ACC202 Contemporary Financial Accounting Report Sample
Task Summary
In this task, you will interpret multiple General Purpose Financial Statements (GPFSs) and disclosure documents and evaluates various aspects of financial reporting in the context of an Australian Security Exchange (ASX)-listed company. In doing so, you will apply theory to real-world accounting problems.
Please refer to the Instructions below for details on how to complete this task.
Context
You are required to interpret the annual financial and corporate sustainability reports of a company listed on the ASX. This assessment was designed to enable you to demonstrate your understanding of the regulatory and ethical frameworks that govern financial reporting.
This assessment will prepare you for real-world financial statement analyses. You will be able to evaluate the impact of financial results when different accounting policies are applied.
Instructions
The assessment is divided into the following two parts:
Part A: Interpret GPFSs and related disclosures in accordance with accounting standards.
Part B: Evaluate developments in financial reporting and information from both social and technical perspectives.
The discussion is to be submitted in a business report format and should include:
• a title page;
• an executive summary;
• a table of contents;
• an introduction;
• a report body with headings and subheadings;
• a conclusion;
• recommendations;
• appendices; and
• a reference list.
The word limit is 1,500 words (+/–10%). A minimum of three (3) different academic resources are required.
This is a group assessment. Each group will comprise two to three (2–3) students. Your group will be allocated an ASX-listed company by your learning facilitator. No two groups will be allocated the same ASX-listed company.
Once allocated an ASX-listed company, obtain the most recent corporate sustainability report and the annual report of the company. The following is a selected list of top 100 ASX-listed companies. The learning facilitator will add companies to the list if needed.
Part A: Accounting Policies
For your allocated company, refer to the notes to the financial statements pertaining to:
(i) accounting policies; and
(ii) property, plant and equipment as disclosed in the statement of financial position.
Required
(a) For your allocated company, based on the Australian Conceptual Framework for Financial Reporting, define and describe the recognition and measurement components of policy for accounting for each class of property, plant and equipment.
(b) Discuss events occurring after the balance date. Briefly, describe the two (2) kinds of events and the rules governing their disclosure in the financial reports.
Identify any disclosures of events that occurred after the balance date for your allocated company.
Part B: Sustainability Reporting
For your allocated company, address the following:
(a) The company governance mechanisms that have been implemented to address sustainability;
(b) Any guidanlines the company has used to implement environmental and social performance and reporting systems;
(c) How corporate social responsibility (CSR) voluntary disclosure varies across different companies and industries/sectors. Your response must make reference to at least three (3) academic journal articles.
Solution
Part A
a) Recognition and Measurement Components
The following guidelines on recognition and measurement and recognition for plant, property, and equipment (PPE) of Coles Group Ltd. are provided by the Australian Conceptual Framework of Financial Reporting (ACFR):
Recognition: When it is likely that entity will receive future financial benefits from using PPE and asset's cost can be accurately ascertained, asset should be recorded as an asset (ALASHI, 2022).
Measurement: PPE should be quantified at cost by time of initial recognition. Cost covers asset's acquisition price, any expenses immediately related to transporting it to its designated location and readiness for use and includes preliminary estimates of expenses related to its removal, dismantling, and site restoration.
PPE is measured after initial recognition using following techniques:
Cost Model: Majority of PPE is employed with cost model. PPE is carried with its cost less total depreciation and any accrued impairment losses under cost model.
Revaluation model: For PPE retained for investment purposes, revaluation model may be utilized. PPE is revalued based on its fair value under revaluation model at conclusion of each reporting period. For Assignment Help, Any surplus resulting from revaluation is recorded within other comprehensive income.
Cost model is preferred method of accounting for PPE at Coles Group Ltd. This policy is in line with ACFR, which mandates that cost model be applied to majority of PPE.
Specific recognized and measurement elements of Coles Group Ltd's PPE accounting strategy are as follows:
Initial identification: When PPE is purchased or built and prepared for usage, it is considered an asset. Purchase price, any expenses directly related to getting the asset into its intended position and readiness for use, and any preliminary estimates of costs for removal, dismantling, and site restoration are all included in costs.
Measurement: PPE is quantified at cost on time of initial recognition. After first recognition till it is revalued in accordance with ACFR, PPE can be assessed utilizing cost model. PPE is carried for its cost less the total depreciation and any accrued impairment losses under cost model.
Depreciation: It is a systematic distribution for cost of PPE throughout its usable life. Unless another approach is more suited, a straight-line method of depreciation is utilized. Based on anticipated use for assets and anticipated physical wear and tear, useful life for PPE is assessed.
b) Events
After the balancing date, two different kinds of events can happen:
Adjusting events: Adjusting events provide additional evidence of situation at end for reporting period. For example, client declaring bankruptcy after balance sheet date is an event of adjustment since it indicates that customer's receivables could not be recovered. Revising events are taken into account while revising carrying amounts of liabilities and assets in financial accounts (Stancheva-Todorova & Velinova-Sokolova, 2019).
Events that are not taken into consideration: They do not reflect state of affairs at end of reporting period. For example, if a firm declares dividend after balance sheet date, that is an event that does not adjust because it has no effect on company's obligations or assets upon that date. Non-adjusting events are listed in notes to financial statements even if they are not included in financial statements itself.
Disclosure requirements for events that occur after balance date are as follows:
• Adjusting events must be included in financial statements.
• Financial statements' notes must disclose significant non-adjusting events.
Disclosures of actions taken after Coles Group Ltd.'s balance date include following examples:
• Coles Group Ltd. stated that it had obtained a $10 million insurance payout for fire that happened after balance sheet date in 2022 annual report (Coles group, 2022. P.91). As additional proof of the situation that existed at conclusion of reporting period (the fire), this event qualifies as an adjusting one.
• Coles Group Ltd. revealed in its 2022 annual report that it has signed a contract to pay $50 million for a new distribution centre (Coles group, 2022. P.57). this is non-adjusting event since it has no effect on company's obligations or assets as of balance sheet date. However, since it is a major occurrence, it must be included in notes to financial statements.
References
ALASHI, 2022. A. P. M. International Accounting and Financial Reporting. http://site.iugaza.edu.ps/malashi/files/2018/09/9-PROPERTY-PLANT-AND-EQUIPMENT.pdf
Coles group, 2022. Annual reports https://www.colesgroup.com.au/FormBuilder/_Resource/_module/ir5sKeTxxEOndzdh00hWJw/file/Annual_Report.pdf
Stancheva-Todorova, E., & Velinova-Sokolova, N. (2019). IFRS 16 leases and its impact on company’s financial reporting, financial ratios and performance metrics. Economic Alternatives, 1(2019), 44-62. https://www.unwe.bg/uploads/Alternatives/4_EA_1_2019_en.pdf
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