Corporate Strategy and Governance Doc
Added on 2020-10-22
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Corporate Strategy andGovernance
Table of ContentsTITLE:.............................................................................................................................................1INTRODUCTION...........................................................................................................................1Background of research..........................................................................................................1Overview of organisation.......................................................................................................1Rationale of research..............................................................................................................2Research Aim.........................................................................................................................2Research objectives................................................................................................................2Research questions.................................................................................................................3Conceptual framework...........................................................................................................3LITERATURE REVIEW................................................................................................................5The concept of accounting policies........................................................................................5The importance of disclosure profit and revenue of association...........................................6The influence of inappropriate accounting policies on revenues and profits of TESCO PLC7The different ways through which TESCO PLC can easily overcome impact of inappropriateaccounting policies.................................................................................................................8DISCUSSION OF PRIMARY AND SECONDARY RESEARCH................................................9RESULTS OF SECONDARY AND PRIMARY RESEARCH....................................................13Results of primary research..................................................................................................13Results of Secondary research..............................................................................................21RECOMMENDATIONS AND ACTION PLAN..........................................................................23CONCLUSION..............................................................................................................................27REFERENCES..............................................................................................................................28
TITLE:“To identify the impact of inappropriate accounting policies on disclosure of profitsand revenues of association.” A case on TESCO.INTRODUCTIONBackground of researchCorporate governance refers to the process, mechanism, relations under whichorganisation can be controlled, managed. This is the framework through which managementwithin an organisation can perform business activities in effective and reliable manner. Undercorporate governance, there are some strategies through which transparency, fairness,accountability, etc. are the maintained (Albu, Lupu and Sandu, 2014). This helps to providecomplete and relevant information to stakeholders. Corporate governance framework hasfollowing aspects-Explicit and implicit contracts between organisation and stakeholders in order todistribute roles, responsibilities and powers. Reconciliation in case of conflict of interest of stakeholders in compilation to their duties,roles, etc.Procedure for supervision, manage flow of information, control, etc. within organisation. With maintaining business operations according to these framework, it is easy tomaintain long term relations with stakeholders because true and fair representation of operationsand accounts provides satisfaction. This research is based on TESCO is the organisation which is one of the leadingorganisation in British this organisation has head quarter in Welwyn Garden City, Hertfordshire,England, United Kingdom. In terms of revenue, this is the third largest organisation in world.TESCO PLC deals in grocery, clothing, mobile, banking sector, etc. Overview of organisationTESCO PLC is the largest British retail store in UK. This organisation serves in differentparts of world such as Hungary, India, China, Europe, etc. These days there are some rules andregulations which has to be followed by organisation. This helps to maintain safe and secureenvironment and maintain loyalty with stakeholders (Aoyagi and Ganelli, 2014). Stakeholdersare the individuals or group of individuals or organisation who are concern about organisation's1
actions and activities. It is important and relevant to analyse consumer demand which helps tomake long term relations with workers. These days, there is requirement of performing businessoperations in authentic form. There are many stakeholders of TESCO PLC such as consumers,suppliers, debtors, bank, competitors, employees, shareholders, etc. Hence it is important tocommunicate them plans and policies of organisation. In this research, there is discussion aboutaccounting policies of TESCO PLC and its impact on disclosure of profits. Rationale of researchIn this research, there is discussion about corporate governance policies. Corporategovernance policies sets some framework which are relevant in current market because itprovides complete information about working style of organisation, change in plans and policies,etc. Reason behind conducting this research is to analyse impact on inappropriate accountingpolicies on disclosure of profits. There are issues in disclosing half yearly profits of TESCO PLCwhich affects ran image of TESCO PLC. Stakeholders wants to analyse actual performance ofTESCO PLC because they have interest in operations of organisation. Hence with the help of thisresearch, it is easy to understand reason of inappropriate counting policies and its impact ondisclosing of profits (ArAs and et. al., 2016). With the help of this research, it is easy to provide ways through which correct measurescan be provided to TESCO PLC. This also helps reader to provide knowledge about importanceof accounting policies in decision making of stakeholders. With the help of this research, it iseasy to recommend changes which has to be made by manager while changing their accountingpolicies. Research Aim“To identify the impact of inappropriate accounting policies on disclosure of profitsand revenues of association.” A case on TESCO.Research objectivesTo understand the concept of accounting policies. To evaluate the importance of disclosure profit and revenue of association.To analyse the influence of inappropriate accounting policies on revenues and profits ofTESCO.2
To recommend the different ways through which TESCO can easily overcome impact ofinappropriate accounting policies.Research questionsDo you understand the concept of accounting policies?What is the importance of disclosure profit and revenue of association?What is the influence of inappropriate accounting policies on revenues and profits ofTESCO?What are the different ways through which TESCO can easily overcome impact ofinappropriate accounting policies?Conceptual frameworkConceptual framework is the way through which all the activities which are conductedwhile conducting research is analysed. With the help of this framework, it is easy to understanddescription which is taking place in various research activities. Research is process throughwhich in- depth analysis can be done on some specific topic. Hence research is conducted underdifferent chapters. Under conceptual framework it is easy to understand aspects which arecovered under various chapters of research.Introduction is prime chapter which covers overview of research, background ofcompany, research aims and objectives, etc. With this section, it is easy to understandabout topic of research topic and organisation. Hence it is easy to make blue print relatedto research in mind of reader with this section. Second section is about literature review (Bain and Band, 2016). This is the conceptwhich talks about objectives discussed in introduction. In literature review, opinion isauthentic as per view of some specific author. This makes complete research authenticand reliable.Section third is about discussion about primary and secondary. This is the concept whichhelps to collect information from respondents to give complete and relevant information.Research is conducted with different activities such as introduction, literature review,data collect and analysis, etc. which jointly known as research methodology. Section four is about discussing results. With collecting data with the help of primaryand secondary method, then outcomes are discussed in this section. In this section,3
interpretation on the basis of primary data is discussed and gist is discussed of secondarydata collected discussed under literature review.Last section is about recommendations and action plan. After discussing researchoutcomes, there are recommendations through which issues faced by organisation can beovercome. Action plan is the way through which actions can be taken by managers oforganisation to overcome issues (Bell, 2014). 4
LITERATURE REVIEWLiterature review is the section in which objectives of research are discussed with someauthentic source. This is part of secondary data because information is collected from books,online sources, journals, etc. In this research, there is discussion about impact of inappropriateaccounting policies on disclosing profits and revenue. Hence in this literature review, there isdiscussion about author's view over the research objectives. The concept of accounting policiesAccounting policies refers to the specific principles and methods which are implementedwhile managing financial statement of organisation. These are the measurement system,procedures for preparing books and accounts of TESCO PLC. According to Breitbarth and et. al.,2015 accounting policies is different from accounting principles. Accounting principles are legallaws and revelations which has to be considered while framing accounts for specificorganisation. TESCO PLC are legally bind towards these principles. For instance: depreciationmethod, recognition of goodwill, research and development cost, valuation of stock, etc. areaccounting policies. While accounting principles are going concern principle, matching concept,revenue recognition, etc. For instance: there is specific method through which stock withinorganisation can be valued. There are different methods for valuation of stock such as LIFO,FIFO, Weighted average, etc. There is specific method which is used by TESCO PLC forshowing their balance of stock. In order to make consistency in books of accounts and providecomplete and relevant information to stakeholders, specific method is used to year after year. There is difference in accounting policies as per difference in organisation. But there aresome assumptions which has to be followed by managers of TESCO PLC which helps to getappropriate and relevant outcome. In order to understand fundamental accounting policies, theseassumption are considered-Going concern. As per this assumption, it is assumed that business will operate for longerperiod of time in industry. Hence there is no assumptions related to closing down ofbusiness after specific period of time. Consistency. As per this assumption, it is assumed that accounting policies which areused by managers of TESCO PLC is consistent in next year as well. This helps todisclose profits and revenue appropriate and significant. 5
Accural. Third assumption is that income or cost which are incurred whether received ornot, it must be recorded in period to which they are related. This helps to get actualknowledge about expenses and incomes. Hence accounting policies are different as per company. There is no specific policies withwhich organisations are bind. There are some considerations which has to be followed byTESCO PLC while farming financial statement. These are discussed as under-Prudence. In organisation, future is uncertain, hence there are many activities which areestimated for future. As per this accounting concept, in case of losses and expenses whenthey are estimates are recorded (even if hey are not paid). While in case of profits andrevenues, it must be recorded only when it is received. Hence it is clear that in accountingpolicies, risk is secured when it is identified, while in case of profits they are recorded onreceived basis. Substance over form. As per this principle, it is important to record financial data as pergoverned principles (Chen and et. al., 2015). Materiality. As per this principle, it is identified that only material things has to beconsidered by managers of TESCO PLC. These are the factors which affects decisions ofstakeholders. The importance of disclosure profit and revenue of associationThere are many parties which deals with TESCO PLC in direct or indirect manner suchas consumers, suppliers, management, employees, etc. These are the people who have interest inorganisation's operations hence organisation has to disclose their books of accounts inappropriate manner. It is important for TESCO PLC to disclose their profits and revenuesbecause stakeholders analyse performance and financial condition of company in appropriate andrelevant manner. There are many people whoo wants to analyse financial performance ofTESCO PLC due to different reasons. For instance: for shareholders books of accounts providescomplete and relevant information whether to invest or withdrawal. Hence books of accountsplays crucial role in affecting decision making of individuals.Financial position such as revenue, debt equity ration, pay back period, etc. are importantfor suppliers as they give credit to TESCO PLC. Hence financial books of accounts are importantfor analysing whether to give debt or not. According to Ciampi, 2015 in order to providecomplete and relevant information to stakeholders disclosure of profits and revenues is6
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