Analysis of Accounting Policies and Estimates for BHP Billiton Company
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This report provides an in-depth analysis of the accounting policies and financial estimates employed by BHP Billiton Company. It examines the company's adherence to GAAP and IFRS standards, highlighting key aspects such as asset valuation, income tax, and foreign exchange transactions. The report differentiates between the company's practices before and after the Samarco Mineração S.A incident in Brazil, detailing the impact on financial reporting and the adoption of new estimations, including contingent provisions and adjustments to CSR spending. It identifies red flags in the accounting reports, particularly concerning the implementation of impairment tests and compliance with accounting standards. The report concludes with recommendations for improved harmonization in domestic and international reporting frameworks and a call for enhanced adherence to federal government regulations.
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RUNNING HEAD: Accounting policies and estimates used by BHP Billiton company
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Title- Accounting policies and estimates used by BHP Billiton company
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Title- Accounting policies and estimates used by BHP Billiton company
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Table of Contents
Introduction.................................................................................................................................................3
Accounting policies and GAAP rules followed by BHP Billiton Company...................................................3
Estimates prepared by BHP Billiton Company before incidents of iron ore operations of Samarco
Mineração S.A in Minas Gerais, Brazil...................................................................................................4
Estimates prepared by BHP Billiton Company after incidents of iron ore operations of Samarco
Mineração S.A in Minas Gerais, Brazil...................................................................................................5
Red flag in accounting report of BHP Billiton Company............................................................................5
Conclusion...................................................................................................................................................6
References...................................................................................................................................................8
Appendix.....................................................................................................................................................9
Table of Contents
Introduction.................................................................................................................................................3
Accounting policies and GAAP rules followed by BHP Billiton Company...................................................3
Estimates prepared by BHP Billiton Company before incidents of iron ore operations of Samarco
Mineração S.A in Minas Gerais, Brazil...................................................................................................4
Estimates prepared by BHP Billiton Company after incidents of iron ore operations of Samarco
Mineração S.A in Minas Gerais, Brazil...................................................................................................5
Red flag in accounting report of BHP Billiton Company............................................................................5
Conclusion...................................................................................................................................................6
References...................................................................................................................................................8
Appendix.....................................................................................................................................................9

Accounting policies and estimates used by f BHP Billiton company 3
Introduction
This report reflects the key understanding on the financial reporting of BHP Billiton
Company. In this report, it is reflected that each and every company prepare their financial
reporting as per the IFRS rules and standards in which they have to make estimation in their
financial statement. In this report, BHP Billiton Company has been taken into consideration.
Present description of organization
It is an Australian company which has been selling gas and oil products to its clients. The
main reporting issues and changes in BHP Billiton Company has arisen due to changes in
estimation prepared in its financial statements. This report has shown the incidents of iron ore
operations of Samarco Mineração S.A in Minas Gerais, Brazil in BHP Billiton Company (Ball,
and Shivakumar, 2015).
Accounting policies and GAAP rules followed by BHP Billiton Company
BHP Billiton Company has followed GAAP Rules and IFRS accounting standards in its
reporting frameworks with a view to increase its overall efficiency (Aobdia, Lin and Petacchi,
2015).
BHP Billiton Company has charged written down value method to reflect true and fair
view of its assets as per the IAS-16.
In addition to this, all the lease transactions has been recorded as per AASB16 rules and
standards. BHP Billiton Company in its annual report has adopted provision of right of
use assets in reporting of its underlying leased assets.
Introduction
This report reflects the key understanding on the financial reporting of BHP Billiton
Company. In this report, it is reflected that each and every company prepare their financial
reporting as per the IFRS rules and standards in which they have to make estimation in their
financial statement. In this report, BHP Billiton Company has been taken into consideration.
Present description of organization
It is an Australian company which has been selling gas and oil products to its clients. The
main reporting issues and changes in BHP Billiton Company has arisen due to changes in
estimation prepared in its financial statements. This report has shown the incidents of iron ore
operations of Samarco Mineração S.A in Minas Gerais, Brazil in BHP Billiton Company (Ball,
and Shivakumar, 2015).
Accounting policies and GAAP rules followed by BHP Billiton Company
BHP Billiton Company has followed GAAP Rules and IFRS accounting standards in its
reporting frameworks with a view to increase its overall efficiency (Aobdia, Lin and Petacchi,
2015).
BHP Billiton Company has charged written down value method to reflect true and fair
view of its assets as per the IAS-16.
In addition to this, all the lease transactions has been recorded as per AASB16 rules and
standards. BHP Billiton Company in its annual report has adopted provision of right of
use assets in reporting of its underlying leased assets.

Accounting policies and estimates used by f BHP Billiton company 4
BHP Billiton Company has been filling its consolidated financial statement as per the
AASB-105 in its reporting frameworks (Cairns, et al. 2011).
As per the IAS-136, BHP Billiton Company has been implemented impairment test and
charged its impairment loss from its goodwill and other cash generating units.
AASB-117 has been followed by BHP Billiton Company to record its leased transactions
and reporting of its estimation done (BHP Billiton Company, 2015).
Estimates prepared by BHP Billiton Company before incidents of iron ore operations
of Samarco Mineração S.A in Minas Gerais, Brazil.
The financial statement of BHP Billiton Company has been prepared with FRS 101
requires the use of critical accounting estimates. There are several future estimates that have
been followed by BHP Billiton Company in its financial reporting frameworks such as
income tax payment, valuation of assets, investment in subsidiaries, income tax expenses and
foreign exchange transactions. However, it is observed that when BHP Billiton Company did
not face the incidents of iron ore operations of Samarco Mineração S.A in Minas Gerais,
Brazil then at that time company was having general estimations in its reporting frameworks.
Ideally, it focused on preparing provision, foreign exchange transaction, income tax payment
and subsidiaries company investment (Barth, 2013). The main estimation was done by
company for reporting of its liabilities for wages and salary that includes non-monetary
transaction set off 12 months from the reporting period. In addition to this, BHP Billiton
Company did not follow proper CSR rules and regulations which resulted to failure to install
eco system safety mechanism to reduce the negative impact of Samarco incident (Atkins, J.
and Maroun, W., 2015).
BHP Billiton Company has been filling its consolidated financial statement as per the
AASB-105 in its reporting frameworks (Cairns, et al. 2011).
As per the IAS-136, BHP Billiton Company has been implemented impairment test and
charged its impairment loss from its goodwill and other cash generating units.
AASB-117 has been followed by BHP Billiton Company to record its leased transactions
and reporting of its estimation done (BHP Billiton Company, 2015).
Estimates prepared by BHP Billiton Company before incidents of iron ore operations
of Samarco Mineração S.A in Minas Gerais, Brazil.
The financial statement of BHP Billiton Company has been prepared with FRS 101
requires the use of critical accounting estimates. There are several future estimates that have
been followed by BHP Billiton Company in its financial reporting frameworks such as
income tax payment, valuation of assets, investment in subsidiaries, income tax expenses and
foreign exchange transactions. However, it is observed that when BHP Billiton Company did
not face the incidents of iron ore operations of Samarco Mineração S.A in Minas Gerais,
Brazil then at that time company was having general estimations in its reporting frameworks.
Ideally, it focused on preparing provision, foreign exchange transaction, income tax payment
and subsidiaries company investment (Barth, 2013). The main estimation was done by
company for reporting of its liabilities for wages and salary that includes non-monetary
transaction set off 12 months from the reporting period. In addition to this, BHP Billiton
Company did not follow proper CSR rules and regulations which resulted to failure to install
eco system safety mechanism to reduce the negative impact of Samarco incident (Atkins, J.
and Maroun, W., 2015).
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Accounting policies and estimates used by f BHP Billiton company 5
Estimates prepared by BHP Billiton Company after incidents of iron ore operations
of Samarco Mineração S.A in Minas Gerais, Brazil.
After occurring of this event, the financial statement of BHP Billiton Company has been
prepared by adopted preliminary agreements rules and regulations in its reporting
frameworks. However, this incident has resulted to high value destruction in its annual
turnover throughout the time. There are several new estimations has been adopted by BHP
Billiton Company such as creation of contingent provision, preparing separate liability
discharge account and increasing the CSR amount in its business functioning. However, as
per the IAS-137, the impairment test implemented by company on periodic basis has charged
all of its decreased value of assets from goodwill and remaining amount has been charged
from its cash generating unit. In addition to this, hedge funds created by BHP Billiton
Company has also increased by $ 1.3 billion in its estimations prepared as per the IFRS rules
and standards. In addition to this, framework reporting of company has also been changed
after entering into agreement with the Brazilian Authorities in determined approach. This
level of change in its reporting frameworks (Bischof, Brüggemann and Daske, 2014).
Red flag in accounting report of BHP Billiton Company
BHP Billiton Company has observed several red flags while charging the loss arise from
Samarco incident. Company has charged this Samrco loss from its all cash generating units
after implementing the impairment test as per the IAS-136. In addition to this, company has
also prepared reserve and provisions to cover up its future contingent liabilities (BHP Billiton
Company, 2017). However, company has faced problems and issues in complying with the
Estimates prepared by BHP Billiton Company after incidents of iron ore operations
of Samarco Mineração S.A in Minas Gerais, Brazil.
After occurring of this event, the financial statement of BHP Billiton Company has been
prepared by adopted preliminary agreements rules and regulations in its reporting
frameworks. However, this incident has resulted to high value destruction in its annual
turnover throughout the time. There are several new estimations has been adopted by BHP
Billiton Company such as creation of contingent provision, preparing separate liability
discharge account and increasing the CSR amount in its business functioning. However, as
per the IAS-137, the impairment test implemented by company on periodic basis has charged
all of its decreased value of assets from goodwill and remaining amount has been charged
from its cash generating unit. In addition to this, hedge funds created by BHP Billiton
Company has also increased by $ 1.3 billion in its estimations prepared as per the IFRS rules
and standards. In addition to this, framework reporting of company has also been changed
after entering into agreement with the Brazilian Authorities in determined approach. This
level of change in its reporting frameworks (Bischof, Brüggemann and Daske, 2014).
Red flag in accounting report of BHP Billiton Company
BHP Billiton Company has observed several red flags while charging the loss arise from
Samarco incident. Company has charged this Samrco loss from its all cash generating units
after implementing the impairment test as per the IAS-136. In addition to this, company has
also prepared reserve and provisions to cover up its future contingent liabilities (BHP Billiton
Company, 2017). However, company has faced problems and issues in complying with the

Accounting policies and estimates used by f BHP Billiton company 6
GAAP rules and IFRS standards. As per the GAAP Rules Company should re-evaluate its
assets and liabilities only on periodical basis. On the other hand, company could implement
impairment test as per needs and estimations prepared by company, if IFRS rules and
regulations followed. BHP Billiton Company has identified these problems and issues in its
reporting frameworks while reporting financial statement to financial reporting authorities.
BHP Billiton Company did not follow CSR rules and issues in its reporting frameworks
which resulted to destruction of proposed eco system to mitigate the negative impact of
hazardous occurring (BHP Billiton Company, 2017).
There are several financial issues which company has faced in its reporting frameworks
BHP Billiton Company should have maintained reserve and provisions under the federal
government agreement and frameworks in its reporting frameworks to mitigate the negative
impact of hazardous happening in society.
Company should have charged its loss as capital expenditure to reduce the negative
impact on its profit earning capacity and should have deposited all of its penalties and loss in
the escrow account.
Company should have complied all the rules and regulation of preliminary agreement
prepared by it with other authorities while complying with the reporting standards (Cairns, et
al, 2011).
Conclusion
After evaluating the annual report of BHP Billiton Company before 2015 and after 2016,
company has filled various red flags. BHP Billiton Company needs to established proper
GAAP rules and IFRS standards. As per the GAAP Rules Company should re-evaluate its
assets and liabilities only on periodical basis. On the other hand, company could implement
impairment test as per needs and estimations prepared by company, if IFRS rules and
regulations followed. BHP Billiton Company has identified these problems and issues in its
reporting frameworks while reporting financial statement to financial reporting authorities.
BHP Billiton Company did not follow CSR rules and issues in its reporting frameworks
which resulted to destruction of proposed eco system to mitigate the negative impact of
hazardous occurring (BHP Billiton Company, 2017).
There are several financial issues which company has faced in its reporting frameworks
BHP Billiton Company should have maintained reserve and provisions under the federal
government agreement and frameworks in its reporting frameworks to mitigate the negative
impact of hazardous happening in society.
Company should have charged its loss as capital expenditure to reduce the negative
impact on its profit earning capacity and should have deposited all of its penalties and loss in
the escrow account.
Company should have complied all the rules and regulation of preliminary agreement
prepared by it with other authorities while complying with the reporting standards (Cairns, et
al, 2011).
Conclusion
After evaluating the annual report of BHP Billiton Company before 2015 and after 2016,
company has filled various red flags. BHP Billiton Company needs to established proper

Accounting policies and estimates used by f BHP Billiton company 7
level of harmonization in its domestic and international business reporting frameworks in
determined approach after complying with the rules and instruction given under the federal
government rules and regulations.
level of harmonization in its domestic and international business reporting frameworks in
determined approach after complying with the rules and instruction given under the federal
government rules and regulations.
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Accounting policies and estimates used by f BHP Billiton company 8
References
Aobdia, D., Lin, C.J. and Petacchi, R., 2015. Capital market consequences of audit partner
quality. The Accounting Review, 90(6), pp.2143-2176.
Atkins, J. and Maroun, W., 2015. Integrated reporting in South Africa in 2012: Perspectives from
South African institutional investors. Meditari Accountancy Research, 23(2), pp.197-221.
Ball, R., Li, X. and Shivakumar, L., 2015. Contractibility and transparency of financial statement
information prepared under IFRS: Evidence from debt contracts around IFRS adoption. Journal
of Accounting Research, 53(5), pp.915-963.
Barth, M.E., 2013. Global comparability in financial reporting: What, why, how, and
when?. China Journal of Accounting Studies, 1(1), pp.2-12.
BHP Billiton Company, 2015, Annual report, Retrieved on 30th September, 2017 from
BHP Billiton Company, 2017, Annual report, Retrieved on 30th September, 2017 from
Bischof, J., Brüggemann, U. and Daske, H., 2014. Fair value reclassifications of financial assets
during the financial crisis.
Cairns, D., Massoudi, D., Taplin, R. and Tarca, A., 2011. IFRS fair value measurement and
accounting policy choice in the United Kingdom and Australia. The British Accounting
Review, 43(1), pp.1-21.
http://www.bhp.com/-/media/documents/investors/annual-reports/2017/bhpannualreport2017.pdf
http://www.bhp.com/-/media/documents/investors/annual-reports/2017/bhpannualreport2017.pdf
References
Aobdia, D., Lin, C.J. and Petacchi, R., 2015. Capital market consequences of audit partner
quality. The Accounting Review, 90(6), pp.2143-2176.
Atkins, J. and Maroun, W., 2015. Integrated reporting in South Africa in 2012: Perspectives from
South African institutional investors. Meditari Accountancy Research, 23(2), pp.197-221.
Ball, R., Li, X. and Shivakumar, L., 2015. Contractibility and transparency of financial statement
information prepared under IFRS: Evidence from debt contracts around IFRS adoption. Journal
of Accounting Research, 53(5), pp.915-963.
Barth, M.E., 2013. Global comparability in financial reporting: What, why, how, and
when?. China Journal of Accounting Studies, 1(1), pp.2-12.
BHP Billiton Company, 2015, Annual report, Retrieved on 30th September, 2017 from
BHP Billiton Company, 2017, Annual report, Retrieved on 30th September, 2017 from
Bischof, J., Brüggemann, U. and Daske, H., 2014. Fair value reclassifications of financial assets
during the financial crisis.
Cairns, D., Massoudi, D., Taplin, R. and Tarca, A., 2011. IFRS fair value measurement and
accounting policy choice in the United Kingdom and Australia. The British Accounting
Review, 43(1), pp.1-21.
http://www.bhp.com/-/media/documents/investors/annual-reports/2017/bhpannualreport2017.pdf
http://www.bhp.com/-/media/documents/investors/annual-reports/2017/bhpannualreport2017.pdf

Accounting policies and estimates used by f BHP Billiton company 9
Appendix
Appendix

Accounting policies and estimates used by f BHP Billiton company 10
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