Accounting Theory for AGL Energy Ltd: Analysis of Auditor and Annual Reports

This report provides a critical analysis of the accounting theories and concepts used by AGL Energy Ltd, including accrual concepts, monetary measurement, realization concepts, and periodicity. It includes a review of the auditor report and annual report, along with recommendations for the company.

Running head: ACCOUNTING THEORY
Accounting Theory
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Executive Summary
This delivers gives a vibrant idea approximately how accounting theories concepts is being used
in the corporate group in command to alleviate interior along with external risks. The report on
Australian Accounting Theory and Issues has been equipped rotating about the office system of
AGL Energy Ltd. There are subsequent notions such as accrual concepts, monetary
measurement, realization concepts, and periodicity along with business entity. This report
provides the critical analysis of auditor report along with the annual report. The report is being
concluded by recommendations based on the analysis that a listed company shall follow.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Conceptual Framework of Accounting........................................................................................4
General purpose financial statement............................................................................................4
Critical Review of the Auditor Report.........................................................................................5
Critical Review of Annual Report...............................................................................................6
Recommendations............................................................................................................................8
Conclusion.......................................................................................................................................9
Reference.......................................................................................................................................10

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Introduction
In the year 1837 at Sydney, New South Wales AGL Company was formed. In year 1837,
company provided town gas to provide lighting for the street lamp. It was second in number to
list in stock exchange. In the coming time company expanded in number of different locations.
The new listed company was restructured on 6thof October 2006 and was named as AGL Energy
Ltd. and Alinta Ltd. AGL Energy has set up some of the upcoming stream gas project. Recently
in November 2016 started the project of decommissioning as well as rehabilitation of wells in
Camden place.
Discussion
AGL Energy Ltd follows different theories of accounting along with set of assumption.
The analysis of accounting theory involves realization along with full disclosure. The business
functioning of AGL Energy key concepts are based on the theories of Australian Accounting
Standard Board. The theories and principle of accounting of AGL Energy delivers that all the
data regarding accounting along with fiscal terms information shall be reliable, comparable,
consistent and relevant with the AASB and rules regarding accounting.
The polices of accounting and the theories that are related to methods that is being
applied to the joint ventures are on a fundamental basis depended upon the way of recording
position of finance along with the outcome of operations. In order to maintain stability and
continue the smooth running of business operations the company makes certain assumptions.
The accounting of AGL Energy Ltd. follows going concern concept. This mean the company
deemed that the operations of the business would continue for an indeterminate time or up to
extent to full fill the present plans along with contracts. The company to prepare financial

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statements is following ASIC regulatory Guide 230, and rules and regulation in IFRS. The
company follows ASIC-191 for rounding off to nearest million dollar where needed.
Conceptual Framework of Accounting
AGL Energy Ltd. framework of accounting gives a clear supervision along with sets of
direction that is to be followed as per the principles of finance with the concepts of accounting to
prepare financial statement. There is a conceptual framework that is part if AASB that
establishes the vital reason of reporting the financial by corporate. The consolidated financial
statements of the company is prepared on the base of IFRS rules and regulations along with
accounting principles.
General purpose financial statement
This statement is constructed for the investors and creditors so that they are able to take
decision regarding monetary. The company frames the statement based on the principles of IFRS
along with Australian Accounting Standard of Board. The company has abided the rule and
regulations of the accounting framework to prepare the components of financial statement.
The accounting standard followed by the company are as bellow:
AASB Description
101 Presentation of Financial Statement and the
disclosure of necessary items have been noted
according to the standard.
136 Impairment of Assets
The natural gas is no longer part of asset and

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it will be disposed off.
8 Operating Segments
The segment information are as below:
Wholesale markets
Group Operations
Customer market
Investments
118 Revenue
The company has abided the accounting
standard to study the revenue earning.
$12816 million revenue has been earned from
major product and services.
112 Income Tax
The income statement is prepared according
to the standard.
111 Constructions Contract
(Simshauser, 2014).
Critical Review of the Auditor Report
The fiscal report does not comprise completely the proceedings that happened
subsequently the creation of the Assessor’s report. Around $39171 million income of the
auctions of the electricity among the era of last beat interpretation and reportage date will be
getting unbilled. Therefore, key regulator organization had been under taken in order to access
the valuing along with additional expectations for the trade.

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The significant examination of the Property, plant, tangible assets and equipment and
together with were commenced to know the quantity of the same possessions and to justice the
quantity contemporary in the fiscal reports. (Klettner, Clarke and Boersma, 2014).
Critical Review of Annual Report
Through critical analysis of the annual report of 2018 it is clear that the company has
prepared the components of the financial statement in accordance to the AASB along with
presenting full disclosures. The amounts presented in the report are at Australian Dollars. There
are certain areas that needs attention along with proper framework of accounting. (Simshauser,
2014).
No contingency has been prepared in case of cancellation of contract in middle as per the
terms of Counterparties. The contract with electricity to provide energy resources till 2036 was
cancelled. The cancellation of contract might lead to losses in upcoming time. this indicates
proper contingency to protect losses. ((Simshauser, 2014).
There was problem in the billing system of the company that reflected in wrong
presumptions of earnings. The removal of the 100 % attention from the Macarthur Wind Farm
Pty Ltd along with MWF Finance Pty Ltd delivers an incorrect influence in the marketplace
concerning the standing and liquidness location of the Group. This illustrate the absence of
fluidity in the Business’s hand. The Section has been alienated based on the method of the
auction of the products along with the services, that is a similar way of delivery of incomes, viz.
Energy Markets comprises sellng of power, natural gas along with other energy-associated
products for the purpose of the consumer.

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Group operations: It comprises of the generation of power, as well as all sorts of generation
power that is wind, solar and hydro. This too comprises natural gas removal along with gas
storing processes New Energy: these section stresses on the original foundations of vigor in the
Australian market.
This part comprises equity venture in several concerns like Actew AGL Retail corporation, Solar
Analytics Pty Ltd.
The Accounting outline charity by the Corporation is the Australian Accounting
Standards along with other Secretarial principles along with agreements recognized by the
necessary Government officials-
According to Accounting Standard AASB 101 of Brief monetary news, the group wants
to mark full revelations concerning the Divisions, revenue in attendance are convinced clothes
which are not fully revealed by the Group, consequently indicates to inappropriate practice of the
standard of accountig. (Simshauser, 2014).
According to Accounting Standard AASB 116 of equipment, Property, and pants. The
appropriate estimate of the assets necessity be assumed bearing in mind all the expectations and
important judgments concerning the upcoming financial assistances from the assets in instruction
to make suitable monetary judgment. (Klettner, Clarke and Boersma, 2014).
According to Accounting Standard AASB 134 of temporary monetary journalism, the
appropriate monetary intelligences must be equipped in the central of the reporting period in
order to make an eye finished the varying monetary location of the Crporation.

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Recommendations
However the Business has shadowed all accounting standards along with guidelines in
the groundwork of the Accounting reporting, motionless some disadvantages continue
consequently few commendations are as below-
It is needed for the company to follow to the Australian Accounting Standard 1039 of brief
financial Reports besides requirements to brand the full disclosure concerning the management
of accounting along with physical contacts of the Firm. (Simshauser, 2014).
The Group has consumed an enormous amount of $20 million in 2017 concerning the
rearrangement cost and has deliberate for around $ 80 million in 2017, so the price should be
sensibly performed and supreme advantage must be attained from the rearrangement
(Simshauser, 2014).
Correct devotion of the framework of accounting in circumstance of Asset Impairment along
with divestment of the Assets of the Organization.
The Assumptions and judgment of the Crucial assets concerning the upcoming economic
welfares from the possessions need to be clearly analyzed for branding suitable upcoming
choices.
The company wants to extremely emphasis on the plenty chances of the renewable bases of
Energy and income the essential consents from the Government bureaucrats guiding decreasing
the tendency of non-alterable sources of vigor along with cumulative the renewable sources of
energy such as wind and thermal. The firm wants to establish a Provision apart for any
eventuality or removal of the Electricity prevarication agreement with other parties. As the
agreement comprise terms of termination by the other gatherings consequently for the benign

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side the corporation requirements to generate running for the Contract. (Klettner, Clarke and
Boersma, 2014).
Conclusion
As per the above discussion, it could be sated that fiscal situation of commercial
marketing is quite strong in nature and there will be of upcoming chances in the Energy
segment. The Divestment plans related to the Natural Gas Assets will decrease unpredictability.
There is a need to put the focus on the Renewable Sources of Energy as it has plenty of chances
in the upcoming. It has also willing of its 100 % curiosity from Macarthur Wind Farm Pty Ltd
along MWF Finance Pty Ltd, as a part of its premeditated plan; this particular aspect has
facilitated in receiving $ 660 million to the organization that can be additional consumed in the
other premeditated strategies of the company. The business has also accomplished to issue
Dividend to its stockholders, and received a decent market value along with goodwill complete
this phase. The Company is placing of its speculation in the convinced companies and
concentrating on the development of several Alterable causes of energy in directive to seizure the
Market of the Australia. Complete it can be said, that Business is realizing best of its planned
plans for its long-tenure development along with existence.

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