Comparative Analysis of BEGA Cheese Financial Disclosures and Media

This report provides an in-depth analysis of BEGA Cheese's financial disclosures, focusing on the company's annual reports over the past two years. It examines key aspects such as voluntary disclosures, including the adoption of AASB 15 (Revenue from Contracts with Customers) and the acquisition of the Koroit dairy processing facility. The report delves into the qualitative characteristics of financial information, specifically relevance, materiality, and faithful representation, as outlined by the Australian Accounting Standards Board (AASB). Furthermore, it compares the disclosed information with media releases and reviews to assess the consistency and completeness of the financial reporting. The analysis includes a discussion of the impact of these disclosures on stakeholders and the company's overall transparency. The report concludes with a summary of the key findings and their implications for BEGA Cheese's financial performance and reputation. The document is contributed by a student to be published on the website Desklib, a platform which provides all the necessary AI based study tools for students.

Running Head: BEGA CHEESE
BEGA CHEESE
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Voluntary Disclosure.............................................................................................................2
Qualitative characteristics:.....................................................................................................4
Media Releases and Reviews.................................................................................................5
Conclusion..................................................................................................................................6
Reference....................................................................................................................................8

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Introduction
BEGA cheese, an Australian company indulged in diver diversified food category in
Queensland, Victoria and North south wales. It has developed a trusted iconic and reputed
brand in Australia supplying cheese products that suits Australian. The mission of the
company is to be the greatest food company by creating food to create a better future.
Disclosure of financial and relevant information is a vital step taken by the
organisations in order to recognise the policy and determine the expenses and profits in a
particular time period. Disclosure is important in order to provide details to the present
stakeholders of the company as well as future investors and helps in transparency of the
company’s accounting policy and procedures (No 2018). This assignment aims at analysing
the last two years annual report of BEGA cheese and compare these disclosure with material
gained by media reviews and other external resources. This report states various theories and
concepts of AASB conceptual framework and the applications of these concepts in case of
disclosures by BEGA Cheese.
Discussion
BEGA Cheese, an Australian company engages with manufacturing in diversified
food category in Queensland, Victoria and North south wales. It has developed a trusted
iconic and reputed brand in Australia supplying cheese products that suits Australian.
Voluntary Disclosure
Disclosure is a vital step taken by the organisations in order to recognise the policy and
determine the expenses and profits in a particular time period. Disclosure is important in
order to provide details to the present stakeholders of the company as well as future investors

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and helps in transparency of the company’s accounting policy and procedures (No 2018).
Two main voluntary disclosure made by BEGA Cheese are as follows:
- The company discloses adoption of the Australian Accounting Standard Board 15,
which refers to the revenue generated from contracts with the customers. In the year
2018, the company adopted this standard i.e. AASB 15 that stands for ‘Revenue from
Contracts with Customers’. The adoption resulted in various changes in the existing
accounting policies of the company and an amount of 186 million US dollars were
reported as revenue which were previously superseded (Murphy and O’Connell
2013). The disclosure was vital as it was key audit matter with made it essential for
the stakeholders to know about the same. It was a vital disclosure due to the following
reasons (2020):
1. The extent of the adjustments to the revenue generated
2. Major accounting judgements and adjustment made by the company in
determining the impact that AASB 15 would have
3. In assessing the capability of the methodology used by the company in order to
contract various reviews required in identifying the impacts of the standard
4. To develop an understanding of the significant standings of the including parties,
background of the agreement, term dates, payments that have to be made and
performance obligations.
5. It assists in checking the accuracy of the calculation of the adjustments made by
the company while using this standard.
- The group focuses on disclosing the various combinations or acquisitions with other
brands. In August, 2018 BEGA Cheese acquired the dairy processing facility named
Koroit for 251 million US dollars. The accounting procedures on the acquisition was

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completed by 2019, June. It was a crucial feature for the audit matter due to the
following reasons:
1. To determine the magnitude of total transactions of the company in that particular
year.
2. In order to determine the fair value of various assets and liabilities such as
properties, equipment and plant, tax balances and inventory acquired from Koroit.
3. To develop a better understanding of the terms and conditions of the acquisition
by obtaining and evaluating the purchase and sale agreement. The group agreed
for paying the consideration to the banking records and other acquired net assets
were physical inventory counted till the acquisition date, The fair value of the
plant, equipment and property were compared with the third party valuation report
and the company’s external values were considered such as competency,
qualification, objectivity and experience
4. The appropriateness of recognised goodwill, which included assessment of
completeness with reference to the requirement of the AASB 3 that dealt with
business combinations and re-performing the calculation of the goodwill of the
acquired company.
Qualitative characteristics:
AASB, The Australian Accounting Standard Board provides a conceptual framework
with six qualitative features of which the three major characteristics that help in making the
information present in the annual report useful to its users are Relevance, Materiality and
Faithful representation.
Relevance refers to the fact that the provided information is relevant to its users and
helps them in making better decision. It is called relevant when it has the power to influence
the economic decision of the users by assisting them in evaluating the past, present and future

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events and disclosure made in the annual report of the company. BEGA Cheese disclosures
help its investors and other stakeholders by providing them relevant information about the
company’s day to day transactions and updates and help them making better decisions.
Materiality and nature affects the relevance of the information, it depends on the
nature of the information. An information is said to be material when its misstatement can
affect the decision making of those using the information from the annual report of the
company (Kasser 2016). Hence, materiality helps in providing a threshold rather than having
a primary qualitative characteristics.
Faithfull Representation means providing reliable information that can genuinely and
faithfully represent the economic and financial phenomena of the company in its annual
report. These information are expected to represent the company’s financial figures with zero
errors and mistakes. This creates a sense of trust and loyalty about the company in the minds
of its investors and other stakeholders. BEGA cheese provides a faithful representations of its
balance sheet figures be it assets or equities and liability (Kythreotis 2014). In case of
goodwill evaluation, determining it becomes a bit difficult and challenges its reliability, the
company in that case discloses the risk of error surrounded by measurement and recognition.
Media Releases and Reviews
An article by Brad Thompson titled “Bega cheese faces fight to boost Koroit milk
supply after $250 million acquisition”. The article stated that the company was tipped for
taking a leaf from vegemite playbook post the conformation of the 250 million US dollars
purchase from koroit dairy, which processed in western Victoria. The article claimed that the
company was supposed to fund this acquisition through its debt but the company failed to
rule out the capital raising. The share price of the BEGA Cheese raised over more than 4 per

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cent and closed on 8.01 dollars on Wednesday, the day when the acquisition was completed
(Bega faces fight to boost Koroit milk supply after $250 million acquisition, 2020).
Farmers and other employers in koroit confirmed BEGA Cheese as their new owner
committed to ramp up the capacity of Koroit. Daniel Meade, councillor of Dairy farmer and
Moyne shire stated that the company has levelled up its efforts in order to collect more milk
in that region. He added that the company has been in the south west region for a long time
but somehow could not own a factory there. The acquisition would provide the company with
a base that would give the farmers confidence of their stay in the company for a long period
and that they would be helping in generating financial and economic benefits that was going
to the local economy.
According to the media, the immediate upside for BEGA Cheese was that the
company collected over 100 million litres of milk in various regions and transferred the milk
to other processed plants. There was an immediate rise from 100 million litres milk to 300
million litres milk in a year ((Bega faces fight to boost Koroit milk supply after $250 million
acquisition, 2020). The terms and conditions of the acquisition mandate Saputo to guarantee
the supply of 300 million litres till June, 2020. The earnings before interest, tax and
depreciation or amortisation (EBITDA) was expected to be 20 million US dollars based on
the intake in the current year. The article however stated it would not be easy for BEGA
cheese to boost their supply with rivals like Saputo and Fonterra, both were operating in the
same regions and was hunting for more milk.
Conclusion
In a nutshell, it can be said from the above discussion that disclosure is a vital step
taken by any organisation. BEGA Cheese discloses all the relevant information in its annual
report in order to maintain transparency. Disclosure is a vital step taken by the company and

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helps in recognising the policy and determining the expenses and profits in a particular time
period. BEGA Cheese’s disclosure helps its users in making better decisions.

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Reference
No, A.S., 2018. Conceptual framework for financial reporting. Norwalk, CT: FASB.
Murphy, T. and O’Connell, V., 2013. Discourses surrounding the evolution of the
IASB/FASB Conceptual Framework: What they reveal about the “living law” of
accounting. Accounting, Organizations and Society, 38(1), pp.72-91.
Davern, M., Gyles, N., Potter, B. and Yang, V., 2019. Implementing AASB 15 revenue from
contracts with customers: the preparer perspective. Accounting Research Journal.
Annualreports.com. 2020. [online] Available at:
<http://www.annualreports.com/HostedData/AnnualReports/PDF/ASX_BGA_2019.pdf>
[Accessed 15 April 2020].
Australian Financial Review. 2020. Bega Faces Fight To Boost Koroit Milk Supply After
$250 Million Acquisition. [online] Available at: <https://www.afr.com/companies/bega-faces-
fight-to-boost-koroit-milk-supply-after-250-million-acquisition-20180718-h12tkb>
[Accessed 15 May 2020].
Kasser, T., 2016. Materialistic values and goals. Annual review of psychology, 67, pp.489-
514.
Kythreotis, A., 2014. Measurement of financial reporting quality based on IFRS conceptual
framework’s fundamental qualitative characteristics. European Journal of Accounting,
Finance & Business, 2(3), pp.4-29.