Financial Reporting Disclosures in Australian Corporate Sector

This report provides an analysis of financial reporting disclosures within the Australian corporate sector, with a specific focus on the impact of AASB 16 (Leases). It examines how AASB 16 has altered the accounting for leases, using Woolworths Limited as a case study. The report highlights the potential impact of the new rules, including the eradication of differences between financing and operating leases, and the implications for various industries. The evaluation emphasizes the widespread use of leasing as a financing activity and the importance of evaluating all lease types under the new standards. Recommendations include incorporating restoration and indirect expenses and facilitating proper team planning for efficient project management to address the new accounting treatment. The report references key financial accounting and corporate finance texts, along with Woolworths Limited's 2017 annual report.

FINANCIAL REPORTING
DISCLOSURES IN THE AUSTRALIAN
CORPORATE SECTOR

DESCRIPTION OF THE LEASE
 AASB 16 (leases) has played a key role in
disengaging present requirement of
accounting for leases under the AASB 17
(leases).
 lease classification of the Woolworths
 liability of lease projects that the present
value of payments of future lease of the
company (Woolworths limited, 2017)
 the company’s accounting for leases (as a
lessee) also remains unchanged based on
AASB 16.

THE COMPANY’S ACCOUNTING FOR LEASES (AS A
LESSEE) ALSO REMAINS UNCHANGED BASED ON
AASB 16
 standard is required for corporate reporting
 objective of the project is to ensure high-quality
performance based on the current accounting
standard
 primary duties of the company’s project also
cover budgeting, accounting policies, impact
assessment, implementation of prices, identifying
system requirements, and finishing the
implementation strategy (Woolworths limited,
2017)

POTENTIAL IMPACT FROM THE APPLICATION
OF NEW RULES
 key role in making many alterations in the
company’s financials when the same is
implemented by the industry (Vaitilingam,
2014)
 eradication of differences betwixt both
financing and operating leases
 influence every industry in the market
 the company will now encounter expenses
incurred towards the maintenance of leased
assets (Ross et. al 2014).

EVALUATION
 leasing function is believed to be the most
widely utilized and relevant financing affair of
the companies (Vaitilingam), 2014)
 assists it in safeguarding the asset from the
risk of residual value
 after implementation of new standards, it has
become benevolent for companies to
evaluate all kinds of lease (Porter & Norton,
2014)

RECOMMENDATION
 The right to utilize an asset incorporates both
restoration and indirect expenses and there
are no variations in the accounting of a
company’s lessor
 companies must facilitate in proper team and
planning
 Across-functional team will ensure that a plan
can be designed with efficient project
management to encounter such new
accounting treatment (Woolworths limited,
2017).

REFERENCES
 Porter, G. and Norton, C. (2014) Financial
Accounting: The Impact on Decision Maker. Texas:
Cengage Learning
 Ross, S., Christensen, M., Drew, M., Bianchi, R.,
Westerfield, R. And Jordan, B.(2014) Fundamentals
of Corporate Finance, 7th ed. North Ryde: McGraw-
Hill Australia Pty Ltd.
 Vaitilingam, R. (2014) The Financial Times Guide to
Using the Financial Pages. London: FT Prentice Hall.
 Woolworths limited. (2017) Woolworths limited
Annual Report and accounts 2017. [online] Available
from:
 http://www.woolworthslimited.com.au/icms_docs/18
2381_Annual_Report_2017.pdf
[Accessed 30 September 2018]