ACC706 Accounting Theory and Issues Editing and Proof Reading Services

ACC706 Accounting Theory and Issues Assignment Help

ACC706 Accounting Theory and Issues Editing and Proof Reading Services


An Organization has to maintain the records of accounting for proper interpretation of financial data. General purpose financial reporting is prepared by the Australian Accounting research foundation and by Accounting Standards Review Board for implementation of accounting standards by the Australian Corporations. These are the general standard of accounting. TPG Telecom is one of the top 100 listed corporations of Australian Securities Exchange. The Organization mainly deals in IT sector and telecommunications, and in this comprehensive report, will discuss about the accounting concepts and accounting framework of the Organization. Accountancy policies are used in such a way that true and transparent information of the Organization is presented.


General Purpose Financial Reporting

The General Purpose Financial Reporting refers to the providing of the conceptual framework of the accounting standards for implementation by the corporations. This framework helps in measurements of assets and liabilities and presentation of the financial statements of the corporation (Deegan, 2012). The main objective behind the GPFR is to provide the necessary financial information to the users.

The primary users of the GPFR are current and prospective investors, debtors, creditors, banks and financial institutions. They require the financial reporting for not only analyzing the financial position of the organization but to know the effectiveness of the internal management of the Organization (Deegan, 2012).

General Purpose Financial Statements

This includes the Income Statement, Balance Sheet, and Statement of owner’s Equity and statement of Cash Flow. These all are the statements prepared according to the set standards. These statements are helpful in financial interpretation of the data of the Organization.These are the key documents for an Organization and helps in record keeping of the accountancy and financial data (Horngren, 2013).

Board for formation and update of Accounting Standards

Australian Accountng Standard Board

This is the main board responsible for formation, development, and for issuing of the accounting standards. These are the standards & guidelines which forms the basis for the making of the financial statements of corporations. These are designed in such a way so as to make the Accounting simple and informative and also free from biased (Horngren, 2013).

International Financial Reporting Standards

This is a board established for the global accounting standards which are globally accepted. The IFRS board is essentially required to make certain accounting standards so as to make global business easy and uniform. With the increasing cross border businesses, the need of globally accepted accounting norms are essentially required (Horngren, 2013).

TPG Telecom

TPG telecom is one of the biggest telecom and IT sector organization in Australia. The main products in which the Organization deals are Ethernet Broadband Access, Internet Protocol Television, SIM only mobile plans, and business networking solutions etc (Wines & Scarborough, 2015). The Financial Analysis of the corporation needs to done because of the following aims-

Aims of the Financial Analysis

A Corporation is a single entity, separated from its owners; therefore the financial analysis of the Corporation is utmost necessary for knowing the actual financial position of the Corporation and to calculate benefits for the stakeholders of the corporation-

The Board of Directors of the Corporation has to make various financial decisions and formulate future plans therefore an evaluation of the financial reporting is indeed necessary for the appropriate decision making.

The Shareholders are the actual owners of the corporation, and financial reporting are the primary tools for them to make decisions relating to their holdings in the Company. Such as, whether they want to continue the holdings in the firm or not.

Stakeholders of the Organization such as Creditors, Debtors, Shareholders, Debenture holders, or any other person who has direct or indirect interest in the firm, needs to know the financial position of the firm to take important financial decisions(Ali et. al., 2016).

Objectives behind Accounting principles & Standards

The main objective behind making of Accounting principles and standards are as follows-

To provide the true and fair representation of the accounting figures so as to increase their reliability and to make them trust-worthy.

To avoid the imaginative or excess figures of the assists or liabilities of the Organization so as to present true picture (Wines & Scarborough, 2015).

To protect the investors from any fraudulent activities or any financial scandal which will ultimately make loss for the stakeholders?

The accountancy standards are prepared to provide transparency of the internal business management and financial interpretation (Wines & Scarborough, 2015).

TPG Accounting standards and Conventions

TPG telecom prepares its financial reports in accordance with the applicable accountancy norms and Regulations. The Accounting principles & conventions, as well as the Accounting standards followed by the Organization, are as follows-

Accounting Principles and conventions

Accounting principles are the general guidelines for implementation in the Accounting framework (Wines & Scarborough, 2015). These are the following Accounting principles which are applied by the TPG telecom in its Accounting standards-


S. NO.




Business Entity

A business has a separate identity. It is a separate identity from its owner. And it can be sued or be sued on its own. Owner is included only to the point where any business transactions are involved (Pozzi, 2010).


Going Concern

It means that a concern keeps on going infinitely. Once established, it will go on in future and will shut down only if certain procedures of closing a company are followed.


Monetary unit

All the management accounting information is in monetary terms such as US Dollar, Rupees, and Australian Dollar etc. Non-monetary items can note recorded. In the Annual report, single monetary unit is used in consolidation of all the subsidiaries so as to make fair judgements (Pozzi, 2010).


Historical Cost

All the assets of the organization must be measured on original cost or actual cost and not on market or future cost. As the future cost will mislead the financial interpretation of the Organization.



This principle implies that the revenue must be matched with the expenses and should present true profit (Pozzi, 2010).


Accounting Period

This principle implies that the business statements must pertain to a particular period e.g. annually, quarterly, monthly etc.  



This principle implies that among the two values, lower value should be considered so as to present a true and fair value of the accounting concepts.



There must be consistency in the accountancy procedure. It must be prepared every year without any interruption and must also be preserved by the Directors of the Organization.



According to this principle, all the transactions which are material for the business must be recorded otherwise it will lead to biased and wrong information. And, omission of any business transaction will attract civil as well as criminal liability (Pozzi, 2010).



This implies that all the transactions must be supported by some evidence so that they are considered as true and free from any biased. These evidence or documentation is the proof of happening of certain event.



This principle forms the basis for the accounting; it says that the revenue must be recorded when earned and not when actually received. Basically it must relate to that particular accounting period irrespective of the fact that it is earned or not.


Comparative information

The financial reports are prepared in accordance with the last year figures, so as to make a comparative analysis and to know the progress of the Organization.


Fair Representation

The presentation of all the financial statements must be true and fair and should be free from unbiased and any untrue information must be excluded (Pozzi, 2010).

Analysis of Financial Ratios

In this segment, through the help of financial information and financial ratios, financial interpretation of the Corporation will take place-

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Financial Interpretation

Debt Equity Ratio-The Debt equity ratio of the corporation represents the use of debt as comparison to the equity of the company. The declining of the debt equity ratio from 0.79 to 0.65 represents the decrease in use of outside source of financing such as borrowing, loans etc and increase reliability on the owner’s fund. This is a good sign as it decreases the financial burden of the Organization. Formula for calculating it is-

Debt Equity Ratio -Total Liabilities/ Total Shareholders’ equity

Working Capital Ratio- the Negative working capital ratio signifies that the Company’s liabilities are far more than the Company’s assets, though the decreasing working ratio i.e. from -36.3 to -4.2 represents a good signs that but still the current liabilities of the organizations are very high (the company is funding its fixed assets from the current liabilities, which is bad sign from the financial point of view).

Working Capital Ratio- Current Assets- Current Liabilities

Return on Equity- The increasing returns on equity/ shareholders investment from 1.17 to 1.27 signifies that the Company is making a good use of the Shareholder’s investment for generating revenues for the company.

Return on Equity-Net Income/ Stockholder's Equity

Assets Turner ratio-this ratio signifies the efficiency in the use of the Assets of the company in generating revenues for the company, the increasing ratio from 0.65 to 0.77 shows the company is more efficiently and effectively using the Assets of the company for generating sales for the company(Curran-Everett & D.,2013).

Assets Turnover Ratio-Sales/ Average total Assets

The following are the few doctrines which are followed by the Organization in its Accounting framework-

Doctrine of Disclosure- This implies that the financial reports must make full disclosures of the accounting information

Doctrine of Consistency- All the accounting reports of all the period should use amen accounting standards.

Doctrine of materiality- All material transactions must be recorded otherwise would mislead (Potter, et. al., 2013).

Doctrine of Conservatism- if there is any uncertainty in the accounting reports, conservative estimation must be taken.

Accounting Standard followed by the TPG Telecom-

Australian Accounting Standard Board is responsible for strategic development of accounting standards to be followed by the Australian corporations for standard maintenance of Accounting Reports of all the Organizations. The Requisite Government bodies are responsible for constant up date of the accounting standards according to the needs and changing pattern of the Organizations (Kober, et. al., 2013).

There are numerous accounting standards which are useful in the preparation of the financial reporting of the Organization. The main accounting standards are discussed below-









The operating segment of the organization is the core activities which are telecommunications and other IT services such providing internet for business and consumers.



The Consolidated statements of TPG Telecom have been prepared according to the respective accounting standard.
The measurement of the assets & liabilities are in accordance with the historical cost except few exceptions.
The currency used in measurements is Australian Dollar. And all the figures of every subsidiary is taken in single currency so as to extract  a true and fair value (Kober, et. al., 2013).



The net cash flow from the operating activities is equivalent to 381.9 as compared to the 300.6 of last year.



The current income tax of the organization is 94.9 $m as compared to the 75.1 $m of last year. It has increased from last year which shows that Organization profits have increased. 



These are calculating at the cost which includes (all the expenditure required for its acquisition) less accumulated depreciation and losses, if any.
Gain or loss of an item is calculated by comparing the sales value with the carrying amount (Kober, et. al., 2013).



The company disclosed all the key managerial personnel of the Organization and their remuneration.
Related movement of the shares or loans are mentioned in the report.
All the business transactions with the related parties such as executive directors are mentioned in the Director's report.



The basic and diluted earnings per share are calculated by dividing the profit attributable to the ordinary shareholders by the weighted average number of Ordinary share.



These are calculated by deducting the accumulated amortization and accumulated impairment losses from the cost of the Intangible Asset.
Further expenditure of the Intangible assets are capitalized only of the cost realizes long term economic benefits


Interim Financial Reporting

Interim financial reports are also prepared by the organization which are prepared at the mid of the accounting period to know the profitability of the Organization (Kober, et. al., 2013).


Financial instruments

The organization prepares the necessary financial statements such as income statement, balance sheet, cash flow and statement of equity owner etc. these are prepared in accordance of the accounting standards and norms.


Employee Benefits

The organization has planned certain fully paid shares for the performance based employees.

Also there are certain superannuation plans for some of the employees in the organization.

Various current as well as nun-current employee benefits are also there (Kober, et. al., 2013).


The following are few recommendations for the TPG Telecom in context of Accounting framework and regulations-

The Company has incurred too much Current liabilities far more than the Current assets; it shows the increase in the short term liabilities of the Organization, which will adversely, affects the Working Capital of the Organization, therefore it is recommended to lessen its Current Liabilities.

Company must keep proper documentation and evidence of all the business transactions that it had or will take part in so as the business transactions presents true and fair value and are free from biased (Nguyen & Gong, 2014).

Requisite boards of government authority update the accounting standards and conventions time to time, therefore these must be carefully analyzed and changed accounting framework must be adapted to present true and fair picture.

Figures of the Assets of the Organization must always be taken at the historical cost or cost less depreciation, so that true value of the business economic assets can be interpreted.

Figures that are presented in the financial statements must not be Market or untrue value otherwise it will mislead the Net Worth of the Organization and presents an untrue picture in front of Stakeholders (Nguyen & Gong, 2014).

Net Worth must always be carefully analyzed and correct value must be included otherwise, it will mislead the Shareholders and investors.

Necessary steps must be taken to detect any financial scandals that might occurred and mislead the Public as whole (Nguyen & Gong, 2014).


With the thorough analysis of the Accounting principles and accounting framework of the TPG Telecom, the financial soundness and financial interpretation of the business is considered. TPG Telecom is one of the top 100 listed companies of Australian Securities Exchange and therefore it follows all the regulatory framework and accounting norms required in a Company. The Accounting principles and Accounting standards plays crucial role in the consistency and authentication of the financial data of TPG telecom. The company keeps a proper record of all the documents and evidence necessary for the fairness of the Organization. All the financial interpretation are used by the stakeholders of the Organization such as Equity owners, Debtors, Creditors, banks & Financial Institutions and other associated subsidiaries companies. The financial data presents the financial soundness which is useful for all the stakeholders to make necessary financial decisions such as borrowing, investments, buying or selling of equity shares etc. 


Ali, A., Akbar, S. & Ormrod, P. 2016, "Impact of international financial reporting standards on the profit and equity of AIM listed companies in the UK", Accounting Forum,vol. 40, no. 1, pp. 45-62.
Curran-Everett, D. 2013, "Explorations in statistics: the analysis of ratios and normalized data", Advances in physiology education,vol. 37, no. 3, pp. 213.
Deegan, C.M. 2012, Australian financial accounting, 7th edn, McGraw-Hill Australia, North Ryde, N.S.W.
Horngren, C.T. 2013, Financial accounting, 7th [Australian] edn, Pearson Australia, Frenchs Forest, NSW;Frenchs Forest, N.S.W;.