Corporate Accounting: Financial Reporting System and Standards

The report aims in detecting the financial reporting system and standards, which can be used by the organisation for depicting their accurate financial performance in the annual report. The assessment also aims in evaluating the overall contributions, which has been conducted by the Australian Accounting Standard Board in drafting the conceptual framework for the organisation. The debt and equity combination for the selected companies are mainly conducted in the assessment for deriving their current solvency condition. In addition, the comparative analysis is conducted on the overall four companies for detecting their operational capability, which has been noticed from the equity and debt combinations.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student:
Name of the University:
Authors Note:

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Executive Summary:
The report aims in detecting the financial reporting system and standards, which can be used
by the organisation for depicting their accurate financial performance in the annual report.
The assessment also aims in evaluating the overall contributions, which has been conducted
by the Australian Accounting Standard Board in drafting the conceptual framework for the
organisation. the debt and equity combination for the selected companies are mainly
conducted in the assessment for deriving their current solvency condition. In addition, the
comparative analysis is conducted on the overall four companies for detecting their
operational capability, which has been noticed from the equity and debt combinations.

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Table of Contents
Introduction:...............................................................................................................................3
Corporate Regulations:...............................................................................................................3
i) Understanding whether the financial reporting measure can be handed over to the managers
or adequate disclosures can be used:..........................................................................................3
Accounting Standard Setting:....................................................................................................4
ii) Mentioning about the contribution, which is provided by the AASB to the regulations laid
down by the IASB, while detecting why there is no compulsion for the member countries to
adopt the IFRS accounting system:............................................................................................4
Owners’ Equity:.........................................................................................................................6
iii) Mentioning an identifying the overall equity item that has been detected from the annual
report of the selected companies:...............................................................................................6
iv) Comparative analysis is mainly conducted between the overall selected companies, where
the financial position of the companies is detected:...................................................................8
Conclusion:..............................................................................................................................10
References and Bibliography:..................................................................................................12

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Introduction:
Financial reporting system and standard is considered to be one of the essential
components, which has forced the organisations to depict their accurate financial position in
the annual report. In addition, the assessment also aims in evaluating the overall
contributions, which has been conducted by the Australian Accounting Standard Board in
drafting the conceptual framework for the organisation. the debt and equity combination for
the selected companies are mainly conducted in the assessment for deriving their current
solvency condition. In addition, the comparative analysis is conducted on the overall four
companies for detecting their operational capability, which has been noticed from the equity
and debt combinations.
Corporate Regulations:
i) Understanding whether the financial reporting measure can be handed over to the
managers or adequate disclosures can be used:
The discussions regarding the preparation of annual report in accordance with the
regulations or at the managements discretion is directly evaluated. In addition, the evaluation
indicates that the annual report of the organisation needs to be prepared in accordance with
the regulations, which eventually helps investors to identify the accurate financial condition
of the organisation. The regulations imposed on the organisation mainly force the
management to prepare the annual report in accordance with the laws and regulations, which
helps in depicting the fair value of the current financial condition of the company. Kothari,
Ramanna and Skinner (2015) mentioned that the financial crisis of 2008 was mainly
conducted by the manipulation that were made by management of the organisation, which
reduces the trust on managers in preparing the accurate financial report.

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There have been many scandals, which occurred in the past due the manipulations,
which were conducted by the management of the organisation. Enron and HIH Insurance
scandal that drastically impacted the overall capital market of the organisation were mainly
conducted by the management of the organisation. Hence, it can be detected that the annual
report disclosure cannot be left under the discretion of the managers, as they might
manipulate the overall annual performance and project wrong information in the annual
report. Therefore, it can be detected that adequate regulation needs to be imposed in
organisation in preparing and disclosing their annual report, as it helps in detecting the
accurate financial performance of the organisation. Thus, it can be understood that
stakeholder with the presence of adequate regulation are able to detect the accurate financial
position of an organisation, which can help them make adequate investment decisions.
Accounting Standard Setting:
ii) Mentioning about the contribution, which is provided by the AASB to the regulations
laid down by the IASB, while detecting why there is no compulsion for the member
countries to adopt the IFRS accounting system:

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Figure 1: Contribution of the AASB in the IASB standards
(Source: Aasb.gov.au 2018)
The contribution of the Australian Accoutring Standard Board can be detected from
the above figure, which directly helps in detecting the measures taken by the board in drafting
the annual report. In addition, the measures also help in detecting that AASB has created
awareness for the financial report, with an outreach and educational condition, which can be
seen in the above figure. This contribution has mainly allowed the organization to accurately
depicts their financial position in the financial report. Bhasin (2015) mentioned that AASB
has improved different standard of the IFRS system for restricting the occurrence of
loopholes and maximising the level ethical financial reporting in part of the organisations.
The IFRS reporting system is not imposed on the member countries, as the accounting
measure is voluntary for the organisation to follow. According to the AASB ruling only the
multinational companies and listed companies in oversees capital market needs to be
followed by the IFRS reporting structure, as they need to present the accurate financial
position to the international investors. The IFRS reposting system is relevantly costly, which
can directly increase expenses of small and medium scale organisations. Hence, the small and
medium companies in the member countries can ignore the IFRS accounting method, while
preparing their annual report. The IFRS reporting structure is only imposed, when
international investors are keen on investing in the organisation.

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Owners’ Equity:
iii) Mentioning an identifying the overall equity item that has been detected from the
annual report of the selected companies:
 Reserves: Reserves are mainly detected in the equity section of the selected companies,
which directly indicate the level of savings, which are conducted by the organisation for
purchasing a certain asset.
 Share Capital: The share capital is considered the overall equity value of the
organisations, which has been used in the capital market for acquiring the required level
of money for smoothly conducting its operations.
 Non-controlling interest: This measure relevantly depicts the overall investors, who have
less than 50% of the total share of the organisation and does not have any say in the
management’s decisions (Roy and Saha 2018).
 Retained earnings: The overall income that has been generated by the organisation over
the period of its existence is mainly know as retained earnings. The retained earnings
would eventually increase over time, where the company will incur high profits and vice
versa.
Boral Limited 2018 2017 2016 2015
Issued Capital 4,265.10 4,265.10 2,246.20 2,361.60
Reserves 155.80 19.30 162.00 166.20
Retained earnings 1,309.90 1,156.10 1,098.10 996.30
Total Equity 5,730.80 5,440.50 3,506.30 3,524.10
The total equity value of Boral limited is mainly detected in the above table, which
directly indicates that its value has increased exponential duding the past four fiscal years

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(Boral.com 2018). In addition, the increment in the values is due to the rising values of the
retained earnings and issued capital of the organisation. Moreover, the values have been
raising adequately, while the reserves of the organisation have declined, which does not
affect the rising values of the total equity of Boral Limited.
CSR Limited 2018 2017 2016 2015
Issued Capital 1,036.20 1,036.80 1,041.10 1,042.20
Reserves (53.20) (73.40) 15.80 17.10
Retained earnings 244.40 191.60 127.00 86.40
Non-controlling
interest 46.70 51.50 133.30 60.30
Total Equity 1,274.10 1,206.50 1,317.20 1,206.00
The CSR Limited overall equity value has mainly increased during the past fiscal
years, which can be identified from the above table (Csr.com.au 2018). The increment is
mainly slow, as the overall values of the equity is not rising except the retained earnings of
the organisation. The increment in the current financial position of the organisation is directly
detected in the above table, where retained earnings of the company has increased the total
equity of the company higher in value.
BHP Billiton 2018 2017 2016 2015
Share capital 2,243.00 2,243.00 2,243.00 2,255.00
Treasury shares (5.00) (3.00) (76.00) (587.00)
Reserves 2,290.00 2,400.00 2,557.00 2,927.00
Retained earnings 51,064.00 52,618.00 60,044.00 74,548.00
Non-controlling interest 5,078.00 5,468.00 5,777.00 6,239.00
Total Equity 60,670.00 62,726.00 70,545.00 85,382.00
The decline in the total equity condition of the BHP Billiton can be detected from the
above table, where the values have relevantly deteriorated, as the components of the total
equity has declined (Bhp.com 2018). The overall share capital, reserves, retained earnings

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and non-controlling interest the organisation has mainly declined during the past four fiscal
years, which has mainly hindered the financial capability of the of the organisation.
Rio Tinto 2017 2016 2015 2014
Share capital 4,360.00 4,139.00 4,174.00 4,765.00
Share premium account 4,306.00 4,304.00 4,300.00 4,288.00
Other reserves 12,284.00 9,216.00 9,139.00 11,122.00
Retained earnings 23,761.00 21,631.00 19,736.00 26,110.00
Attributable to non-controlling
interests 6,404.00 6,440.00 6,779.00 8,309.00
Total Equity 51,115.00 45,730.00 44,128.00 54,594.00
The above table indicates the overall decline in values of Rio Tinto equity section
from the past four fiscal years. This decline is mainly supported from the reducing values of
share capital. Share premium account, retained earnings and non-controlling interests. This
decline in the values of the organisation is directly affecting the overall total equity condition
of the organisation, which has declined during the past four fiscal years (Riotinto.com 2018).
The other reserves of the organisation have mainly increased, while other components of the
equity have declined, which deteriorated the total equity values.
iv) Comparative analysis is mainly conducted between the overall selected companies,
where the financial position of the companies is detected:
Rio Tinto 2018 2017 2016 2015
Equity 51,115.00 45,730.00 44,128.00 54,594.00
Debt 3,845.00 9,587.00 13,783.00 12,495.00
The equity and debt values of Rio Tinto can be detected from the above figures,
which directly indicate that the organisation’s overall solvency condition has improved. This

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improvement of the current financial performance has mainly derived from the declining
values of debt in companion to the equity (Riotinto.com 2018). The values of the organisation
have mainly declined exponentially over the period, which has improved solvency condition
of the organisation. The debt accumulation has declined exponentially in comparison to the
equity levels of the company, which is directly depicts the improvements in the financial
potion of Rio Tinto over the past four fiscal years.
Boral Limited 2018 2017 2016 2015
Equity 5,730.80 5,440.50 3,506.30 3,524.10
Debt 2,453.00 2,333.00 893.00 817.00
The financial position of Boral limited has mainly lingered in adequate levels, as the
organisation has acquired adequate level of debt for supporting its activities (Boral.com
2018). The company’s overall debt accumulation has increased substantially over the past
four fiscal years, which can be detected from the above table. This increment in the equity
values of the organisation was high, while the debt condition was relevantly higher, which
relevant increases the concern for higher debt accumulation conducted by the organisation.
CSR Limited 2018 2017 2016 2015
Equity 1,274.10 1,206.50 1,317.20 1,206.00
Debt 28.00 30.50 3.30 10.40
The debt and equity combination of CSR limited can be detected from the above
table, which directly indicates the positive conduction position of the organisation
(Csr.com.au 2018). The debt accumulated by CSR is relevantly low in comparisons to its
equity contributions, which certainly reduces the concern for insolvency condition of the

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organisation. In addition, the equity values of the company have increased over the period,
while the increment in debt is also seen.
BHP Billiton 2018 2017 2016 2015
Equity 60,670.00 62,726.00 70,545.00 85,382.00
Debt 10,934.00 16,321.00 26,102.00 24,417.00
The improvement in the current solvency position of BHP Billiton conducted from the
above table, where the debt values have declined substantially, while the equity values has
reduced adequately. This change in the current combination of equity and debt of BHP
Billiton has strengthen the operational ability of the organisation and reduced the chance of
any future occurrence of insolvency conditions (Bhp.com 2018). The company has declined
the debt combination by half, while the reduction if equity combination is seen. This
relevantly indicates that equity values are more focused by the organisation for conducting its
operations in comparison to debt capital.
The debt and equity combination of the four companies are relevantly conducted in
the above tables, which initiates the comparative analysis between them. The overall
comparative analysis directly indicates that financial performance of BHP Billiton, CSR
limited, and Rio Tinto has mainly increased over the period of four fiscal years, where the
debt accumulation is adequate and no problematic condition is seen for the organisation.
However, the analysis of Boral limited financial performance, it could be understood that the
debt accumulation of the organisation is relevantly high, where the current combination of
debt and equity is under control, while relevant measure needs to be made by the
management for further improving its operations over time

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Conclusion:
The aim of detecting the overall significance of an adequate financial reporting
system is adequately depicted in the above assessment. In addition, the significance of
regulation in preparing the annual report of the organisation is adequately depicted, which
allows the investors to understand the accurate financial position of the organisation. In
addition, the AASB has adequately contribution to the operations of IASB in formulating the
financial reporting system, which are used by companies of the member countries. However,
the restriction of the IFRS is only to the multinational companies, as small and medium
companies does not have to prepare their annual report in accordance with the IFRS system.
The combination of debt and equity of the four companies are mainly depicted in the above
assessment, which helps in detecting the solvency condition of the organisation.

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References and Bibliography:
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corporate investment during the global financial crisis. Journal of Business Finance &
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Bhp.com. 2018. Annual Reporting 2018. [online] Available at:
https://www.bhp.com/investor-centre/annual-reporting-2018 [Accessed 28 Sep. 2018].
Boral.com. 2018. [online] Available at:
https://www.boral.com/sites/corporate/files/media/field_document/Boral-Annual-Report-
2018.pdf [Accessed 26 Sep. 2018].
Csr.com.au. 2018. Annual Meetings and Reports. [online] Available at:
https://www.csr.com.au/investor-relations-and-news/annual-meetings-and-reports [Accessed
26 Sep. 2018].
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accounting professionals—a reflection of client narcissism and fraud attitude risk. Journal of
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Scandal: A Comparative Study of Enron and Satyam. IUP Journal of Accounting Research &
Audit Practices, 14(2), p.7.

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