Critical Analysis of the Annual Report of James Hardie Australia Pty Ltd

ACCOUNTING THEORY AND ISSUES

REPORT 1
Introduction
Accounting refers to the process that must be followed by the entities to record the business
transactions, present them in a fair and transparent manner and thereby enabling the various
stakeholders to form informed judgements about the financial and overall performance
(Chand, Patel and White, 2015). The regulatory bodies prescribe a framework comprising of
the guidelines, policies, and procedures that must be adhered to while preparing and
presenting the financial statements. The report will study the applicable accounting
framework on the company James Hardie Australia Pty Ltd. In addition, the report is aimed
at analysing how well the company has taken into account the said framework and thus will
evaluate the financial reports of the entity. The evaluation will be done with the aid of the
comparison of the financial data of similar company belonging to the same industry. The
report will conclude whether the information presented was enough to enable the users of the
financial statements to make the relevant decisions.
Company overview
The company chosen for the evaluation is James Hardie Australia Pty Ltd., which is listed on
the Australian Stock Exchange, while the headquarters are situated at Ireland. The company
is a producer of the industrial building materials, together with the technologies to enable
such production. The company was in news for one of its products namely the Asbestos
cement. The product negatively influenced the life of the workers and families engaged in the
production of the asbestos cement, the first incidence was shown up in the year 1978 in the
form of the asbestos related diseases. Because of which the company and its entity have been
paying the affected people the claims since the year 1980s. The company and its management
have been charged with the range of breaches by the various regulators for the non-fulfilment
of the duties on the part of the senior management and the directors. As the company “James
Hardie Australia Pty Ltd” is a member of the group, the financial statements are prepared as
per the US GAAP applicability and accordingly the analysis is done in the following report.
Critical Analysis of the Annual Report
The different concepts or purposes constitute the conceptual framework which makes the
businesses to set the standards which are essential for the formulation of the effective report,
as prescribed by the Australian Accounting Standards Board (AASB). This framework helps
in offering the guidelines to company which helps them to prepare the comparable and

REPORT 2
trustworthy reports (AASB, 2015). It supports the stakeholders to attain the better knowledge
of annual report which offer them a convenient way and this offers them a way to compare
company’s report with the opponent which is must to attain the conclusion. In the case of
James Hardie Australia Pty Ltd, the focus is on the conceptual framework which helps in
analysing the annual report of the corporation. The company must abide by the strict
guidelines of the applicable framework which are used by them with the purpose of
accumulating, recognise and to evaluate the financial performance of the entity (Deegan,
2014).
In addition, AASB majorly elaborates the conceptual framework in the form of the practical
tool which provides the assistance which can help in generating the awareness and
understanding standards. As stated above, the entity prepares its group financial statements
according to the guidelines prescribed by the US GAAP. Conceptual guidelines support the
company while forming the financial statement and accounting. Along with the financial
statement, the company includes the financial notes that contribute in developing the
understanding of stakeholders related to financial aspects so that they can show their interest.
The company reflects that each and every transaction is verified and stated according to the
US GAAP and the AASB rules as well. Further the conceptual framework states to keep the
consistency with respect to the methods adopted and the enactment related to the companies,
the same has been followed as well. In addition, the major conceptual framework has been
analysed on the basis of the relevancy and fair presentation aspects that are linked with the
company.
Moreover, the representation that is done by the company in the annual report related to the
financial and non-financial element remains true and fair which is essential to be presented
with the proof and points. These proofs help the stakeholder in developing the interest and
they can also search it in the near future. In the annual report of the company, the entire
actions and data have made the place are essential to be analysed and documented in report.
Considering the case of the James Hardie, it has been formed that all the foresee assignment,
new functions and modifications in the companies have been stated in the annual report
related to the corporation concisely. In addition to this, the companies are majorly liable for
conforming the taxes, accounting, regulations, law and rules. Moreover, it has been stated in
the annual report of James Hardie can be accessed through Data via Software.