologies and standards provided by the company
for showing the corporate social responsibilities. It helps them in effectively showing the information to
their stakeholders and maintaining transparency with them.
Further, the comparison between integrated reporting of both the companies can be analysed as
under:
Components Synlait Milk Limited Foreign
Exempt NZX
Pioneer Food Group Ltd.
Assurance N/A as the company does not Individual auditor of company
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prepares integrated reports.
Rather, it prepares corporates
governance reports that does
not include this component.
states that they takes assurance
about accuracy of various
financial reporting from
company's managers, and
other key managerial persons
of company.
Boards approval The company has developed
board committee that are being
appointed in the company for
the purpose of taking all the
effective decisions of it
(ASX_SML_2017.pdf).
As per the corporate
governance reports of the
business, the company takes
approval from the board before
taking any of the major
decisions for the company.
Remuneration As per the reports, the
company provides its
employees appropriate amount
of salaries and wages so as to
improve their interest and
efficiency in the business.
Not applicable (INTEGRATED
REPORT 2018. 2018). As
while preparing integrated
reports, the company dos not
include this component.
CONCLUSION
From the above study, it can be concluded that the conceptual frameworks in the
accounting reports helps the company in improving the accountability and sustainability of the
company. With the help of various guidelines of IFRS and IASB, a company can improve the
transparency in the financial reports of the company. Further, both Synlait Milk Limited Foreign
Exempt NZX and Pioneer Food Group Ltd adopts various guidelines and methodologies of these
standards. They also prepares various statements in this regard. It helps them in enhancing the
sustainability and accountability of the statements.
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