Analysis of AASB Compliance for Australian Energy Companies

This report critically examines the compliance of AGL Energy and Origin Energy Ltd, both ASX-listed companies, with Australian Accounting Standards Board (AASB) standards. The analysis focuses on their general-purpose financial statements to ensure adherence to the conceptual accounting framework, emphasizing the importance of transparency and prudence in accounting practices. The report includes detailed financial statement analyses, incorporating income statements, and consolidated financial positions, along with graphical representations to illustrate key findings. It evaluates compliance with specific AASB standards like AASB 8, AASB 139, and future compliance considerations with AASB 9 and 15. The report provides recommendations for enhancing financial reporting, including the adoption of new standards and the consistent application of prudence principles. The conclusion highlights the necessity of following the conceptual accounting framework for producing useful and relevant financial information for stakeholders, supporting informed decision-making. References to relevant AASB documents and company annual reports are included.

Contemporary Issues in Accounting
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Executive Summary
This report has analyzed and examined the compliance of AASB standards by the ASX
listed companies that are. AGL Energy and Origin Energy Ltd, this has been done in order to
ensure that Australian listed companies develops their financial reports as per the AASB
standards in order to meet the needs of end-users of financial reports This is necessary for
maintaining prudence of transparency in the accounting practices. The report emphasizes on the
need of complying with the conceptual accounting framework by businesses globally for
enhancing the usefulness of financial reports for decision-making purposes.
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Contents
Introduction.................................................................................................................................................4
AGL Energy Ltd............................................................................................................................................4
Compliance with AASB standards as per Conceptual accounting Framework Requirements.................4
Auditor’s Declaration...............................................................................................................................6
Financial Statement Analysis...................................................................................................................7
Income Statement- Screenshot...............................................................................................................7
Income Statement- Analyses...................................................................................................................8
Findings:..............................................................................................................................................8
Income Statement- Graphical analyses...................................................................................................8
Consolidated Position of Financial Statement- Analyses:......................................................................10
Findings:-..........................................................................................................................................10
Consolidated Position of Financial Statement- Graphical presentation................................................10
Recommendations:................................................................................................................................11
Origin Energy.............................................................................................................................................11
AASB Compliance..................................................................................................................................11
Future Compliance................................................................................................................................13
Auditor’s Declaration.............................................................................................................................13
Financial Statement Analysis.................................................................................................................15
Income Statement- Screenshot.............................................................................................................15
Income Statement- Analyses.................................................................................................................15
Findings:............................................................................................................................................16
Income Statement- Graphical analyses.................................................................................................16
Consolidated Position of Financial Statement- Screenshot...................................................................17
Consolidated Position of Financial Statement- Analyses:......................................................................18
Findings:-..........................................................................................................................................18
Consolidated Position of Financial Statement- Graphical presentation................................................18
Recommendations:................................................................................................................................19
Prudence Inclusion in Conceptual Framework..........................................................................................19
Recommendations.....................................................................................................................................19
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Conclusion.................................................................................................................................................19
References.................................................................................................................................................20
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Introduction
The present report aims to analyze the compliance of conceptual framework and AASB
standards by tow of the Australian companies registered on ASX. The selected companies are
AGL Energy and Origin Energy Ltd operating in the energy sector of Australia. The report, in
this regard, evaluates the general purpose financial statements of both the companies for
analyzing the compliance of these statements as per the conceptual accounting framework. For
the purpose, the report examines the conceptual framework of accounting for both the companies
by taking into consideration prudence theory. The analyses of compliance with AASB standards
by both the companies have been done in the report by extracting the screenshot from their latest
annual financial reports.
AGL Energy Ltd
Compliance with AASB standards as per Conceptual accounting Framework
Requirements
As analyzed from the director’s report of the company, it implements and adopts AASB
standards in preparation of its financial statements (AGL Energy Limited: Annual Report,
2016). The notes to financial sttaments of the company state the basis of preparation of accounts
as per the AASB standards determined by the Corporations Act 2001.
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The company has also provided all the segment information as per the AASB standards
(AGL Energy Limited: Annual Report, 2016). It has adopted the AASB 8 standards for
reporting its segment information to its stakeholders as evident from the attached screenshot:
The company as per the AASB 139 standards also incorporate the use of derivative financial
instruments for managing its exposure to interest rates and foreign exchange rates as evident
from the below screenshot of the annual report:
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Auditor’s Declaration
The auditor’s report of the company is also prepared in accordance with the AASB
standards such as evident from the screenshot attached:
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Financial Statement Analysis
Income Statement- Screenshot
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Income Statement- Analyses
AGL Energy Limited
Analysis of income statement for the F Y ended on 30.06.2016
Components Amount in AUD $m Amount in AUD $m
2016 2015 Variance (+/-)
Revenue and other income $ 11,193.00 10,698 4.63%
Expenses $ 11,600.00 10,480 10.69%
Profit / Loss for the year $ -407.00 218 -286.70%
Findings:
 Revenue of the company is increased by 495 million dollars showing the positive
variance of 4.63%.
 Expenses in the year 2016 have been increased drastically by 10.69% as compared to
year 2015.
 Due to increase in the expenses company has to face the losses of 407 million dollars in
year 2016.
Income Statement- Graphical analyses
Revenue and other income Expenses Profit / Loss for the year
$-2,000.00
$-
$2,000.00
$4,000.00
$6,000.00
$8,000.00
$10,000.00
$12,000.00
$14,000.00
Income Statement Analysis
2016
2015
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Consolidated Position of Financial Statement- Analyses:
AGL Energy Limited
Analysis of Financial statement for the F Y ended on 30.06.2016
Components Amount in AUD $m Amount in AUD $m
2016 2015 Variance (+/-)
Current Assets 3,587 3,459 3.70%
Non Current Assets 11,017 12,374 -10.97%
Total Assets 14,604 15,833 -7.76%
current Liabilities 2,553 2,373 7.59%
Non-current liabilities 4,125 4,645 -11.19%
Total Liabilities 6,678 7,018 -4.84%
net assets 7,926 8,815 -10.09%
Share capital 6,696 6,696 0.00%
Total equity 7,926 8,815 -10.09%
Findings:-
 There has been 7.76 % decrease in total assets of the company
 Current Liabilities were increased by 7.59% and current assets by 3.70%
 Net assets were reduced to 7926 million dollars in year 2016 as compare to 8815 million
dollars in year 2015.
Consolidated Position of Financial Statement- Graphical presentation
Current Assets
Non Current Assets
Total Assets
current Liabilities
Non-current liabilities
Total Liabilities
net assets
Share capital
Total equity
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Consolidated Position of Financial Statement
2016
2015
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Recommendations:
The company on the basis of above analysis is recommended to ensure prudence and
transparency in its financial reporting by effectively complying with AASB and conceptual
accounting framework principles. It should also abide by the new AASB standards as directed by
the corporations Act 2001 such as AASB 9 for financial instruments and AASB 15 for revenue
from contracts with customers (Aasb, 2014).
Origin Energy
AASB Compliance
The company complies with the AASB standards for the preparation of its general
purpose financial statements as mentioned in its director’s report (Origin: Annual Report, 2016).
The company complies with the Corporations Act 2001 for reporting its financial facts and
figures in its annual report as evident from the below screenshot:
The company as per the AASB 13 standard has also disclosed the fair value of its assets
and liabilities:
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