BUACC5932 Corporate Accounting: Rio Tinto Financial Report

This report provides a comprehensive analysis of Rio Tinto's financial performance, corporate social responsibility (CSR), and business activities. The introduction defines corporate accounting and its significance, emphasizing CSR's role. The report examines Rio Tinto's financial structure, business operations, and financial performance, including assets and key performance indicators. It discusses Rio Tinto's strategies, particularly in relation to competitors, financial funding, and its operational activities in various regions. The report also analyzes the company's financial performance in 2018, including the impacts of market volatility, and the measures used for assessing financial performance. The financial statements are prepared according to IFRS, and the report highlights specific accounting treatments. The conclusion summarizes the key findings, emphasizing the importance of corporate accounting and CSR in the modern business context. The assignment is based on the analysis of Rio Tinto's annual report and includes references to various sources.

Running head: REPORT 0
CORPORATE ACCOUNTING
SEPTEMBER 12, 2019
STUDENT DETAILS:

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Contents
Introduction.................................................................................................................................................2
Overview of company.................................................................................................................................3
Financial structure of company...................................................................................................................3
Business and operating activities.................................................................................................................4
Finance and financial performance..............................................................................................................5
Assets – PPE and Intangibles......................................................................................................................7
Conclusion...................................................................................................................................................8
References.................................................................................................................................................10
Appendix 1................................................................................................................................................12

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Introduction
The corporate Accounting is considered as specific branch of accounting. It deals with
accounting of corporations , final account’s preparation as well as cash flow statement’s
preparation, evaluation and examination of financial outcomes of company and accounting for
the particular events (such as amalgamation and preparation of consolidated). According to the
book of Howard R Bowen “Social Responsibility of Businessmen”, the CSR has described as
obligation’s set needed to be made by businessperson, in relation to framing the policies as well
as undertaking decision that is in line with the aims as well as values of the societies in whole
(Tricker, 2015). The concept is not limited to the environmental approaches, however it expands
to aligning whole value of the company with aspiration of the stakeholder in comparison with
customer, investor, dealers, workers, as well as regulators (Zientara, 2017). The international
significance of corporate accounting may be simply tracked by various international companies
established for similar that are constantly stating the issues concerning the accounting policies as
well as the social and ethical responsibilities of organisations (Jamnik, 2017). These include the
Global Reporting Initiative, UN Global Compact, Economic cooperation as well as development
organisation, World Business Council for Sustainable Development and International
Organization for Standardization (Moon, 2014).
Further, the corporate governance structure includes the practices, regulations as well as
procedures that are helpful to direct and to control the entities (Katamba, et. al, 2012). This is
usually the framework of regulations and approaches that enable the administration being fair,
transparent, as well as responsible. The company’s corporate governance structure has various
aspects such as people, practices, and structures along with rules. In the following parts, the

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CSR, business as well as operating activities, accounting policies of assets or others and financial
performance of Rio Tinto is discussed and assessed.
Overview of company
The corporation selected for assessment is Rio Tinto. It is one of main mineral and metal
mining conglomerates of the world. The head office of company is in United Kingdom along
with Australia (Rio Tinto, 2018). The main business of the company is manufacturing of raw
materials such as copper, bauxite, iron ore, uranium, diamond, as well as industrial minerals such
as salt, titanium dioxide, borates and gypsum. The key objective of the paper is to examine
approaches as well as policies of Rio Tinto in relation to the corporate social responsibility,
governance structure, as well as business ethics, and its implementation along with results. The
corporation carries out the CSR throughout Sustainability Committee that was headed by Ms
Megan Clark (Sustainability Committee Chairman).
In metal and mining industry, ten leading competitors in Rio Tinto are Alcoa,
Constellium, RUSAL, Hydro, Anglo American, Exxaro, Vale, Kaiser Aluminum, Anglo-
americal Group as well as Vedanta. Rio Tinto designs the long-term competitive strategies to
develop the defensive post in against of the competitors as well as gains the competitive edge
over opponents (Schwartz, 2011). Rio Tinto has the capability to complete the requirements of
market and to attract as well as retain the present clients. The company ensures that the price set
for products should be reasonable (Reuters, 2018).
Financial structure of orgnisation

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From Rio Tinto’s annual report, it can be analysed that in 2018, the company funded the
capital expenditures from the operating activities. Rio Tinto is expected to continue the financing
the capital programmes from the internal resources, excepting Oyu Tolgoi underground
developments that are projects-financed. The urbanisation as well as industrialisation of China
has the main force creating mining industry, along with Rio Tinto over previous two decades.
When it would remain significant in the upcoming time, this is expanding toward Africa, South
East Asia and India. The areas have the larger infrastructure gaps that would need the important
increase in the investment for supporting the development. The infrastructure project tends to be
financed by the private industry however also provide chances for the government to exert
impact at homes as well as out of nation. The company’s potential opportunities involve the
business operations in different territories (Tricker, 2015).
Business and operating activities
The strategy of company is to make investment in as well as operate larger, long-term,
cost reasonable mines as well as business, driven not through the commodity’s choice however
rather through quality of all the opportunities. The basic role of the company is to make delivery
of value when operating in an ethically as well as socially accountable way, as well as remaining
devoted to longer term sustainable expansion. Further, it is operated in the moral as well as social
manner that creates and keeps the reputation of company, and makes sure continuing access to
the individuals, mineral sources, as well as capital.
The key business of Rio Tinto is the manufacturing of raw material such as iron ore,
bauxite, copper, diamonds, industrial minerals, as well as uranium including the titanium
dioxide, gypsum, and salt, along with borates. The company also makes performance on the

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processing on certain materials, with plant dedicated to dispensation of bauxite in aluminium
along with alumina, and smelting iron ore in the iron. Rio Tinto also manufactures different more
minerals and metals as by products from the process of the major sources, such as
molybdenum, silver, sulphuric acid, gold, nickel, lead, potash, as well as zinc. In addition, the
company also controls the gross assets of 81 billion dollars in the values everywhere in the
worlds. It operates the business with major concentration in Australia (thirty-five per cent),
Europe (thirteen per cent), Canada (thirty four per cent), as well as USA (eleven per cent), and
smallholding in Southern America (three per cent), Indonesia (one per cent), and Africa (three
per cent). In this way, the cash produced through the operating activities of 11.8 billion dollars
was fifteen percent lesser this year, mainly because of the tax payment related to 2017 profit as
well as negative working capital movement. It is stated in annual report of company that the
company grows and improves the business of group by exploring the metals and Minerals
Company needs currently as well as tomorrow, implementing modern techniques, delivering the
project as well as optimising the operations. Whether discovering or maintaining the assets, the
company finds ground-breaking manners for adding value across the complete lifecycle of the
operations.
Finance and financial performance
The company continued to deliver stronger outcomes from the top iron ore assets. The
company is advantaged from the strong demand for the best-quality products. The company also
increased the shipment as well as maintained the unit cost. This was the solid year operationally
though 3rd quarter manufacturing was influenced by the security pause across the operation
following the casualty at the Paraburdoo mines. In addition, the aluminium businesses were
stable from the operational point of view, with high premium for the sales in Northern America

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offset by America ten per cent tariff. The years were featured through the marketplace volatility
from tariff, sanction as well as alumina supplies disruption and rise in input price for the main
raw materials. Furthermore, 2018 was the demanding year for businesses with disruption to the
operation, involving 2 amenities at Rio Tinto Iron and Titanium as well as the strike at Iron Ore
Canadian Corporation. In Australia, the year 2018 marked achievement of sale of the outstanding
coking coal asset (Market Index, 2018).
Additionally, sustaining the capital expenditure is element of free cash flow financial
performances measures involved in short term incentive plans. During long-term, KPI affects
TSR that is involved in long-run incentive’s plan. There are some elements that would have the
instant impacts on the sector. The reframing of state owned corporations, the shift of customers
of China towards high-quality products (like premium iron ore product, Pilbara Blend),
emergence of corporations of China as main dealers and as strong external contest. The company
has followed as well as strengthened the relation with China. The company has signed the joint
venture contract with Minmetals in year and are thronging the relation with State Owned Assets
Supervision and Administration Commission that regulates as well as handles the state-owned
assets of China. It would need certain possibly important modifications to the designing of
certain upcoming components of the developments, and the development’s schedule.
The company uses the 2 measures for assessing the financial performance, with the
unflexed as well as flexed targets (adjusted for the price of commodities) for all the measures.
The company also adjusts for non-controllable as well as exceptional item. Generally, the net
influence of the adjustment was to reduce the financial performance of group to sixty per cent
of maximum. The real financial performance against edge, targets, as well as best performance
for the measure is set out (appendix 1). At the time when the company measures the financial

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performances in against of annual plan, half is evaluated in against of actual plan, as well as half
is “flexed” to exclude the elements, which are not in the control of administration, like influence
of fluctuation within exchange rate, or quoted metal as well as different prices. The Flexed
financial target is differently more than “unflexed” targets defined by board while price of
commodity increases, as was a matter in 2018, and lower while the prices of commodities
decrease. The real underlying earning as well as STIP free cash flow outcomes are compared in
against of similarly weighted unflexed targets as well as flexed targets (Pascoe, 2016).
Assets – PPE and Intangibles
The financial statements have made as according to the IFRS. The Merger was accounted
for as the merger as per United Kingdom GAAP. As authorized as per rule governing the
transition to International financial reporting standards that are set out in IFRS 1, the Groups
have not restated combination of business that took place prior to 1st January 2004 (transition
date). As the outcomes, DLC Merger of financial interest defined above continues to be
responsible for as the merger in IFRS as described in note-1 (Moon, 2014). The key
consequences of taking merger in place of the acquisition accounting is that the merged Group’s
balance sheet involves liabilities as well as assets of Rio Tinto plc, along with Rio Tinto Limited
at their carrying value before merger, subject to adjustment to get consistency of accounting
policy, rather than at fair value at merger date (Morrison, 2015).
As corporation listed in London Stock Exchange, company is required to comply with
Disclosure as well as Transparency Rules that need corporations for preparing half-year financial
report (named as ‘interim report’) according to the IAS 34 Interim Financial Reporting. IAS 34
describes minimum contents of the interim report as well as, among different things, needs that
corporation conform IAS 36 Impairment of asset. The purpose of IAS 36 is that asset is not

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carried at more than the recoverable amount. The FCA decided that the company must have
stated the significant impairment loss. By making the own impairment review utilising data that
was presented to Rio Tinto timely, it was determined by FCA that the company must have
disclosed the material impairment losses in the interim report 2012.
The FCA found that there was severe misjudgement by company and that the corporation
failed to prevent misleading data from being presented to marketplace. The importance of the
disclosure’s breach is stated in a penalty’s level. The more significant thing is that investor may
have believe the financial data available to them, and FCA stated deeper concerns regarding the
impacts of such a large corporation not representing the true and fair view of the performances.
Conclusion
Form the analysis undertaken in above mentioned parts, this may be concluded that
corporate accounting as well as corporate social responsibility play the significant role in
functioning of the business of twenty-first century. Over period, relation between managers, as
well as the quality as well as details of corporate social responsibility reporting and sustainable
reporting has attained the worldwide appreciation. Technical concept as well as approach has
established the main importance, and the corporations such as Rio Tinto, voluntary disclose the
accounting policies, events, corporate social responsibility activities as well as governance due to
the 2 main reason. According to the first reason, this increases the image amongst the
stakeholder groups leading to client integrity, long-term advantages, as well as this is a mode of
paying back to society that has provided them license for working. Furthermore, another reason
is to report the practices clear as well as fair. From the analysis of corporate social responsibility
report and sustainable report of Rio Tinto, it is clear that the corporate social responsibility

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activities undertaken by corporation over the period has assisted the corporation in creating the
name of brand for themselves not only in metal and mining sector however internationally as
well. Though there are some instances of gap in the CSR performance of Rio Tinto, but the
company has handled to respond positively to these instances to become the leading international
mining group.

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References
Jamnik, A. (2017). The Challenges Of Business Ethics: The Basic Principles Of Business Ethics
- Ethical Codex In Business. Retrieved form:
file:///C:/Users/System04100/Downloads/RIC_volume_3_issue_3_Anton_Jamnik
%20(1).pdf
Katamba, D., Zipfel, C., Haag, D., & Kazooba, C. T. (2012). Principles of Corporate Social
Responsibility (CSR): A Guide for students and practicing managers in developing and
emerging countries. Houston: Strategic Book Publishing and Rights Co.
Market Index (2018). Rio Tinto Limited. Retrieved from:
https://www.marketindex.com.au/asx/rio
Moon, J. (2014). Corporate Social Responsibility: A Very Short Introduction. New York: Oxford
University Press, 3.
Morrison, J. (2015). Business Ethics: New Challenges in a Globalised World. London: Palgrave
Macmillan, 226
Pascoe, M. (2016). Unethical Rio Tinto seeing shares surge up. Retrieved from:
https://au.finance.yahoo.com/news/unethical-rio-tinto-seeing-shares-surge-up-
034629798.html
Reuters (2018). Rio Tinto, Mongolia end stand-off to build huge copper mine. Retrieved from:
https://www.reuters.com/article/rio-tinto-plc-oyu-tolgoi-idUSL3N0Y95MT20150519

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Rio Tinto. (2018). Sustainable Development Report 2017. Retrieved from: Available from:
http://www.riotinto.com/documents/RT_SD2017.pdf
Schwartz, M. S. (2011). Corporate Social Responsibility: An Ethical Approach. New York:
Broadview Press.
Tricker, B. (2015). Corporate Governance: Principle, Policies and Practices. 3rd ed. Oxford:
Oxford University Press.
Zientara, P. (2017). Socio emotional Wealth and Corporate Social Responsibility: A Critical
Analysis. Journal of Business Ethics, 144(1), 185–186.