Corporate Governance and Financial Analysis

The assignment delves into a comparative analysis of four profitable companies (Adherium Limited, Admedus Ltd, Airxpanders Inc, and Ansell Limited) based on their financial performance and corporate governance practices. Utilizing International Financial Reporting Standards (IFRS), the report examines their balance sheets and provides insights into their relative reliability and efficiency. The goal is to determine which company demonstrates superior financial health and governance structure.

Corporate and Financial
Accounting

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
INTRODUCTION...........................................................................................................................2
TASK 1 ...........................................................................................................................................2
(I) Corporate regulation...............................................................................................................2
(ii) Role of AASB in the global accounting standard board.......................................................3
OWNERS' EQUITY........................................................................................................................4
(iii): Listing item of equity and associated information about the companies ...........................4
(iv): Comparative analysis..........................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
APPENDIX......................................................................................................................................9

EXECUTIVE SUMMARY
This project is being taken by specific information about the corporate or financial
accounting. It discuss the importance of corporate regulation in respect to the shareholder and
other user group. Manager should be allowed to reveal financial accounting information on
regular basis to shareholder but also follow some guidelines. The process of AASB in setting
IFRS in the global accounting standard is discussed.

INTRODUCTION
Financial accounting is the process of recording, summarizing and reporting the
numberless of transaction resulting from business operation over a period of time. These
transaction are summarized in the preparation of financial statements, including the balance
sheet, income statements and cash flow statements that help to examine and measure company
operating performance over a specified period. Corporate accounting refers to the measurement,
recording and interpretation of financial information and data relating to a limited company. It
specifically refer to accounting for larger organisation.
In this report, the corporate rules and regulation are discussed that shows the control on
flow of financial accounting information. The role of Australian accounting standard board in
setting global accounting standard like IFRS along with the reason for IFRS set by the IASB is
not compulsory for the member countries of IASB is discussed. Financial statement of four listed
companies are shown to understand about each item of equity. The companies chosen are
Adherium limited, Admedus Ltd, Airxpanders Inc. and Ansell limited which listed on ASX
(Edwards, 2013) These all companies are from same industry and provide heath care equipment
and services in Australia. At last analysis of the debt and equity position of four selected firm are
shown in this report.
TASK 1
(I) Corporate regulation
Financial reporting is the process of producing statement that discover an organisation
financial status to the management, shareholder and also to the government. It basically includes,
income statements, statements of comprehensive income, quarterly and annual reports to
stockholder. There is a need for regulation in financial reporting because of a number of reason
and no , manager must be allowed to disclose financial information voluntarily. Without having
permission from higher authority or board manager are not allowed to disclose any financial
report to stock holder or other user group.
There are different user group of finance report, some of which includes equity investor,
employee group, analyst advisor group, the public and other stakeholder. Different stock holder
use fiscal information in a systematic way in order to make the necessary financial decision.
Disclosure of financial reporting resolve some of the problem associated with the imbalance of
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information between the directors and stakeholder (Bevis, 2013). They also enable equity holder
to compare the level of their inducements with those received by other groups. Managers not
only present the financial statement to the shareholder each year but also that independent
auditor are appointed to examine the financial statement and report finding to the shareholder.
This will help investor, shareholder to properly know about the current position of organisation
and they are able to make decision accordingly.
(ii) Role of AASB in the global accounting standard board.
The international accounting standards board (IASB) is an independent, private-sector
body that develop and approves International financial reporting standard (IFRS). The AASB is
an Australian Government agency that work under The Australian securities and Investment
commission Act 2001. Some legal function of AASB is like they develop a conceptual
framework of the purpose of evaluating proposed standard. The major standard setting objective
of the AASB in IASB which are included in the adoption of IFRS like
 Each IFRS are subject to an AASB view Draft to ensure that IFRS are best in the interest
of Australian economy.
 It give essential time to become familiar with IFRS and build information system.
 It gave most entities almost two years to apply IFRS.
 To assist IFRS adoption the AASB issued 1047 section that disclose the impact of
adopting Australian cognition to IFRS in April 2004.
 AASB 1047 required company to disclose the relevant impact in their financial reports
for the foregoing the year of adoption (financial year 30 June 2005).
The due process adopted by the AASB includes the following steps:
 Communicating its view and proposal to a broad range of interested parties like media,
alerts etc.
 Inviting public comment on proposed via draft, invitation to comment and other open for
comment documents.
 Meeting with concerned parties, including holding meeting with its Informative Group
 Business enterprise selected Board papers and discussing technical issues in Board
meetings that are open to public observation
 Publishing Action Alerts following Board meetings and minutes of Board meetings.
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IASB member countries have option whether to adopt IFRS rules and policies which are provide
by IASB. The main aim of both board to provide transparency, accountability and efficiency to
the countries accounting system.
OWNERS' EQUITY
(iii): Listing item of equity and associated information about the companies
Equity items: These are said to be owner capital worth that is being derived among total
assets and liabilities they are carrying with them. In business, equity is one degree of ownership
in any assets after subtracting all debt associated with that assets. The data is taken from all four
Adherium limited, Admedus Ltd, Airxpanders Inc and Ansell limited of past four year. There are
various types of equity accounts that are combine to make up total shareholder's equity. It
consists of common stock, additional paid up capital, retained earning, treasury stock and other
stockholder’s equity (Baber, Liang and Zhu, 2012). These are mentioned as per the financial
statement prepared by the company, some of them are discussed below:
 Common stock: It is said to be the security that represent ownership within an
organisation. Holder of common stock exercise control by electing board of director and
making vote on corporate policy. Common stock of above taken companies are:
Companies name 2015 2016 2017 2018
Adherium limited 5261 70426 74278 74349
Admedus Ltd 53492.22 80738.57 87887.94 106025.63
Airxpanders Inc 0.9 70.43 79 96
Ansell limited 1229600 1146900 1142200 1052600
From the above presented data common stock of all four companies can be analyse. In
Adherium limited common stock of shareholder continuously keep on increasing year by year.
The changes under this varies with the total net earning by company is getting within an
accounting period of time (Sharma and Panigrahi, 2013). The value of capital keeps on changing
form 2015 to 2018 like, value in 2015 was $5261, in 2016 was $70426 in 2017was $74278 and
in 2018 it was $74349. This is because company profit keeps on increasing and investor are
investing more to gain more profit. In Admedus Ltd capital of shareholder increase from
$53492.22 in 2015 to $106025.63 in 2018 As these changes are good as investor are willing to
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earn more profit by investing in Admedus Ltd. Similarly, slightly change can be seen in the
common stock of Airxpanders Inc., As it increase from $0.9 in year 2015 to $70.43in year 2016
then $79 in 2017 and $96 in 2018 this is because of increase in net income of company. In Ansell
limited the total shareholder capital keeps on decreasing year by year like it was $1229600 in
2015, $1146900 in 2016, $1142200 in 2017 and $1052600. These changes can be seen because
of decrease in net income of company and investor are not willing top invest in the company.
 Retain earning: These are said to be net revenue after dividend that are present with the
company to reinvestment in the company's core business. It is also used to pay their all
times debts. They used to recorded all this information under shareholder equity on their
balance sheet. It is mostly affected by the increase or decrease in net income and dividend
paid to shareholder (Islam, Ahmed and Hasan, 2012).
Companies name 2015 2016 2017 2018
Adherium limited -5125 -13010 -25820 -35158
Admedus Ltd -19249.63 -44503.47 -68517.34 -80829.41
Airxpanders Inc -35744.05 -46905.4 -66328 -95311
Ansell limited -16900 74100 158900 580900
From the above data it is clear to include that three out of four listed companies are not
able to make sufficient profit to make retained earning. In Adherium limited, Admedus Ltd, and
Airxpanders Inc the amount of retained earning shows negative balance for past last four year.
This is because the net expenses for the companies are greater that their net income and they are
not able to make sufficient amount for reinvestment or to pay any debt. Ansell limited shows
negative balance in year 2015 of about $16900 but in 2016 company net income are greater that
net expenses. As a result Ansell is able to maintain sufficient amount out of their income as a
retained earning for their shareholder that help them to reinvest again in the company or pay any
of their debts.
 Other stockholder equity: These are consider are other reserve or such kind of gains
incurred by the company that kept aside for upcoming contingencies. Capital under this
account is being processed either from sale of fixed assets or from overall shareholder
equity. These are shown on the balance sheet of four companies . The changes under this
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varies with the total net earning and loss a company is getting with an accounting period
of time.
Companies name 2015 2016 2017 2018
Adherium limited 881 -29959 -25753 -26381
Admedus Ltd 533.42 -8.65 1377.72 -2267.38
Airxpanders Inc - - - 6
Ansell limited -60900 -100000 -90200 -98900
The data presented above for last four year shows the amount these four companies
incurred as reserve to met the upcoming contingencies. Adherium limited, in year 2015 shows
balance of $881 but after that amount for other stockholder equity keeps on decreasing as
company is not making sufficient income (Chen, Lu and Sougiannis, 2012). Admedus Ltd make
sufficient income in year 2015 and 2017 to incurred some amount $533.42 and $1377.72 as
reserve but in other year company is not making proper income to make these reserve.
Airxpanders Inc deals with health services, but its expense are more than its income so company
is not able to maintain any reserve to deal with any contingencies. As now in 2018 Airxpanders
Inc started to make some amount as a reserve. Ansell limited is one of the biggest heath services
providers in Australia but they are not able to make sufficient income from their services. Total
expense of company are more than total income that will result in negative balance of reserve
and shareholder will be investing in other project (Bonsón, and Ratkai, 2013).
(iv): Comparative analysis
In the context to examine total liabilities and equities of four companies, debt equity ratio
is taken into account to compare the debt paying capabilities of such large kind of organisation.
Debt equity ratio= total liabilities/ total equity.
Adherium limited Admedus Ltd Airxpanders Inc Ansell limited
Debt ratio=2511/12810=
0.196
4608.08/22928.82
=0.136
20490/16836=
1.21
972300/1534600=
0.636
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In this table debt equity ratio for following four companies have been shown for current
financial year. The total liabilities for Adherium limited is 2511, their total equity for current
year are 12810 and debt equity ratio is for year 2018 is 0.196 (approx), for Admedus Ltd their
total liabilities for the year are 4608.08, companies total debt are 22928.82 and debt equity is
calculated of about 0.136(approx) in year 2018 (Tugas, 2012). In year 2018, Airxpanders Inc
liabilities are about 20490, their total debt is equal to 16836 and total debt equity ratio id 1.21
and for Ansell Limited total liabilities for year 2018 is 972300, total equity is 1534600 and debt
equity ratio of the company is 0.636 (approx). After making reliable performance analysis for
four companies it is very clear from their equity ratio that Airxpanders Inc is more responsible to
pay off their liabilities in coming future time (Armstrong, Balakrishnan and Cohen, 2012). This
company is having much higher ratio of 1.21 that is close to ideal debt equity ratio (2:1). All
other three companies have lower ratio that Airxpanders Inc from which it can be said that they
are not being able to pay off their liabilities.
CONCLUSION
From the above project report, it has been concluded that corporate or financial
accounting is used by an organisation in order to analyses the financial strength by formulation
of final accounts and cash flow statements. It is necessary to regulate financial reporting and
manager must be allowed to to disclose fiscal accounting information on a regular basis. This
will help investor to know more about business firm. Australian accounting standard board play
a vital role in setting IFRS. All above mentioned companies are profitable and earn some amount
of profit during the year. In the above report item related to equity are shown and proper analysis
of all taken four companies are discussed to show that which company is more reliable and
efficient.
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REFERENCES
Books and journals:
Armstrong, C. S., Balakrishnan, K. and Cohen, D., 2012. Corporate governance and the
information environment: Evidence from state antitakeover laws. Journal of Accounting
and Economics, 53(1-2), pp.185-204.
Baber, W.R., Liang, L. and Zhu, Z., 2012. Associations between internal and external corporate
governance characteristics: Implications for investigating financial accounting
restatements. Accounting Horizons. 26(2). pp.219-237.
Bevis, H. W., 2013. Corporate Financial Reporting in a Competitive Economy (RLE
Accounting). Routledge.
Bonsón, E. and Ratkai, M., 2013. A set of metrics to assess stakeholder engagement and social
legitimacy on a corporate Facebook page. Online Information Review. 37(5). pp.787-
803.
Chen, C. X., Lu, H. and Sougiannis, T., 2012. The agency problem, corporate governance, and
the asymmetrical behavior of selling, general, and administrative costs. Contemporary
Accounting Research. 29(1). pp.252-282.
Edwards, J. R., 2013. A History of Financial Accounting (RLE Accounting). Routledge.
Islam, Z., Ahmed, S. and Hasan, I., 2012. Corporate social responsibility and financial
performance linkage: Evidence from the banking sector of Bangladesh.
Sharma, A. and Panigrahi, P. K., 2013. A review of financial accounting fraud detection based
on data mining techniques. arXiv preprint arXiv:1309.3944.
Tugas, F. C., 2012. Exploring a new element of fraud: A study on selected financial accounting
fraud cases in the world. American International Journal of Contemporary Research.
2(6). pp.112-121.
Online
Role of AASB in setting IFRS. 2017 .[Online]. Available through:
<https://www.aasb.gov.au/About-the-AASB/Frequently-asked-questions.aspx>
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APPENDIX
Balance sheet of Adherium limited
Admedus Ltd
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Airxpanders Inc
Ansell limited
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