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Conceptual framework is not considered as accounting regulations or standards. It is set by the regulators for help the preparer to prepare the final statements as well as it also help the user to understand the final statement of a company easily. Conceptual framework ensures the external stakeholder f an organization about the reliability, relevancy, comparability and understandability of the final financial statements. Conceptual framework is just a set of some rules prepared by the IASB and FASB to make it easier for the accountant as well user to accomplish their duty.
Conceptual frameworks offer depth knowledge about the rules and regulations of international accounting standards so that the preparer could easily accomplish his duty without any ignorance of any rules. It is useful for internal as well as external stakeholders. As external stakeholder could analyze the financial position of the company through I and internal stakeholders could make the better decisions with the help of it.
TPG telecom ltd is one of the leading companies in Australian telecommunication industry in Australia. It operates in IT sector as well to offer the internet services to the customers and businesses. It offers many ranges of services and products such as internet access, OEM services, and networking, accounting software and mobile phone services.
TPG telecom ltd is a profit making company and it has been incorporated in Australia. The company has registered itself in the Australian stock exchange to trade the shares in the market. Annual report (2016) of TPG ltd depict that all the final statements of the company has not been prepared according to the conceptual framework of the IASB and FASB (ACCA Global, 2017). The data provided in the income statement of the company are recorded according to the historical information but some liabilities and assets have been recorded according to the fair value.
The financial reports:
Have been prepared according to the IFRS and IASB and the corporation act has also considered.
Have been prepared according to the Australian accounting standard
Have been prepared according to the historical cost but some liabilities and assets have been recorded according to the fair value accounting.
The reports have been prepared with a observation of IFRS that is issued by IASB.
The figures presented in the report are in dollars (Australian Dollar)
This annual report of the company depict that the statement and report presented by the company for the external stakeholder and auditors are prepared according to the Australian accounting standard board and Australian accounting standards.
It has also been analyzed that the statement of income, statement of financial performance and cash flow statement of the company has been prepared according to the accounting concepts such as going concern and materiality concept. All the requirement of the UK companies act and Australian corporation act has been fulfilled by the company. Due to the globalization, company is focusing over the international accounting standard too.
It is the largest telecommunication company in Australia. It operates the business of telecommunication network, mobile, internet access, markets voice, entertainment product, pay television and other services. It has been founded in 1975 in Australia. The company has registered itself in Australian stock exchange for the purpose of trading of shares. Company operates its business through many subsidiary companies such as Telstra retail, Telstra wholesale segment, Telstra operations etc (annual report, 2017).
The financial report of Telstra operations has been prepared according to the going concern concept and UK companies act and Australian corporation act.
Have been prepared according to the IFRS and IASB and the corporation act has also considered (Jones, 2006).
Have been prepared according to the Australian accounting standard
Have been prepared according to the historical cost but some liabilities and assets have been recorded according to the fair value accounting.
The reports have been prepared with a observation of IFRS that is issued by IASB.
The figures presented in the report are in dollars (Australian Dollar)
This annual report of the company depict that the statement and report presented by the company for the external stakeholder and auditors are prepared according to the Australian accounting standard board and Australian accounting standards.
It has also been analyzed that the statement of income, statement of financial performance and cash flow statement of the company has been prepared according to the accounting concepts such as going concern and materiality concept (Annual report, 2016). All the requirement of the UK companies act and Australian corporation act has been fulfilled by the company (IFRS, 2006). Due to the globalization, company is focusing over the international accounting standard too.
Prudence is an accounting concept which depict that an organization must record all the liabilities and expenses at the time of occurrence or if there is any hope for the expanses then also they must be recorded but the revenue and profit must be recorded by the organization only at the time of incurring it. While recording the data according to the prudence concept, it has been expected from the professionals to not to overstate or understate the figures to manipulate the statements (IASB Framework, 2001).
In the annual report of TPG telecom it has been analyzed that the company is following the concept of TPG telecom strictly. Same has been found through the annual report of Telstra. Both the companies have highlighted that the concept of prudence have been followed by them and they did not manipulate any figure to give fake information to the external stakeholders.
The annual report of both the companies have been prepared according to the AASB, IFRS and IASB concepts. Both companies have followed the corporation act, 2001. The TPG telecom also followed the companies act to accomplish the reporting of all the data so there might be any difference in disclosing the entire concept due to the companies act (ACCA Global, 2017). The difference could be due to the operations of the company and the nature of the company.
Segment reporting offer all the information related to the revenue and other things of the company. Majorly the operations of both the companies could be separate through geographical area and the products of the company (Vollmer, Mennicken and Preda, 2009). Both the companies are offering almost similar products but the geographical area of TPG is quite different form Telstra. So the recording of figures could be different due to it.
The fixed assets of both the companies are recorded on the basis of historical cost at the same time the depreciation technique used by the companies are also same. Still the recording concept of both the companies is different.
Current asset of both the companies are recorded according to the going concern concept. The inventory technique of both the companies are also same.
Through this report it could be recommended that the conceptual framework is important for an organization to enhance the understandability of the final statements. Both the companies have used a proper standard and format to enhance the relevancy and curability but the understandability could not be enhanced by both the companies (McGregor and Street, 2007). Company has been recommended to make some changes in the format and adopt the conceptual framework so that the external stakeholders could understand the final statement of the company easily.
It is recommended to the managers and accountants to make some changes in the format and adopt the conceptual framework so that the external stakeholders could understand the final statement of the company easily. It could enhance the investment tin the company as the investors could feel that the statements are reliable and the investment done by them would be back with much returns Although, it is suggested to the companies to focus over the conceptual framework to enhance the investment and make the final statement of the company more reliable.
This report has been done to understand the concept of conceptual framework. It is prepared to understand all the key concept of accounting which could be helpful for a company’s external as well as internal stakeholders. In this report TPG Telecom limited and origin energy ltd’s annual report have been studied to understand the final statement of a company. The financial statement of the companies has been studied according to the conceptual framework and their understandability have been analyzed.
This report concludes about the final statements of both the companies. It has been analyzed through the data of both the companies that they are following a proper format of final statements according to the AASB, IFSB, companies act, corporation act but the data is not understandable for the stakeholders as the company has ignored the format of conceptual framework. It has also been found that the conceptual framework is prepared for the relevancy, reliability, curability and understandability of finals statements of a company.
ACCA Global, 2017. Conceptual framework for financing activities. Retrieved as on 5 April 2017 from http://www.accaglobal.com/gb/en/student/exam-support-resources/fundamentals-exams-study-resources/f7/technical-articles/iasb-conceptual-framework-financial-reporting.html
Annual reports. 2016. Telstra corporation limited. Retrieved as on 5 April 2017 from https://www.telstra.com.au/content/dam/tcom/about-us/investors/pdf-e/2016-Annual-Report.pdf
Annual reports. 2016. TPG Telecom Ltd. Retrieved as on 5 April 2017 from http://www.asx.com.au/asxpdf/20161020/pdf/43c4ntvj1x9f81.pdf
Bezemer, D. J., 2010. Understanding financial crisis through accounting models. Accounting, Organizations and Society, 35(7), 676-688.
Chorafas, D.N. 2006. IGRS, Fair Value and Corporate Governance: The Impact on Budgets, Balance Sheets and Management Accounts. Oxford: Elsevier Publishing
IASB. 2006. Summary of International Accounting Standards. International Accounting Standard Boards. Retrieved 20 January 2007 fromhttp://www.iasb.org/Home.htm
IASB. 2007. Fair Value Measurement. Part 2: SFA's 157 Fair Value Measurements: Comments to be submitted. London: IASB
IFRS. 2008. International Financial Reporting Standards. London: IASB
ISAB Framework. 2001. Framework for the preparation and presentation of Financial Statements. International Standards Accounting Board
Jones, M. 2006. Financial Accounting. Chichester: John Wiley & Sons
McGregor, W., and Street, D. L., 2007. IASB and FASB face challenges in pursuit of joint conceptual framework. Journal of International Financial Management and Accounting, 18(1), 39-51.
Vollmer, H., Mennicken, A., and Preda, A., 2009. Tracking the numbers: Across accounting and finance, organizations and markets. Accounting, Organizations and Society, 34(5), 619-637.
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