Wesfarmers Limited Financial Analysis

This assignment requires a critical analysis of Wesfarmers Limited's financial information presented in their annual report. Students must evaluate the faithfulness, completeness, and neutrality of the provided data, considering its impact on user decision-making. The analysis should also assess the company's adherence to accounting standards and objectives of general purpose financial reporting.

FINANCIAL REPORTING DISCLOSURES
Student Name: Student ID:
9/29/2017

EXECUTIVE SUMMARY
The topic of the business report is Financial Statements disclosures which has been prepared to
understand the aim of general purpose financial reporting in relation with Conceptual Framework
disclosures as per Corporation Act, 2001 so that decisions about the company reputation can be
farmed. The other intention for which report has been prepared is to understand the major part of
financial statements of the company which comprises Property, Plant & Equipment. It shows the
compliance done by company to present its financial statement according to the applicable laws
of Australia. The head of the Property plant and equipment has been discussed in detail and the
proper analysis of the Australian accounting standard number 116 has been done. The third aim
is to define the features of the financial information and the features that will enhance the
usefulness of the financial information relating to the company. With these intentions the report
has been prepared for board of directors with appropriate headings and sub headings and using
information from reliable secondary sources.

Contents
EXECUTIVE SUMMARY.........................................................................................................................2
SYNOPSIS..................................................................................................................................................4
(A) GENERAL PURPOSE FINANCIAL REPORTING AND CONCEPTUAL FRAMEWORK.............4
(B) DISCLOSURE OF PROPERTY PLANT AND EQUIPMENT............................................................6
(C) FEATURES OF USFUL FINANCIAL INFORMATION....................................................................7
(D) FINANCIAL REPORTING OBJECTIVES..........................................................................................7
CONCLUSION...........................................................................................................................................8
REFERENCES............................................................................................................................................8
APPENDIX.................................................................................................................................................9

SYNOPSIS
Every company whether it is newly incorporated company or the older company, the financial
results of the operations of the company is required to be presented. These results are presented
in the financial statements of the company comprising of the statement of the comprehensive
income and the statement of the balance sheet and the statement showing the cash inflows and
the cash outflows. Through this report, the importance of the financial statements has been
sighted majorly on one component only which is the Property plant and equipment. The
company that has been selected for conducting of the business research is the Wesfarmers
Limited. The report has been started describing the requirements and the importance of the
general purpose financial reporting and the features that the conceptual framework of accounting
possesses. Secondly, the requirements of the disclosure as made by the accounting standard on
the property plant and equipment has been discussed and whether the company has complied
with the same have been reported. Thirdly, the features of the useful information has been
discussed in connection with the conceptual framework of accounting and lastly the analysis has
been made in the critical manner and the report has been closed with the appropriate suggestion
if any for improvement.
(A) GENERAL PURPOSE FINANCIAL REPORTING AND CONCEPTUAL
FRAMEWORK
The concept of the general purpose financial reporting has been explained and described in the
statement of concepts. Firstly, the general purpose financial reporting has been discussed. The
statement of concepts number two has defined the general purpose financial report as the reports
which has been made and made available for the users of the financial report in the situation
where the user does not have control over the presentation and the preparation of the financial

reports (AASB, 2001). The users of the financial reports includes the accounts receivable and the
accounts payable, to whom the goods have been sold and from whom the goods have been
purchased and etc.
Secondly the term of the conceptual framework of accounting is dealt with the structure or the
layout within which the financial reports of any company is developed and presented. This
framework is consists of the layout as prepared in accordance with the Australian accounting
standards, international financial reporting standards and the corporations act, 2001. The
conceptual framework of accounting has been explained in the statement of concepts number
eight. The main objective of having the conceptual framework of accounting is that the financial
statements shall be prepared in such manner so that the uniformity shall be available across the
globe in the preparation and the presentation of the financial statements. As per OB 1 of the
statement of concept number eight the general purpose financial reports acts as the platform or
the base on which the conceptual framework of accounting has been constructed and developed.
The aims for having the general purpose financial reports in the system has been detailed under
the paragraph number beginning from the OB 1 and ending to OB 21.
The main objective of having the general purpose financial reports is to provide the
understanding to the users of the financial statements about the result of the company both in the
meaning of the financial position and as well as in the meaning of the financial performance. The
users then will be able to take the decision on an effective basis after analyzing the financial
results of the company. The users decision will be in total based on the type of interest like
customers will like to have the information as to whether goods shall be purchased from the
particular vendor or not and the supplier will to have the information like whether it will be
useful to sell the goods to the particular vendor and also even in case of the requirements of
funding from the banks, the first step that the banks usually takes as to whether the company has
the required creditworthiness and so on.
The second main objective of the preparation of the general purpose financial reports is that to
ascertain or estimate the cash inflows of the company that will be generated in the future. This is
because only on the basis of the estimation and judgments applied by the management of the

company in respect of the cash flows that will be generated in future, many investors’ wants to
invest in the company and thus becomes the potential investor of the company as the same will
help them in knowing whether the company will increase the wealth of their investment so made
in the company or likely to be made in the company.
Along with the objectives of the general purpose financial reports, there exists the features of the
conceptual framework of accounting that has been listed and mentioned in the paragraph number
beginning from QC 1 and ending with QC 39. It contains two basic features of the conceptual
framework and these are the relevancy and second one is the faithful representation (AASB,
2010). Apart from these features, in order to enhance or increase the usefulness of the financial
information, three more features have been prescribed and these are comparability,
understandability and verifiability. These have been mentioned in QC 4 of the statement of
concepts number eight.
(B) DISCLOSURE OF PROPERTY PLANT AND EQUIPMENT
The disclosure of the property plant and equipment shall be made in accordance with the
Australian accounting standard number 116. For continuing the discussion, the company has
been selected from the Australian stock exchange list which is Wesfarmers Limited. The
company is into the business of having super market chains all over the Australia and New
Zealand. In accordance with the seventy fourth paragraph of the relevant standard the company
shall disclose the following in their financial statements (AASB, 2010):
 The accounting policy for the measurement of the asset both initially and subsequently.
 The basis for calculation of the cost of the asset and the net carrying amount
 The basis for calculation of the depreciation and the basis for choice of having the
particular depreciation method
 The basis for estimation of the useful life of an asset
 The proper statement showing the reconciliation of the carrying amount and the net
carrying amount for the period under consideration and for the period immediately before
that period.
After analyzing the note number seven of the annual report of the company, it has disclosed all
the matters in the annual report of the company and have given the slab for the useful life of an

asset like twenty to forty years for the different kinds of the plant and equipment and the proper
statement reconciling the two years balances and thus showing the net carrying amount of ten
thousand million dollars approximately (Company official Website, 2017).
In this way the company is complying with the requirements of the accounting standards.
(C) FEATURES OF USFUL FINANCIAL INFORMATION
The conceptual framework of accounting as per statement of concept number eight has
prescribed that there is one fundamental feature which is known as the faithful representation. It
includes within itself three concepts which are – complete, free from error and neutral. All the
three concepts have the role in establishing the faithful representation of the financial statements.
In the given case, the company has mentioned all the things in the note number seven of the
financial statements which indicates and establish that all the features are present therein as the
information provided is totally complete and the auditor’s report has further clarified that the
financial statements are error free and is not prepared on the basis of the personal bias or similar
interest.
The feature that further increased the usefulness of the financial information is that the financial
statements has made the results easily understandable by any one and due to the application of
the uniform accounting policies and the accounting standards that are globally acceptable, the
company has facilitated the two other features which are comparability and the
understandability.
(D) FINANCIAL REPORTING OBJECTIVES
The extent of the disclosures so made by the company in its annual report for the year ending
2017 is as per the requirements of the accounting standards and the accounting concepts. The
information so provided by the company is not only meaningful but also very useful for the users
of the financial statements to take the decision accordingly. As the general purpose financial
reports targets the potential community of the customers, suppliers or investors, etc, the large
benefit have been enjoyed by them. It is because the company in current situation is the
competitor for the largest company – Woolworths Limited and operates across the country of

Australia and New Zealand. Thus, then objectives of the general purpose financial reports have
been achieved in great manner.
CONCLUSION
The conceptual framework of accounting carries the fundamental features of the financial
information and also the features that will enhance the usefulness of the information. On the
other hand general purpose financial reports acts as the base on which the conceptual framework
is developed. These two are the pillars which ensure the compliance with the provisions of the
accounting standards, accounting concepts and the law of the governing state. The company
Wesfarmers Limited has provided all the disclosures in accordance with the accounting standards
and other related statutes.
Apart from all the compliances, the company shall strive for improving the financial information
quality so as to ensure the comparability across the globe.
REFERENCES
AASB, (2001), “Objectives of General Purpose Financial Reporting”, available at
http://www.aasb.gov.au/admin/file/content102/c3/SAC2_8-90_2001V.pdf accessed on
25/09/2017.
AASB, (2010), “Conceptual Framework”, available at
http://www.fasb.org/jsp/FASB/Document_C/DocumentPage?
cid=1176157498129&acceptedDisclaimer=true accessed on 25/09/2017.

AASB, (2010), “Property Plant and Equipment” available at and
http://www.aasb.gov.au/admin/file/content102/c3/AASB116_07-04_ERDRjun10_07-09.pdf
accessed on 25/09/2017.
Company official Website, (2017), “Annual Report 2017” , available at www.wesfarmers.com.au/
Accessed on 25/09/2017.
APPENDIX