REA Group's Reporting Practices for the Financial Year 2020

Australian Securities and Investments Commission
GPO Box 9827
Sydney NSW 2001
Dear Sir,
This letter accepts and confirms our understanding of the engagement in respect to providing
professional services to ASIC.
We have carried out the research on REA Group’s reporting practices for the financial year
2020 and based upon the findings, we will issue a report stating about the REA reporting
practices, financial impact of it and reason behind those practices. In addition to this, the
disclosure policies of the company is also being analysed in regard to earnings management,
measurement practices, sustainability and environmental accounting.
Thank you for engaging us, we are looking forward for working with you again.
Yours sincerely,
xxxxxxxxxxxx
Senior Consultant

CASE STUDY REPORT
WRITING ON REA
GROUP LTD AUSTRALIA

EXECUTIVE SUMMARY
This report is conducted for the purpose of determining the REA Group’s
compliance with the important accounting standards which includes AASB 16, AASB 6 and
AASB 121 along with analyzing the earning management and sustainability reporting of the
group. The report is basically built on the annual reports of the company. Based on the
findings it can be concluded that AASB 121 is applied for accounting of foreign transactions
by the businesses which have global footprint. It enables proper disclosure in respect of
change in rate and the associated rate risk. The financial statements are prepared in a
presenting currency with the help of translation procedure. It also mitigates the risk through
engaging in forward exchange contracts. In addition to this it was also evaluated that for the
accounting of sustainability and environment there are not much any standards by the
accounting board. But then also the company is trying to manage the effective sustainability
and corporate governance within operations of the company. Along with it was also evaluated
that REA group need to manage and make use of effective earning management practice.
This is essential as when the company will be having effective earning management practice
then this will increase the profitability of the company to a great extent.

TABLE OF CONTENTS
EXECUTIVE SUMMARY........................................................................................................3
INTRODUCTION......................................................................................................................5
METHODOLOGY.....................................................................................................................6
OBSERVED FINDINGS...........................................................................................................7
1.Accounting for mineral Resources......................................................................................7
2. Accounting for leases.........................................................................................................7
3. Accounting for foreign transactions and forward exchange contracts.............................10
4. Disclosures and practices in respect to sustainability and environmental accounting and
other voluntarily disclosures................................................................................................12
5. Earnings management practices.......................................................................................14
6. Measurement practices.....................................................................................................16
IMPLICATIONS OF THE FINDINGS...................................................................................16
Implications of AASB 16.....................................................................................................16
Implications of AASB 121...................................................................................................20
Measurement practices.........................................................................................................22
CONCLUSIONS AND RECOMMENDATIONS..................................................................23
REFERENCES.........................................................................................................................25

INTRODUCTION
REA Group Ltd is a MNC engaged into the digital advertising business specialised
in the property. The group is aimed at offering its customers with the access to largest and
most engaged audience in respect to the property seekers and thus, it delivers the highest
possible customer value through the way of large number of leads along with offering the
high quality content and insights to the customers. The company makes use of the latest
technology along with collective team of genius for providing the quality products and
services to its clients and the large customer base.
This report provides the view as an external consultant engaged by the ASIC
pertaining to initiating a research and reporting on the REA Group(ASX:REA)financial
reporting and accounting practices. This report is based upon investigating the annual report
of REA Group for the year ended 30 June 2020 and is aimed at REA group’s reporting
practices pertaining to the accounting for leases and mineral resources. In addition to this, it
also involves evaluating the compliance of the company regarding accounting for foreign
currency transactions. the report also provides a disclosure of the practices which is being
followed by company pertaining to the sustainability and the environmental accounting.
Based upon the requirement, it will also incorporate proper evaluation of the earnings
management and measurement practices. For the purpose of completion of this report, mainly
the annual report of the date 2020 will be used and other financial reports of the previous
financial years might be taken into account for the purpose of deriving the finding ina more
accurate manner. The key focus areas as per the ASIC is being considered while evaluating
the financial practices of the company. The accounting standards released by the AASB is
also referred in order to identify whether the organization is complying with the relevant
standards, which is being is evaluated by considered textbooks and articles which are issued
by the reputable firms which helped in gaining better and meaningful insight and
understanding of the relevant standards.
In addition to this, the report will throw some light on the key areas of concern
which is stated by AASB. Furthermore, the critical analysis of the practices which is being
followed by REA group in respect to the earnings management along with the measurement
practices is being observed and analysed to determine the way in which it impacts the
decision making of the users of the financial statements. This report will require exercise of
financial accounting theories and concepts to the current case of REA group along with the
practical application of important regulations and topics pertaining to the financial reporting

procedures. Other crucial documents like the financial report of 2018 or the major financial
reporting changes which has taken place etc. It illustrates the practical application of the
theoretical knowledge and help in gaining better understanding about the financial standards,
policies, regulation which are essential for the organization to comply with for responsible
reporting and disclosure.
METHODOLOGY
In the initial stage of this research, a proper and sound understanding about the
business functioning, operational activities, strategy along with the financial performance and
position of REA group is carried out. It is mainly being done with the help of the annual
report of the company in order to make sure that the financial reports are consistent. For
effectively completing this report, the primary research approach is being utilized in which
relevant data was collected by the way of observing the company’s annual report along with
the any important announcement made and published on the ASX and the information being
published on the official website of the company and through other reliable online sources
(Morris, 2020). In addition to this, it also involves making use of thedirector’s report and
expanding the knowledge base pertaining to the company’s assets, suppliers and the products
and services offered to the customers.
After getting a good understanding about REA group operation, relevant accounting
standards, theories along with the reporting practices were being examined with the objective
of identifying whether the organization is following it or not. The terms of engagement is
concentrated upon the below stated standards:
 AASB16 – Leases
 AASB 6 - Exploration for and Evaluation of Mineral Resources
 AASB121 - The Effects of Changes in Foreign Exchange Rates
The given accounting standards are being obtained through the AASB website. After the
complete examination of the standards, it helped in determining which standards are
applicable to the REA group. In addition to this, the relevance of the accounting theories and
standards is being studied through the textbooks, articles published from the reputed
organizationand the government websites. Apart from this, the other areas which is being
focused involves the accounting theories, earnings management and the measurement
practices. Data in regards to the above themes were essentially gained from course books and
learning material given in the unit ACC3700. Further exploration pertaining to the
supportability, sustainability and environmentalreporting was led bythe way of observing the