Australian Company Disclosures and Governance

This assignment delves into the corporate disclosure practices of Australian companies, particularly those listed on the Australian Securities Exchange (ASX). It examines the importance of transparent reporting, referencing key research papers and ASX guidelines. The analysis highlights the need for effective disclosure methods to mitigate investor risks and promote ethical business conduct within Australia's corporate landscape.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Student’s Name
Course Code

CORPORATE ACCOUNTING 1
Executive Summary
Financial Position of Surfstitch Ltd is under evaluation in this report with its relevant conditions
in the years 2015 and 2016. The following discussion will focus on the present financial situation
of Surfstitch Ltd which will help investors to identify new investment options. The discussion
includes articles, research papers and ASX disclosures which describes majorly the proper
measures that needs to be preserved by Australian authorities. It becomes important for the
organizations to keep track of the monitoring operations. The use of measures for disclosure
could be applied with definite boundaries on wrong display of news. For stopping unethical
measures to get implemented Article 3A can be invoked by the companies as shown by David
Jones in his latest article. Thus it can be established that measures of continuous disclosure
would certainly assist in the reduction of risk for the investors in their respective investments.

CORPORATE ACCOUNTING 2
Table of Contents
Part I:...............................................................................................................................................3
1. Identification of the financial crisis scenario faced by Surfstitch Ltd:.................................3
2. Determining the intangible asset goodwill and investment in subsidiary and cash position
during the year 2015....................................................................................................................3
3. Determining the impairment costs, selling & distribution and administrative expenses in the
profit and loss statement during the year 2016:...........................................................................3
4. Relevant recommendations whether to buy, hold or sell Surfstitch Ltd shares and why:......4
Part II:..............................................................................................................................................5
Mentioning about: Why is it necessary to have a continuous reporting regime for disclosure
entities and is it effective?...........................................................................................................5
References......................................................................................................................................10

CORPORATE ACCOUNTING 3
Part I:
1. Identification of the financial crisis scenario faced by Surfstitch Ltd:
Identification of the financial crisis is mostly done from the annual report submitted by
Surfstitch Ltd in which the decrease of capability of operations is portrayed after Justin Cameron
exited in 2015 (surfstitchgroup.com 2017). Moreover, Surfstitch Ltd had a weak management
which could not control the incremental expenses which hampered the financial condition of the
organization. In addition to this, the organization had very high costs of distribution,
administration and sale which were ever increasing and affected the net profit of the
organization. These cumulative expenses restricted the company from making any significant
profits which could have held its financial activities together in the future. These factors caused
the rise of predicament in context of the financial strength of the organization.
2. Determining the intangible asset goodwill and investment in subsidiary and cash position
during the year 2015
The assessment of the yearly report of Surfstitch Ltd for 2015 primarily represented
goodwill of $73,832,000 (surfstitchgroup.com 2017). Moreover, the subsidiary investment was
principally recognized at $70,197,000 and the cash & cash equivalent point of Surfstitch Ltd was
discovered at $40,837,000 (surfstitchgroup.com 2017).
3. Determining the impairment costs, selling & distribution and administrative expenses in
the profit and loss statement during the year 2016:
In 2015, there was no mention of the impairment costs in the respective annual report,
whereas in 2016 the damage cost increased to $88,999,000, as depicted in the annual report
(surfstitchgroup.com 2017). Additionally, the assessment of annual report also showed an

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addition in the selling and circulation levels of $44,683,000 in 2015 and $101,268,000 in 2016
for Surfstitch Ltd (surfstitchgroup.com 2017). Moreover, the administrative expenses of
Surfstitch Ltd in 2015 essentially mounted to $7,424,000 and in 2016, it stood at $49,237,000
(surfstitchgroup.com 2017). Hence, organisation total financial steadiness deteriorated over the
period of two years, which majorly hampered its financial strength.
4. Relevant recommendations whether to buy, hold or sell Surfstitch Ltd shares and why:
Annual report and complete specified expense evaluation of Surfstitch Ltd can majorly
help in pinpointing will give the validation of finance of the company. Hence, it can be noted
that achieving financial stability in the near future is not possible for the organization. Moreover,
the recent predicament of finance of Surfstitch Ltd is downgrading, which has a negative impact
on the capacity of profit generation (Au.finance.yahoo.com 2017). The stability of finance in
recent times of Surfstitch Ltd is decreasing, as there is acceleration in its expenses. Losses of
Surfstitch Ltd has speeded up in 2016 as compared to 2015. Identification of the relevance can
be achieved by evaluation.
When the share price of Surfstitch Ltd was evaluated, it was found that share market value of the
company is on decline. Due to this there is a decrease in inclusive stability in finance of the
company and badly affecting the main sources of income creation capacity of Surfstitch Ltd
(Au.finance.yahoo.com 2017). Prices of share have fallen gradually in 2 years and investors are
reluctant in making further investments in the company. In addition to this, investors are inclined
to sell the shares of Surfstitch Ltd as company is not looking in a good shape.

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Part II:
Mentioning about: Why is it necessary to have a continuous reporting regime for disclosure
entities and is it effective?
When the evaluation of the data given to identify the importance of disclosure in
continuation was done it showed the main reason for the regime of constant reporting. The help
which the company got by the Australian authorities to reduce greater manipulations was of
measure of nonstop disclosure. This was done by the organization and was much needed.
Surfstitch Ltd got evaluated its case which assisted in focusing on the unethical information
shared by the shareholders. In addition to this, financial strength of Surfstitch Ltd is majorly
determined by the measures of continuous disclosure. This showed that the organization is
accountable for revealing every important information in context of the decisions effecting
growth of the company. In the light of this, Feigin, Scott and Scott (2016) state that applying
measures of continuous revelation can assist in finding out financial transfers of the company.
Disclosures were the main discovery when evaluation of the research paper is done in
2000. This effort assisted in finding out the importance and feasibility of the future disclosure
forecast which was done by Surfstitch Ltd to show their financial transfers. The research paper
was constructed in such a way to show the relevant data of the Surfstitch Ltd in the year 2000
(surfstitchgroup.com 2017). It was found out that there was no proper method followed by the
Australian Government in conducting this process. The research paper was compiled using the
old data and no specifics were mentioned by the ATO. Whereas, Beekes, Brown and Zhang
(2015) stated that some organizations use the measure of disclosure of enhance their prices of
shares which in turn increase their capital in market.

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Earlier of the corporations offered data in their annual report without satisfactory research
and assessment, Therefore, the predictable evaluation of the enterprises were not acceptable,
which led to the use of trustworthy estimation methods by the organization (Lewis 2015).
Accordingly, the application of constant discovery measure needs to be directed, as the
applicable changes in the annual report could be acknowledged. The article establishes the use of
unremitting admission technique could sooner or later permit the investor to find the applicable
changes in the annual report. This has to be done for making decisions by the management.
Seamer (2014) declared that with the support of continuous disclosure method shareholders are
capable to recognize the fluctuations in revenue and total profit that could be produced by the
organization.
The complete evaluation of the article “Australia’s continuous disclosure system: clear or
confused?” helps in revealing the actual confusion created by the continuous disclosure system
(Au.finance.yahoo.com 2017). Moreover, the article establishes that the method of continuous
disclosure which has been applied by the ASX enhances the confusion among investors with
respect to operations of Surfstitch Ltd.The unlawful methods that could be applied by the
company in assistance with methods of continuous disclosure were mentioned in the article. In
addition to this, the article does the evaluation of methods adopted by David Jones for snow
balling demand for the corporation, whose claim for the takeover bid could be known
(Au.finance.yahoo.com 2017). Moreover, the research directed by David Jones majorly
portrayed the actual discourse in relation to the takeover bid made mandatory for enhancing the
demand of company’s shares in the minds of interested investors. These trials assisted in finding
out the influence of methods of nonstop disclosures, which could be organized by Surfstitch

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Ltd.The author tries to focus on the listing rules of 3.1.A.3, in which methods could be
pinpointed which are required to be preserved by the organization before revealing any original
material. Hence it can be stated here that the organization with the help of methods of nonstop
disclosure are able to show the modifications in the annual report. Therefore it can be said that
methods adopted by David Jones could assist in creating some methods which can help in
reduction of manipulative techniques applied by the companies. David Jones surely identified the
complete lacunae in the nature of continuous disclosure being used by Surfstitch Ltd
(surfstitchgroup.com 2017). In the light of this Price (2014) states that ASX in accordance with
methods of continuous disclosure are capable to target the relevant organizations which are in
compliance with regulations of the Australian division of Security Exchange. Therefore, in the
following article it is clearly given that AASB will take necessary actions for regulating the
information of disclosure which have been accessed by the organizations through ASX portal
(Au.finance.yahoo.com 2017). Hence, proper measures and opinions have to be taken by the
ASX for reducing the wrong methods used by companies.
Rules are defined in the organization which needs to be adhered with before moving up to the
requirements for disclosure written by the ASX (Au.finance.yahoo.com 2017). Moreover, the
methods of continuous revelation of the adequate requirements need an evaluation with specific
criteria. This is required for helping the companies to establish the reliability of data which has
been disclosed. Criteria of disclosure are:
 Information of the organization is a trade secret.
 Information disclosure breaches any specific law.
 Make it a point about the information of internal management which is generated.

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 If there is incomplete information of the consultations and suggestions.
After that, conclusions derived from the assessment of above mentioned criteria, corporations
are not supposed to disclose unconfirmed data to the investors. This reduces the enhanced
methods which are wrongful and can majorly damage the share prices of the companies.
Therefore, applying methods of disclosure which are repetitive is highly required in Australia, as
they assist in the reduction of consequences of 2008 financial status. Moreover, it supports in
decreasing the influences, which are intentionally orchestrated by the organization to increase
their share price. Again, the method of disclosure which is repeated is written in the “Continuous
Disclosure: an arbitrage guide”, it emphasizes on different types of methods, applied by
establishments to effectively publish appropriate news through ASX platform. Significant
information displayed, which can be revealed by the enterprises to their shareholders. In the light
of this, it is stated that ASX platform could satisfactorily be deployed by the companies for
imparting important inflation information to its stakeholders, which can determine the nature of
the financial report.
Hence, it can be asserted that use of methods of repetitive disclosure permits the investors to
choose the adequate influence of news, which can alter the nature financial position of the
organization. Additionally, the measures of repetitive disclosure can also support in increasing
authenticity of the evidence reported by the company. Annual reports of the companies were
wrongfully made to show false information about the upcoming profits of the companies during
the financial crisis. Hence, the methods being adopted by ASX is consistent in reducing wrong
methods practiced by organizations to create an unethical financial report.Therefore, disclosure
practices could be applied with some specific restrictions, when it comes to providing data
concerning verbal agreement. All the statements and declarations should be realized with a

CORPORATE ACCOUNTING 9
written agreement which is overseen by the experts of the organization. This can majorly
decrease the chances of forgery practiced by the organizations. Thus, it can be concluded that use
of disclosure methods is a sustainable and mandatory approach for every organization that is
conducting business in Australia and is a public listed company.
There are many important points in this article such as the research paper and the disclosure
methods of ASX which establishes proper methods which should be practiced by the authorities
of Australian government which are of dire need to monitor business in organizations. Therefore
it can be said that the use of repetitive methods of disclosures with certain limitations on false
display of news can be implemented. There is a need for developing Article 3A for decreasing
the practice of wrongful methods used by the companies as stated by David Jones. It can majorly
reduce the risk of investors in the business.

CORPORATE ACCOUNTING 10
References
Au.finance.yahoo.com 2017. SRF.AX: Summary for SURFSTITCH FPO - Yahoo Finance.
[online] Au.finance.yahoo.com. Available at: http://au.finance.yahoo.com/quote/SRF.AX
[Accessed 13 Sep. 2017].
Beekes, W., Brown, P. and Zhang, Q., 2015. Corporate governance and the informativeness of
disclosures in Australia: a re‐examination. Accounting & Finance, 55(4), pp.931-963.
Feigin, A., Feigin, A., Ferguson, A., Ferguson, A., Grosse, M., Grosse, M., Scott, T. and Scott,
T., 2016. Evidence on why firms use different disclosure outlets: Purchased analyst research,
investor presentations and Open Briefings. Accounting Research Journal, 29(3), pp.274-291.
Lewis, K., 2015. Changes to Continuous Disclosure Guidance Note 8. Governance
Directions, 67(10), p.584.
Mayorga, D., 2013. Managing continuous disclosure: Australian evidence. Accounting, Auditing
& Accountability Journal, 26(7), pp.1135-1169.
Price, J., 2014. Continuous disclosure. Governance Directions, 66(1), p.6.
Prokofieva, M., 2014. Twitter-based dissemination of corporate disclosure and the intervening
effects of firms' visibility: Evidence from Australian-listed companies. Journal of Information
Systems, 29(2), pp.107-136.
Seamer, M., 2014. Does Effective Corporate Governance Facilitate Continuous Market
Disclosure?. Australian Accounting Review, 24(2), pp.111-126.

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surfstitchgroup.com 2017. World Leaders in Action Sports Retail. [online] Surfstitchgroup.com.
Available at: http://www.surfstitchgroup.com [Accessed 13 Sep. 2017].
Truong, T.P. and Nguyen, N.N., 2017. Regulatory Enforcement, Financial Reporting Quality and
Investment Efficiency: A Pitch. Accounting Research Journal, 30(1).