Analyzing Reporting Challenges in Australian Corporate Governance

This report examines the challenges faced by reporting entities in Australia when applying Australian Corporate Governance Guidelines, using Bellamy Company's annual report as an example. It highlights issues such as non-conformity to disclosure requirements, as demonstrated by Bellamy's breach of disclosure obligations and subsequent penalty. The report also discusses the failure of management and directors to fulfill their obligations as outlined by the ACGG, leading to misrepresentation of financial reports. It suggests that ASX needs to enhance monitoring to improve the adoption and application of governance guidelines. Desklib provides access to similar solved assignments and past papers for students.

Running head: CHALLENGES FACING REPORTING IN AUSTRALIA 1
Challenges Facing Reporting in Australia When Australian Corporate Governance Guidelines
Are Applied
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CHALLENGES FACING REPORTING IN AUSTRALIA 2
Challenges Facing Reporting in Australia When Australian Corporate Governance Guidelines
Are Applied
The kind of corporate governance practices being applied by the management and
directors of a company usually play a very essential role in maintaining and establishing both
operational and financial reporting standards of a reporting entity. According to the Australian
Securities and Investments Commission, corporate governance is the driver of the performance
of any company.
Although Corporate Governance Guidelines are broad and have many components, most
of them are formulated to guide the management when it comes to reporting. Good Corporate
governance guidelines are essentially required to facilitate continued flexibility and relevancy for
listed companies to make sure there are relevant, timely and fair disclosures in their annual
reports. Looking at Bellamy company's annual report, we can identify a number of challenges
that the corporate governance practices of Australia present to reporting entities (Whyte, 2017).
This paper seeks to outline and explain some of the common challenges that are facing reporting
for companies which apply Australian Corporate Governance Guidelines. The Annual report for
Bellamy Company is taken as an example.
Challenges Presented by Australian Corporate Governance Guidelines
Non Conformity
On a study where the websites for 50 listed Australian companies were explored, it was
found out that many companies in Australia who adopt the guidelines do not conform to the level
of disclosure that is required by the recommendations of the underlying guidelines (Conway,

CHALLENGES FACING REPORTING IN AUSTRALIA 3
2015). The study further found out that the level of disclosure being presented in company
websites do not match the level of disclosure that is required by corporate governance practices.
How the Annual Report for Bellamy Do Not Conform to Recommendations of Australian
Corporate Governance Guidelines
Bellamy is a perfect example of one of the companies that disregarded the guidelines of
financial reporting presented by the Australian Corporate Governance Guidelines. This happened
in 2016 when the company was forced to pay a penalty amounting to $ 66,000 without admitting
liability (WAGNER, 2015). The Australian Securities and Investments Commission accused
Bellamy of continuous breach of disclosure obligations in 2016. This followed an inquest into
the circumstances surrounding the criteria that the company used to track its sales number as
compared to the forecasts ("Investor Centre", 2018). This, therefore, reveals that many
Australian Companies do not conform fully to the recommendations of the Australian Corporate
Governance Guidelines. At Bellamy, the interest of powerful stakeholders might have influenced
the level at which the company conform to ASICS, ASX and GAAP reporting guidelines
(Coffey, 2011). ASX, therefore, need to increase the level of monitoring to enhance the adoption
and application of the aforementioned governance guidelines.
Failure by Management and Directors to Deliver on their Obligations as Set out by ACGG
Australian Corporate Governance Guidelines requires that directors of any company should be
held accountable for any financial or operational reporting done by the company. The reality of
matters is that many directors disregard this mandate, leaving out the delicate role to middle-
level managers and junior employees (Christensen, Kent & Stewart, 2010). For example, the
directors at Bellamy appeared to have disregarded and over misuse their roles by giving a higher

CHALLENGES FACING REPORTING IN AUSTRALIA 4
forecast of its business. An expectation of a growth in revenue by 10 percent in the year 2019
can be ambitious but unrealistic. We can therefore say that the directors for Bellamy might have
be aware with is happening in the misrepresentation of the company’s financial reports and are
disregarding it. This is one of the many challenges that financial reporting is encountering when
the Australian Corporate Governance Practices are applied.

CHALLENGES FACING REPORTING IN AUSTRALIA 5
References
Coffey, J. (2011). ‘ASIC’s Forward Agenda’ – The Australian Corporate Regulator’s Approach
to Timely Disclosure by Listed Companies. SSRN Electronic Journal. doi:
10.2139/ssrn.1869436
Conway, S. (2015). Guidelines for Corporate Governance Disclosure – are Australian listed
companies conforming?. Retrieved from
https://www.researchgate.net/publication/267547400_-1_-
_ASX_Guidelines_for_Disclosure_on_Company_Websites_-
_are_Australian_Listed_Companies_conforming
Christensen, J., Kent, P., & Stewart, J. (2010). Corporate Governance and Company
Performance in Australia. Australian Accounting Review, 20(4), 372-386. doi:
10.1111/j.1835-2561.2010.00108.x
Investor Centre. (2018). Retrieved from https://investors.bellamysorganic.com.au/Investors/
WAGNER, I. (2015). Crisis Communication Lessons from Australia’s Infant Formula Shortage.
Retrieved from http://decisivepr.com/crisis-communication-lessons-from-australias-
infant-formula-shortage/
Whyte, J. (2017). Troubled infant formula producer Bellamy's seeks $60 million from investors
for "stabilisation plan." Retrieved from
https://www.afr.com/business/retail/fmcg/bellamys-organic-seeks-60m-from-investors-
for-stabilisation-plan-20170613-gwpvov

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