AASB Conceptual Framework and Contemporary Accounting Issues Report

This report provides a comprehensive analysis of contemporary accounting issues for Domain Holdings Australia Limited, a newly established Australian company. The report begins by outlining the objectives of the AASB conceptual framework, which guides the preparation and presentation of financial statements in Australia. It then delves into the recognition criteria for assets, liabilities, equity, revenue, and expenses, as defined by the AASB. The report further examines the qualitative characteristics of financial information, including both fundamental characteristics like relevance and faithful representation, and enhancing characteristics such as comparability, verifiability, understandability, and timeliness. By analyzing these aspects, the report aims to shed light on the accounting policies and practices relevant to Domain Holdings, offering recommendations for improving its financial reporting efficiency and adherence to AASB standards. The report emphasizes the importance of following the AASB framework and recognition criteria for accurate and transparent financial reporting, which is crucial for stakeholders' decision-making processes.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
Name of the Student
Name of the University
Author’s Note

1CONTEMPORARY ISSUES IN ACCOUNTING
Executive Summary
The main aim this report is the analysis of different aspects of conceptual framework related to a
newly established Australian company, Domain Holdings Australia Limited. Initial section
shows the main objectives of AASB conceptual framework. The next section involves in the
discussion of the recognition criteria of assets, liability, equity, revenue and expenses as per
AASB conceptual framework. The third section shows the analysis of the qualitative
characteristics of financial information of the companies.

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Table of Contents
Introduction......................................................................................................................................3
Conceptual Framework Objectives..................................................................................................3
Recognition Criteria.........................................................................................................................5
Qualitative Characteristics of Financial Reporting..........................................................................6
Fundamental Qualitative Characteristics.....................................................................................6
Enhancing Qualitative Characteristics.........................................................................................7
Conclusion and Recommendations..................................................................................................8
References........................................................................................................................................9

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Introduction
Financial Reporting is regarded as one of the major part in the financial operations of the
companies and it is needed for the business organizations to follow all the required regulations
and principles at the time of the development and presentation of the financial statements. The
Conceptual Framework for financial reporting is an essential aspect for the business entities as it
provides the companies with all the required regulations and guiding principles for the true and
fair development and presentation of the financial statements. In Australia, the Australian
Accounting Standard Board (AASB) provides the companies with the conceptual framework for
the purpose of their financial reporting and it is the obligation on the companies to follow all the
standards of AASB conceptual framework in their financial accounting (aasb.gov.au 2018). The
main aim of this report is to shed light on diverse accounting policies for Domain Holdings
Australia Limited (Domain Holdings) as it is a newly established company in Australia. The
main operation of the company can be seen in providing multiplatform property solutions in
different regions of Australia as the Domain Holdings provides different marketing solutions for
new developments, commercial properties and residents.
Conceptual Framework Objectives
It can be observed from the above discussion that the conceptual framework of AASB is
a major tool for the companies to prepare and present the financial statements. In this context, it
is need to be mentioned that the conceptual framework of AASB has certain objectives and the
management of Domain Holdings is needed to consider these objective in every aspects of their
financial reporting. The objectives are shown below:

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First Objective: As per the AASB, the first major objective of conceptual framework is to
articulate the true financial standings of the company with the release of the required financial
information for the users of the financial statements. For this reason, the companies are needed to
publish all the required financial statements for this purpose such as income statement, balance
sheet, statement of change in equity and the statement of cash flows. Being a newly established
organization, the management of Doman Holdings must ensure the publication of above-
mentioned financial statements so that the users can assess the financial position of them by
analyzing those statements (Henderson, et al. 2015).
Second Objective: According to AASB, the next major objective of conceptual framework can
be found in showing the financial performance of the entities organizations with the help of
required financial information. The required information for jusding the financial performance of
the companies can be found in the income statements and thus, the companies are required to
ensure the release of their income statement regular basis. Hence, the management of Domain
Holdings is needed to ensure the fact that their financial statement contains all the information
about their revenue, expenses, profit and loss so that the investors and other users can assess the
financial position of their business (Nobes, 2014).
Third Objective: As per AASB, the third objective of conceptual framework is to show the
change in the financial position of the companies with the help of required financial statements.
For this reason, the business organizations are needed to release the statement of change in
equity along with the statement of cash flows for showing the change in the financial position of
the companies. As Domain Holdings is a newly established companies, at the time to the
preparation of the annual report, the management of the company must develop these two

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statements so that the investors and other uses can understand the extent to the change in the
financial position of their business (Palmer, 2013).
Recognition Criteria
It is needed for the Australian companies to pursue the provided recognition criteria of
AASB conceptual framework at the time to recognize five major financial aspects; they are
Assets, Liabilities, Revenues, Expenses and Equity. There is not any exception of this aspect in
case of Domain Holdings and the company is also needed to follow the same guidelines (Perera
and Chand, 2015). The following discussion shows the recognition criteria as per AASB
conceptual framework:
Assets: According to AASB conceptual framework, it is needed for Domain Holdings to
recognize their business assets in the statement of financial position at the time when it is
probable that there will be inflow of the future economic benefit related to the assets to the
company. At the same time, the company should be able in the correct valuation of the costs and
others associated value of the assts reliably (aasb.gov.au 2018).
Liabilities: The same aspect can be seen with the valuation of the liabilities. AASB conceptual
framework states that Domain Holdings will recognize their liability in the statement of financial
position at the time when it is probable that there will be outflow of the future economic benefits
from the side of the company and the company is able in the correct and reliable valuation of the
costs and other values associated with the liability (Potter, Ravlic and Wright, 2013).
Equity: In case of the recognition of equity, AASB conceptual framework follows almost same
rule as per the recognition of assets and liabilities. As per AASB, Domains Holdings will not
recognize any equity in case the total amount of the liability exceeds the aggregate amount

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assigned to the assets. However, for the recognition of equity, the company is needed to follow
the same regulations as per assets and liabilities (Newberry, 2015).
Revenue: According to AASB conceptual framework, Domain Holdings is needed to recognize
their revenue in the income statement at the time when there is a probability that there is inflow
or other enfacements of savings occur in the favor of the company; and the company needs to be
able in the reliable measurement of the revenue (aasb.gov.au 2018).
Expenses: As per AASB conceptual framework, it is needed to Domain Holdings to recognize
their expenses in the income statement at the time when there is a probability of the loss or
consumptions of the future economic benefits for the company resulted to the decrease in asset
or increase in liability. However, Domain Holdings must be able in the reliable measurement of
the loss or consumption of economic benefits (Budding, Grossi and Tagesson, 2014).
Qualitative Characteristics of Financial Reporting
The qualitative characteristics of financial statements are considered as crucial aspect in
the process of financial statements. The presence of both the fundamental and enhancing
qualitative characteristics make the financial information more useful for the users of the
financial statements. The management of Domain Holdings is also needed to ensure the presence
of these charatecrstcs in the financial information. They are discussed below:
Fundamental Qualitative Characteristics
Relevance: According to AASB conceptual framework, it is require for Domain Holdings to
provide all the relevant information about all the economic elements of their business such as
asset, liability, equity, revenue and expenses. In this way, the company will be able to provide
relevant financial information to their users (Lovell, 2014).

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Faithful Representation: According to AASB, it is needed for the company to consider the true
and faithful representation of their financial statements. In order to ensure that Domain Holdings
is needed to comply with all the rules of AASB, IFRS, IASB and Corporations Act in the process
of financial reporting (aasb.gov.au 2018).
Enhancing Qualitative Characteristics
Comparability: According to this particular characteristic, Domain Holdings is required to
prepare and present their financial statements in such a manner so that the users of the financial
statements become able in cmparing the financial information of their entities with the other
companies or different timeline of the same company (Biondi and Lapsley, 2014).
Verifiability: In the presence of this particular characteristic, the users of the financial statements
can reach to a conclusion about the financial position of the companies with the application of
knowledge and independent observation. Thus, Domain Holdings is needed to ensure the
presence of this characteristic in their financial statements.
Understandability: As per AASB, the companies are needed to provide all the clarification and
justification of their accounting treatment so that the users can easily understand them. In order
to comply with this, Domain Holdings is needed to provide all the clarification and justification
of their accounting treatment with the help of notes to the financial statements (Yao, Percy and
Hu, 2015).
Timeliness: In order to make the financial information available to the users at the time of their
investment decision-making, Domain Holdings must ensure the quarterly, half yearly and annual
publication of their financial statements (aasb.gov.au 2018).

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Conclusion and Recommendations
It can be observed from the above discussion that AASB conceptual framework provides
the Australian companies with all the required guidelines those they are required to comply with
in the process of financial reporting. The report shows that AASB conceptual framework has
specific objective and they have provided some basic requirement criteria for the recognition of
asset, liability, equity, revenue and expense. Based on the whole discussion, some
recommendations are provided below:
o It is recommended that Domain Holdings should take into account the objectives of
AASB conceptual framework in order to increase the efficiency of their financial
reporting.
o It is recommended that Domain Holdings is needed to follow all the provided
recognition criteria of AASB conceal framework for recognizing major financial aspects.

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References
Aasb.gov.au. (2018). Conceptual Framework for Financial Reporting. [online] Available at:
http://www.aasb.gov.au/admin/file/content105/c9/ACCED264_06-15.pdf [Accessed 10 Aug.
2018].
Aasb.gov.au. (2018). Definition and Recognition of the Elements of Financial Statements.
[online] Available at: http://www.aasb.gov.au/admin/file/content102/c3/SAC4_3-95.pdf
[Accessed 10 Aug. 2018].
Biondi, L. and Lapsley, I., 2014. Accounting, transparency and governance: the heritage assets
problem. Qualitative Research in Accounting & Management, 11(2), pp.146-164.
Budding, T., Grossi, G. and Tagesson, T. eds., 2014. Public sector accounting. Routledge.
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting.
Pearson Higher Education AU.
Lovell, H., 2014. Climate change, markets and standards: the case of financial
accounting. Economy and Society, 43(2), pp.260-284.
Newberry, S., 2015. Public sector accounting: shifting concepts of accountability. Public Money
& Management, 35(5), pp.371-376.
Nobes, C., 2014. International classification of financial reporting. Routledge.
Palmer, P.D., 2013. Exploring attitudes to financial reporting in the Australian not‐for‐profit
sector. Accounting & Finance, 53(1), pp.217-241.

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Perera, D. and Chand, P., 2015. Issues in the adoption of international financial reporting
standards (IFRS) for small and medium-sized enterprises (SMES). Advances in
accounting, 31(1), pp.165-178.
Potter, B., Ravlic, T. and Wright, S., 2013. Developing Accounting Regulations that Reflect
Public Viewpoints: The Australian Solution to Differential Reporting. Australian Accounting
Review, 23(1), pp.18-28.
Yao, D.F.T., Percy, M. and Hu, F., 2015. Fair value accounting for non-current assets and audit
fees: Evidence from Australian companies. Journal of Contemporary Accounting &
Economics, 11(1), pp.31-45.