Advanced Corporate Reporting : PDF

ADVANCE CORPORATE REPORTING

Table of Contents
INTRODUCTION...........................................................................................................................3
Background..................................................................................................................................3
Scope............................................................................................................................................3
Preliminary analysis findings.......................................................................................................3
Income statement.........................................................................................................................5
Statement of equity:.....................................................................................................................5
Statement of financial performance:............................................................................................5
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Corporate reporting refers to providing information to stakeholders of the business such
as creditors, investors etc. It helps to provide details that helps to take decisions regarding
investment and lending etc. The Report will outline purpose of preparing financial statements,
accounting treatment for financial statements under AASB. It will also explain disclosure and
measurement for business disclosure. It will also explain accounting for group structure, business
strategies on the basis of evaluation and analysis of accounting information etc. The Report is
based on AGL Energy ltd. The Report will explain the comparison between flexible format of
financial statements with fixed format of financial statements. It will also describe the analysis of
information such as it helps to determine the value of the business. Further, report will explain
AASB standards on financial reporting.
MAIN BODY
Background.
AGL Energy ltd. is a company based in Australia which is a public listed company. The
company provides services in thermal power, wind power as well as hydro power. The industry
of the company is natural energy consumption. The organization was founded in the year 1837.
Brett Redman is company's CEO as well as MD. The size of the firm is around 4000 employees
as of 2018. Headquarter of company is located at Sydney, Australia. It offers various products
such as natural gas generation, hydroelectricity, coal seam gas, energy etc. Company also offers
services such as distribution of natural gas, generation of electricity, retailing of electricity etc. It
operates in various countries like South Australia, New South Wales etc.
Scope.
Theme selected for the Report is Corporate reports and disclosures. The term disclosure
refers to the activity of providing all types of relevant information to the public related with
company that helps stake holder's to make relevant decisions such as investment decision etc.
Theme will help to evaluate objective for preparing financial statements of the company,
accounting treatment etc.
Preliminary analysis findings.
The purpose of preparing financial statements.
There are various objectives of an organization for preparing financial statements such as
comprehensive income statement, statement of changes in equity and other statements for

financial position. One of the major purpose of preparing comprehensive income statement is to
assist users in determining financial performance of the business over an accounting period. The
intention of AGL energy Ltd. behind preparing statement of changes in equity is to allow users to
analyse the factors that have cause changes in amount of equity during accounting period
(Handley, K., Evans and Wright, 2019). It explains change in share capital of firm, retained
earnings and accumulated reserves etc. Balance sheet of AGL energy Ltd. reflects financial
position of the business.
Income statement :
Income statement consists of profits and losses of company, it is also known as profit and
loss statement. Statement is prepared to evaluate the past performance of company which states
about the profits and loss. The statement also shows the growth of company and gives exact
performance which includes expenses and income of the company in past few years. Financial
statements are prepared for the shareholders and stake holders of AGL energy Ltd. because they
want to know the details and performance of the company. Statements are made on quarterly
basis and yearly basis also which are presented to the shareholders in the company meetings. It
includes expenses which are incurred in the office and factory premises like bills, salaries and
petty expenses, and income like commission and interest received. Through these statements
shareholders evaluate the position of AGL energy Ltd. in market.
Statement of equity :
Statement of equity includes details of the equity in company like, company holds shares
in the equity market but income statement and balance sheet does not hold the details of the
equity in the company, so company has to prepare equity statement. It consists about company
share capital and the profits of companies from the date of commencement. This statement
shows the money invested by shareholders in company, and details of dividends to be given to
the shareholders in past years as well in current year. Statement will help the share holders to
know the effective changes in the policies of AGL energy Ltd. like inventory cost and cost of
debentures and various internal expenses and income have impact ion the statement. It shows
company position in share market. It has impact on company internally and externally. Statement
also shows share capital and value of shares of AGL energy Ltd. Statement has fair market value
and mortgage loan and also equity reserves for the company.

Statement of financial performance :
Financial performance includes all financial statements like income statement and equity
statement and balance sheet. Balance sheet consists of all assets and liabilities, assets are
property of company whereas liabilities are company is liable to pat to others. Through these
statements companies share holders comes to know about the assets and liabilities. The members
of company use it to make proper right decision for company. Main purpose is to give proper
financial position of the company. It shows the health of company to shareholders and directors
of the company. The future of company is depended on the financial performance and position of
the company. These statements are the primary source for shareholders to know about their
investment and about AGL energy Ltd (Peel and et.al., 2019). It shows about the net expenses and
net cash in the company and also about outstanding income and expenses. It provides details of
debt and creditors of company.
Analysis of accounting treatment for financial statements.
Australian Accounting Standards Board (AASB) is government agency in Australia. The
purpose of AASB is to develop and maintain standards for financial reporting that are applicable
to firms that are operating in public or private sectors in Australia. AASB 101 is related with
presentation of financial statements of AGL energy Ltd. The objective of this standard is to ensure
comparability of financial statements of previous years of the company with financial statements
of other firms (Flower and Ebbers, 2018). Every standard that are developed by AASB includes
an application clause that provide information on the type of standards that are applicable on
entities.
Financial statements are to be prepared by all the firms except small proprietary
companies. Financial statements of AGL energy Ltd. will consist of cash flow statement, balance
sheet, profit and loss statement etc. AASB has also provided information regarding the matters
that should be included in financial statements. There are some standards that allow alternative
treatment or use of different methods, while there are some Australian standards that permits use
of single method (Russell, 2017). Harmonization of all the standardized help to ensure
compliance of different requirements of the international standards. It ensures that listed
companies have to follow all the disclosure requirements.
Evaluate disclosure for business combinations.

Business combination refers to transaction in which one firm acquires control over
another firm. International Financial Reporting Standards (IFRS) 3 is related with business
combination. It defines that business have to use acquisition method for acquiring another firm
(Crowther, 2018).
IFRS 3 is applicable to combinations of business that has occurred in the first accounting
period that has started on or after 1st July 2009. Now, IFRS 3 also includes combinations by
contract and combinations of mutuals. Common control transactions will remain outside the
scope of new standard. Further, the standard provides an option to companies to measure their
minority interest at the fair value (Su and Wells, 2018). The standard has provided option for
each separate business combination for minority interest as well as controlling interest in
subsidiary company. IFRS 3 also have some modifications in liabilities and assets recognized in
balance sheet of acquired company. Most of the assets are recognizes at fair value but now there
are certain exceptions for some items like pension obligations and deferred tax. Further, it also
provides guidance for the accounting of employee shared-based plans.
Moreover, IFRS provides some specific details regarding determination and valuation for
whether replacement shares are considered as a part of payment for business combination, or
they can be compensated for services after combination of businesses. The major change in the
standard is regarding recognition of deferred tax asset acquired by the firm. Whereas, the IFRS 3
on business combination is silent regarding the treatment of insurance contracts, sale contracts,
hedges, lease etc (Brumm and Liu, 2019). These contracts are mainly categorized on the basis of
situations that are existing at the data of inception of the contract.
Analysis of accounting for group structure.
Group structure of the particular company helps in merging the assets and liabilities of
the two or more business entities. It a formal and standardized process of carrying out financial
reporting. Here the various group structures are represented as one single entity. It is beneficial
for the owners and creditors of the parent company (Brewer and et.al., 2017). A consolidated
financial statements help in providing total liabilities and asset under the control of parent
company. It helps in analysing how the particular group of the parent company is performing for
higher results and outcomes. It is very useful in reducing the financial redundancy (Preparing
simple consolidated financial statements, 2019). This helps in improving the bottom line for the
company in order to gain higher results and outcomes.

Business strategies on analysis of relevant accounting information.
Business strategy analysis is useful in determining the key value drivers of the business.
It is also very useful in evaluating the business risk and key value drivers. AGL energy Ltd. should
focus on effectively evaluating the upcoming trends of the business (Appelbaum and et.al.,
2017). Strategic business accounting techniques such as target costing, attribute costing, value
based costing, competitor position monitoring, benchmarking, key performance indicators, etc.
helps in effectively analysis of relevant accounting information systematically. Benchmarking is
one of the effective business strategy which is useful in setting strategic benchmark in order to
attain desired goals. By setting benchmark, AGL energy Ltd. can achieve desired business goals as
well as objectives in the market place (Coltman and et.al., 2018). It helps the company in
analysing key business processes and standards which are followed by profit making companies
in gaining competitive advantages. It is very much important from the perspective of business
operations to adopt sound business strategies for improving performance level. With the help of
correct and accurate accounting information, it helps in measuring current business performance
level. Also, it provides deep insight about the financial position of the company for a specific
period.
Accounting information plays one of the most important role in the decision-making
process of every business firms. It is very much essential to have proper, accurate as well as
relevant business and accounting information pertaining to a particular time period for taking
crucial decisions about business processes. Gathering of relevant and reliable accounting data
helps AGL energy Ltd. in gaining competitive edge in the market place. All the data gathered
needs to analysed and interpreted with the help of proper statistical as well as accounting tools
and methods for having proper understanding about such matter (Loughran and McDonald,
2016). One of the most important business strategy for analysing accounting information is Key
performance indicator with the help of which a business can evaluates its own employees as well
as business strengths and weaknesses. It helps in determining changes which are required to be
made in the business operations for making improvement in overall operational efficiency,
performance as well as profitability level.
Compare and contrast fixed format with flexible format of financial statements.
Financial statements is an effective report which helps management of the company to
effectively present the financial position and performance of the company for a particular period.

Financial statements can be classified into income statement, balance sheet, statement of
shareholder's equity and cash flow statements. Fixed format of financial statements comprises
classification of assets and liabilities (Reid, 2018). A proper structure of the accounting has to be
followed which helps in identifying the current financial status of AGL energy Ltd. for a particular
period. It helps in determining the assets and liabilities of the company in order to effectively
determine the financial position and performance of the organization. Flexible financial
statements is used where company can effectively modify the elements present in the financial
statements.
In case of fixed format of Financial statements, companies are having fixed format or
structure as per which the final accounts of the company for a particular year ending has to be
prepared accordingly. It is required on the part of every business organization to make
compliance of every standard and accounting norms for preparation of financial statements
(Vander Bauwhede, De Meyere and Van Cauwenberge, 2015). As per the fixed format of the
financial statements as prepared by the company, it consists of following items in following
order:
1. Sources of Funds
Shareholders' Funds
Share capital
Reserves and Surplus
Loan funds
Secured loan
Unsecured loan
2. Application of Funds
Fixed Assets
Gross block
(-) Depreciation
Investment
Current Assets
Inventories
Sundry Debtors

Cash and bank balances
Other current assets
Less: Current Liabilities and Provisions
Current Liabilities
Provisions
On the other hand, financial statements of AGL energy Ltd. can also be presented in the
flexible form as well. In flexible format, it provides ease for many business firms in making
interpretation as well as analysis of financial information provided therein. Also, by using
flexible means for financial statements preparation companies can makes changes in their final

accounts as per the changes required to be done for any business as well as accounting
transactions. It comprises items such as assets items on the first column whereas all the items of
liabilities nature are listed on the later column side. It is used mainly by the internal users i.e.
management of the company for making crucial decisions.
CONCLUSION
From the above conducted research it has been concluded that, Corporate reporting refers
to providing information to stakeholders of the business such as creditors, investors. This study
will effectively outline purpose of preparing financial statements, accounting treatment for
financial statements under AASB. The key purpose of preparing comprehensive income
statement is to assist users in determining financial performance of the business over an
accounting period. It will also explain disclosure and measurement for business disclosure. It

will also explain accounting for group structure. A consolidated financial statements help in
providing total liabilities and asset under the control of parent company. Furthermore, this study
also concludes business strategies on the basis of evaluation and analysis of accounting
information and fixed format with flexible format of financial statements.

REFERENCES
Books and Journals -
Appelbaum, D and et.al., 2017. Impact of business analytics and enterprise systems on
managerial accounting. International Journal of Accounting Information Systems.25.
pp.29-44.
Brewer, H.R and et.al., 2017. Family history and risk of breast cancer: an analysis accounting for
family structure. Breast cancer research and treatment.165(1). pp.193-200.
Brumm, L. and Liu, J., 2019. New leasing accounting standard. Taxation in Australia. 53(8).
p.449.
Coltman, T. and et.al., 2018. Managing the Network of Supply and Demand at AGL
Energy. Council of Supply Chain Management Professionals Cases. pp.1-12.
Crowther, D., 2018. A Social Critique of Corporate Reporting: A Semiotic Analysis of Corporate
Financial and Environmental Reporting: A Semiotic Analysis of Corporate Financial and
Environmental Reporting. Routledge.
Flower, J. and Ebbers, G., 2018. Global financial reporting. Macmillan International Higher
Education.
Handley, K., Evans, E. and Wright, S., 2019. Understanding participation in accounting
standard‐setting: the case of AASB ED 192 Revised Differential Reporting
Framework. Accounting & Finance.
Peel, J. and et.al., 2019. Governing the Energy Transition: The Role of Corporate Law
Tools. Available at SSRN 3439212.
Reid, W., 2018. The meaning of company accounts. Routledge.
Russell, M., 2017. Management incentives to recognize intangible assets. Accounting &
Finance, 57. pp.211-234.

Su, W.H. and Wells, P., 2018. Acquisition premiums and the recognition of identifiable
intangible assets in business combinations pre-and post-IFRS adoption. Accounting
Research Journal. 31(2). pp.135-156.
Online
Preparing simple consolidated financial statements. 2019. [ONLINE]. Available
through:<https://www.accaglobal.com/pk/en/student/exam-support-resources/
fundamentals-exams-study-resources/f3/technical-articles/preparing-simple-consolidated-
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