Woolworth Introduction and Analysis of Consolidation

Running Head: COMPANY ACCOUNTING
Memorandum
To- Board of Directors
From-
Cc-
Date- August 26, 2019
Subject- Woolworth Introduction and Analysis of Consolidation
The consolidated financial statements are considered as the group’s financial statements in
which the elements such as liabilities, assets, cash flows, expenses and incomes of parent
company as well as the subsidiaries are being presented as those of the single economic
entity. Hence, this memo is prepared with the intention of analyzing the technical aspects of
the consolidation to the board, which includes preparation of consolidated financial
statements, corporate governance, solvency, sustainability, audit committee, any goodwill,
impairments as well as other important technical aspects of the Group. The presentation of
this memo would be beneficial for the directors as well as management of Woolworth Group.
The Woolworth Group Limited is major Australian company that have extensive interest of
retail throughout Australia as well as New Zealand. The company is the second largest by
revenue in the Australia (Cîrstea, 2014).
The consolidated financial statement of Woolworths Group incorporates liabilities, assets as
well as the results of all of its subsidiaries. The subsidiaries are defined as all the firms on
which Group is having their control. Moreover, the Woolworths Group control the firm in
case when the Group is having right to, is exposed to, variable returns from the involvement
with firm as well as having the ability for affecting those particular returns by their power for
directing the activities of the firm (Palea 2014). From the date of transferring of the control to
the Group, their subsidiaries are consolidated fully and from date of ceases of control, they

1FINANCE
are deconsolidated. Moreover, the consolidated financial statements are the general-purpose
financial statements that are prepared as per Corporation Act 2001 as well as Australian
Accounting Standards and the Interpretation (Gillis et al., 2015). The explanation of the
specific policies of accounting is done in the notes provided in the annual report for each
element of accounting of consolidated financial statements. The balances as well as
transactions of the intra group as well as any of the unrealized losses or the gains that arises
from the transactions of intra-group are generally, eliminated in preparation of financial
statements (Woolworthsgroup.com.au. 2019).
Corporate governance is the central approach of the Woolworths Group for enhancing the
long-term value of shareholders. The board as well as the management of the Woolworth
Group is committed towards the policies and the practices, which meets high levels of the
disclosures and the compliance. The group follows every recommendations of corporate
governance principles as well as recommendations by council of ASX corporate governance,
all throughout the period of the reporting period. The copy of statements of corporate
governance is available at its website (Baumgartner 2014).
The approaches as well as strategy for the sustainability are integral to the operations and
responsibility of the group. During the year, the Group has significantly made progress
towards achieving the commitments of strategy of 2020 that includes important steps for
moving towards the circular economy. The group has conducted materiality assessment of
their responsibility of sustainability and identification of the core areas of their focus on their
business for delivering the positive change. The Group has removed the single-use bags of
plastic from all the businesses and has announced the commitments towards not selling of the
plastic straws by end of the year 2018. The Group also continues for removing the packaging
that is unnecessary for producing, over 180 tones has been removed over last 12 months
(Woolworthsgroup.com.au. 2019).

2FINANCE
The Audit committee commits towards assisting the boards for integrity as well as reliability
of reporting and disclosures of the finance as well as non-financial aspects. The committee
provides advice regarding the consistency of non-audit services provisions with the imposed
auditors independence general standards. The audit done by the audit committee is according
to the Auditing Standards of Australia as they exercises professional judgement and they are
also responsible for maintaining the professional skepticism all throughout the audit
(Alqatamin 2018).
Goodwill of the company helps in representing excess of cost of acquisitions over the fair
value of shares of acquired net identifiable assets. The measurement of goodwill is done at
the cost less to the amortization as well as impairments loss in case if there is any. In case of
acquiring it in the business combination then the costs helps in representing the fair value at
acquisition date. The intangible assets with the finite lives are amortized on the straight-line
basis over the estimated useful lives (Klimczaka, Dynel and Pikos 2016). At each period,
reassessment is done on useful lives. Moreover, in the year 2018, the assessment has been
done by the Group on the amount of carrying of the plant, property as well as equipment.
Moreover, from the assessment of the goodwill and the intangible assets, it has been realized
that no impairments have been recognized.
During the year 2017, there was record of $38 million impairments of the non-financial
assets in the continuing operations in which the amount of $21 million was in relation to BIG
W store plant, property and equipment’s and amount of $17 million was related to
Summergate Intangibles (Tissot 2016). Moreover, during the year 2016, company has
announced their planned exit from markets of the Home Improvement markets. Moreover,
the assets recoverable amounts in the business of Home Improvements was re-assessed
during the year 2017 and the resulting reversal of the held assets for the sale impairments of
the amount $24 million was included in ‘Loss from the discontinued operations’. Further, the