Financial Reporting Issues: BHP Billiton Employee Benefits Analysis

This report examines issues in financial reporting, focusing on the accounting for employee benefits within BHP Billiton. The analysis evaluates the company's annual report, particularly the 2017 version, to understand how employee benefits, restructuring, and post-retirement provisions are handled. The report highlights the increase in employee benefit expenses and provisions from 2016 to 2017, referencing IAS 19 Employee Benefits. It explores various types of employee liabilities, including pension, post-employment, short-term, and share-based payments, as well as annual leave liabilities. The report concludes that BHP Billiton effectively complies with IAS 19, presenting the required information regarding employee benefits in its annual report. The report uses figures to illustrate the expenses and the scope of IAS 19.

Running head: ISSUES IN FINANCIAL REPORTING
Issues in Financial Reporting
Name of the Student:
Name of the University:
Authors Note:

ISSUES IN FINANCIAL REPORTING
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Table of Contents
Introduction:...............................................................................................................................2
Evaluating the Accounting for employee’s benefit of BHP Billiton:........................................2
Conclusion:................................................................................................................................4
References:.................................................................................................................................5

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Introduction:
From the overall evaluation it could be identified that BHP Billiton has different level
of operations, where the accounting for employees are mainly conducted by the organisation.
In addition, relevant evaluation of the annual report is mainly conducted to understand the
level measures that is been taken by the company during the financial year for the employee
benefits. Furthermore, BHP Billiton mainly conducts Employee benefits, restructuring and
post-retirement employee benefits provisions in their annual report, which indicates the
accounting for employee benefits, which is conducted by the organisation. the annual report
of 2017 is mainly evaluated to understand the level of employee expense, which has been
conducted by BHP Billiton.
Evaluating the Accounting for employee’s benefit of BHP Billiton:
Figure 1: Depicting the employee benefit expenses of BHP Billiton in 2017
(Source: Bhp.com 2018)

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The above figure mainly indicates the overall expenses, which is been conducted by
BHP Billiton during the fiscal year of 2017. In addition, the valuation also indicates the
change in provision, which is conducted by BHP Billiton in 2017, as compared to 2016. The
total provisions for employee benefits of BHP Billiton has mainly increased from $1,514
million in 2016 to $1,625 million in 2017, which comprises of Employee benefits,
Restructuring, and Post-retirement employee benefits. In this context, Billings et al. (2017)
stated the companies provide employee with different type of benefits for their input in the
organisation, which increases employee motivation level could help in improving the level of
profits.
After the evaluation of the annual report it could be detected that BHP Billiton has
different types of liabilities towards their employee such as pension liability, employee
benefits, post-employment retirement benefits, short term employee benefits, share-based
payments, and liabilities of annual leaves. BHP Billiton relevantly uses the annual leaves of
the employee and represents them in amounts, which helps in understanding the level of
future expenses incurred by the organisation. BHP Billiton adequately follows IAS-19
Employee Benefits measure, while formulating the annual report, as all the relevant
requirements of the IAS code has been complied by the company in their annual report of
2017. Glaum, Keller and Street (2018) mentioned that companies complying with the IAS
ruling mainly increases the level of trust among the investors, as the organisation represent
the actual financial position to their stakeholders in the annual report.

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Figure 2: Depicting the scope of IAS 19-Employee Benefits
(Source: Iasplus.com 2018)
The above figure mainly indicates all the relevant scope of the employee benefit
measure created by the accounting board, which needs to be evaluate by the organisations in
their annual report.
Conclusion:
The annual report of BHP Billiton relatively indicates that the company effectively
complies with IAS 19 code, where all the relevant information is presented in its annual
report. In addition, the scope of IAS 19 employee benefits is relevantly addressed, such as
leave liabilities, wages, salaries, compensation, termination benefits and retirements benefits.
Hence, it could be understood that BHP Billiton adequately conducts the accounting for
employee benefits, which is reflected in their financial report every year.

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References:
Bhp.com. (2018). [online] Available at:
https://www.bhp.com/-/media/documents/investors/annual-reports/2017/
bhpannualreport2017.pdf [Accessed 16 Jul. 2018].
Billings, M., O’Brien, C., Woods, M. and Vencappa, D., 2017. Discretion in accounting for
pensions under IAS 19: using the ‘magic telescope’?. Accounting and Business Research,
47(2), pp.123-143.
Glaum, M., Keller, T. and Street, D.L., 2018. Discretionary accounting choices: the case of
IAS 19 pension accounting. Accounting and Business Research, 48(2), pp.139-170.
Iasplus.com. (2018). IAS 19 — Employee Benefits (2011). [online] Available at:
https://www.iasplus.com/en/standards/ias/ias19 [Accessed 16 Jul. 2018].