NAB Bank: Analysis of Contemporary Issues in Accounting and Theory

This report provides an overview of contemporary issues in accounting and accounting theory, focusing on the accounting policies and financial procedures of Woolworths, an Australian supermarket chain. It discusses the conceptual framework for financial reporting and standard setting, normative and positive theories of accounting, capital market research and its implications, and earnings management and quality. The report highlights issues faced by accounting professionals, the role of regulatory bodies, and the impact of debt and bonus schemes on accounting methods. It also emphasizes the importance of market research for investment decisions and the need for maintaining quality in earnings through proper accounting practices. Concluding that a deep understanding of accounting issues is essential for informed decision-making and maintaining the integrity of financial reporting.

NAB Bank

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Contemporary issues in Accounting and Accounting theory......................................................3
Conceptual framework for financial reporting and standard setting...........................................4
Normative and Positive theories of accounting...........................................................................4
Capital market research and its implications for accounting.......................................................5
Earnings Management and Quality.............................................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Accounting policies refers to the set of standards that are helps the organisations in
ascertaining the manner in which the accounts are prepared by the firm. These frameworks differ
for all the companies according to their type of work and necessities. They relate to the financial
procedures of the organisations (Al-Kharabsheh, 2021). The chosen company in this report is
Woolsworths. It is a chain of supermarkets in Australia. At present the business is located at
1051 locations. The report discusses about the contemporary issues in accounting and accounting
theory. It also describes the conceptual framework for financial reporting and standard setting.
Further the theories of accounting are evaluated. The report also conducts research on capital
markets along with their implications. In addition to this, earnings management and quality is
discussed.
MAIN BODY
Contemporary issues in Accounting and Accounting theory
These issues in accounting and accounting theory targets at providing knowledge about
the current issues faced by the accounting professionals to the students. It anticipates and
explains the reason that why the manager of Woolsworths adopted a certain accounting method.
They propose the way in which the way regulators introduce their regulations which serves the
private interest of regulators in their best way. Normally these regulations are made according to
the interest of public but the mechanism of regulation is captures with a view to safeguard the
interests of self-interested groups present in the society. Presently there are also issues related to
debt. Many organisations who are close to the breach of accounting based covenants, they prefer
to choose such an accounting method which can help them in increasing their asset and profits
(Anjanappa and Chaturvedi, 2018).
According to the Bran Plan Hypothesis, the accounting methods of managers is
dependent on the bonus schemes that can help in raising the level of profits for the business. The
firms are also prone to political scrutinises so they desire to entertain a method that can help
them in decreasing their reported income. They are based on economic and public pressures.
Shifting towards the system orientation, the firms prepares the various theories practices and
processes that became similar to society. Here organisations are looked as a part of broader
social system and complete focus is on the role of business.

Conceptual framework for financial reporting and standard setting
The conceptual frame work of financial reporting is a document that helps in setting the
objectives and concepts for general purpose financial reporting. It is a body comprising of
interrelated objectives and fundamentals. These fundamentals are the base concepts that will will
help in achieving the set objectives. They provides guidance to the firm about the events,
situations and transactions about their accounting treatment. It tells the manner in which these all
are measured and recognised along with their summarisation and reporting manner. It provides
guidance to the firm about the standards for IFRS. It helps in making sure that the standards are
linked conceptually and all the similar transactions are treated in the same way in order to
provide necessary data to the investors and other stakeholders (Arago and et. Al).
This framework sets the objective of general purpose financial reporting. It provides the
qualitative characteristics that must be present in the relevant information. It provides a
description for the reporting entity along with its boundaries. It relates to the capital and its
maintenance. It is very important because in absence of this tool the stakeholders of the business
will create all the judgement on their own basis and experiences. Their will be no consistency in
the issues and over the time the standards will reflect an changes in the set of beliefs and
experiences.
Normative and Positive theories of accounting.
Normative theory suggests the policy makers of accounting about the thing which is to be
done according to the theoretical principle. It focuses on the deductive process and starts with a
theory. Then it is confined to specific policies. The assets under this theory is not required to be
revalued and calculated at present market price. But after the emergence of financial crises the
markets for these assets went down and rules for these were changed according to market to
market value or the values were required to be updated according to their real value. This
resulted in some unrealised gains and losses for the organisations that became a big part of
incomes and losses for businesses (Beşteliu, 2018).
Positive accounting theory, academics looks at the firm as a sum total of contracts that
have been entitled by them. According to this theory, the main driver that takes the company to
the path of success is its efficiency in handling their contracts. It focuses on reducing the cost of
contract in order to unlock the path of value creation from them. It takes into account the real life
instances and urges the managers to understand them for making prediction about the manner

firms can address to such circumstances. In addition to this, they recommend the decision takers
to review the possible outcomes of the decisions taken by them.
Capital market research and its implications for accounting.
Capital marketing in accounting research helps in investigating the association among the
accounting data and important market variables. It can be related to share value of firm, rate of
return in its shares in some time period or its risk. It focuses on providing proofs for the
evidences of these relations. The main aim is to valuation in order to identify the wrongly priced
securities. Its tests the efficiency of market in relation to its accounting information, fundamental
analysis and valuation based on accounts. This will help the managers of Woolsworth in taking
investment related decisions, setting standards for accounting and disclosing the decisions for
corporate finance (Ruff, 2018).
Shareholders of the firm are very much interested in the knowing about the value if the firm, so
they conduct research in the market in relation to the generating information about the position
Woolsworth stand in the competition. This helps them in making financing decision that whether
they should invest in the business or not. This research is not limited to the shares only but also
to the cash flow statements and returns provided by firms on their shares. It makes use of data of
current as well as historical situation of the whole industry along with the macroeconomic
figures for determining the intrinsic value.
Earnings Management and Quality
Earnings management is the term that makes use of accounting techniques with a view of
producing accounting techniques that presents the positive aspects of the activities of business
and its financial condition. Most of the accounting rules and policies demand that the
management of company makes judgements for adopting these principles. Its takes advantage of
the manner in which the rules of accounting are applied. It also prepares financial statements
which smooths and inflates the earnings of the company. It refers to the net profit of the firm
earned by it in a particular time period. It makes use of earning management for smoothing the
fluctuations occurring in earnings as getting much balanced profits every month (Tjallingii,
2021).
Quality of earnings of a company is received by removing all types of discrepancies of
actual amounts from the planes figures. When all the differences are dismissed, the earnings of
the business will raise high and costs will also reduce to maximum possible extent. The external

factors of the company can make impact on the evaluation of the earning quality. The earnings
which are calculated safely are more reliable than the one that is ascertained by the use of
policies of aggressive accounting. Quality of earnings totally gets failed when the accounting
practices do not show correct sales and increase in the risk of business. It is essential for
Woolsworths to work according to the principles formulated for these accounts in order to
maintain the quality of earnings (Zhu and et. al., 2019).
CONCLUSION
From the above analysis, it can be concluded that there are various types of contemporary
issues in accounting policies which can be analysed for getting more deep knowledge about the
situations of the firms. The normative and positive theories of accounting are different from each
other. One deal in positive aspects of business while other divides the policies into shorter
format. Companies before making investment in companies conduct market research for
checking out the position of the firm. They get insight of the business and reviews in market
condition. So, it is important for organisations to make accounts qualitative and manage them
properly.

REFERENCES
Books and Journals
Al-Kharabsheh, F.I., 2021. THE EFFECT OF ADOPTING INTERNATIONAL PUBLIC
SECTOR ACCOUNTING STANDARDS (IPSAS) ON FINANCIAL
PERFORMANCE IN THE JORDANIAN PUBLIC SECTOR. Academy of Accounting
and Financial Studies Journal. 25(2). pp.1-12.
Anjanappa, J. and Chaturvedi, R.K., 2018. Risk Management in Supply Chain Through Natural
Capital Accounting Framework (NCAF). Available at SSRN 3192390.
Arago, J. and et. al: defined, 55 ADAB, 167 Adams, RM, 82 Agriculture: in ancient Hawaii,
140-141; in Java, 177-184; in Northern. Policy. 72. p.73.
Beşteliu, N.E., 2018. Ways Of Taking Over And Operationalizing The International Public
Sector Accounting Standards (IPSAS)-Essential Milestones In This Process.
In International Scientific Conference" Strategies XXI" (Vol. 1, pp. 52-65). " Carol I"
National Defence University.
Ruff, K., 2018. 9. The Role of Intermediaries in Social Accounting: Insights from Effective
Transparency Systems. In Accounting for social value (pp. 230-248). University of
Toronto Press.
Tjallingii, I., 2021. Accounting for distributive justice in Integrated Assessment Models:
Towards a more equitable climate policy agenda.
Zhu, J. and et. al., 2019. Efforts for a circular economy in China: A comprehensive review of
policies. Journal of Industrial Ecology. 23(1). pp.110-118.