Corporate and Financial Reporting 1: Equity Analysis and Reporting

This report provides an in-depth analysis of financial accounting and reporting practices, focusing on the significance of financial transactions and the preparation of financial statements for external stakeholders like investors and creditors. It explores the roles of the AASB and IASB in setting a...Read More

CORPORATE AND FINANCIAL REPORTING
1
CORPORATE AND FINANCIAL REPORTING

CORPORATE AND FINANCIAL REPORTING
2
Executive summary:
This assignment deals with the relevance of the financial accounting and reporting practices.
It revolves in and around the accounting for the financial transactions.
Additionally, the role of AASB has been discussed and the reason as to why the IASB does
not issue in the accounting standards are discussed.
Then in the last section, the annual reports of 4 companies have been taken and the basic
understanding of the equity and the causes for the changes in the years have been disused.

CORPORATE AND FINANCIAL REPORTING
3
Contents
Introduction:...............................................................................................................................4
Importance of financial accounting and reporting:....................................................................4
AASB and role of IASB:............................................................................................................6
Owner’s equity:..........................................................................................................................7
Debt to equity of the selected companies:................................................................................18
Conclusion:..............................................................................................................................20
References:...............................................................................................................................21

CORPORATE AND FINANCIAL REPORTING
4
Introduction:
The main purpose of the financial accounting deals with the preparation of the financial
statements of the company so that it could show in its financial performance and also position
to the people that exist outside the company. The users of the financial users include
investors, creditors and the suppliers.
The main purposes of the financial accounting and reporting include in the following:
 This is required in by law
 It is required in by the creditors, investors that give money to the business
 It helps the management in gathering the information that are used for the purposes of
making the decisions.
Importance of financial accounting and reporting:
The main reason for the financial accounting and reporting is concerned with the amounts
that the company has paid towards it taxes. If these financial reports are not prepared using
the pre-defined standards and the business procedures, then each individual shall report its
financial transaction as it deems fit.
And as such, this should not be the case.
Also, in respect of the investors, the companies prepare its financial reports for the use of an
investor too since that would help them in understanding the exact fair picture of the
company. The following are few of the calculations that are made in by the investors when
they feel like investing in the business.

CORPORATE AND FINANCIAL REPORTING
5

CORPORATE AND FINANCIAL REPORTING
6

CORPORATE AND FINANCIAL REPORTING
7
The financial accounting and reporting is also useful for the purposes of internal decision
making. Hence the fairness and the accuracy of these records is of an utmost importance and
in no case, be compromised. This exactly where the company runs into trouble since it uses
the legacy methods for the purposes of preparing in the financial reports.
The financial accounting and the reporting is also helps the users of these financial statements
to get an idea about the company and also decide as to whether the company would be able to
get him returns.
The company would also be able to understand if the business would be profitable in the
future if these financial statements are prepared in the fairest manner.
Cash serves as the oxygen for the company and if these financial statements are prepared in
the most accurate manner that would help the company understanding the stress of shortage
of cash in hands.
The company needs to know and understand the options that it has when it comes to the
investing of money in the outside world or purchase in assets for the company. If the
company knows exactly the amount that it has in hands, it would be able to know the amount
that it would be able to spend on the purchase of the assets (Accounting education, 2018).
Further, if the company or the management on its own accord seeks to prepare the financial
reports and do financial accounting of its transactions, then there would be no similarity
between the financial statements being prepared by the company. No benchmarking would be
possible. The scandals like Enron could still take place in the absence of any rules and
regulations and therefore, it is due to that reason, the financial statements should be regulated
and not be in the hands of the management.

CORPORATE AND FINANCIAL REPORTING
8
AASB and role of IASB:
The main aim of the AASB is the development and the maintenance of the financial reporting
standards for all of the sectors of the economy of Australia. It helps in the issuance of the
different versions of the documents which pertains with the International accounting
standards. It produces in the accounting standards that are treated just like any other
transaction. It further signifies in the influence of the development of all of the IFRS’s. The
board also helps in the identification of the various area that requires in the review and the
introduction of the standards that covers in these specific areas. Also, the board helps in the
promotion of the accounting standards that could be consistent and also be interpreted
(AASB, 2018).
The AASB is the agency of the government of Australia and all of the standards issued by it
are termed as the Australian Accounting Standards and includes in the Australian equivalents
which are somewhat equal to the IFRS’s. The board started to adopt in the IFRS’s during the
initial years and it started off by removing some of the options and also by adding in some of
the disclosures. In the year 2007, the board sought the modification of the Australian
Accounting Standards that were similar to the IFRS’s which were issued by the IASB for the
profit entities (IAS plus, 2018).
The IASB on the other hand serves as an independent body which states in the various
accounting standards and is based in London. It comprises of about 15 member countries and
includes in the country of the United States too. This board is funded by the money which is
received from the major accounting firms, the private financial institutions and the industrial
companies. The board is not responsible for the purposes of maintaining or financing in the
IFRS site (IFRS, 2018).
The board is an independent body that helps in the experts in setting up the accounting
standards, in preparing, auditing or using the financial reports.

CORPORATE AND FINANCIAL REPORTING
9
The members of the board are responsible for the purposes of the development and the
publication of the standards of IFRS which are the IFRS’s for SME’s (IFRS, 2018).
In the nutshell, the IASB board just has 9 countries as its members, so may be the accounting
standards prepared by it are not made compulsory since if these standards are followed by
just 9 countries, and the other accounting standards are being followed by the others, then no
benchmarking could be made possible and there would be an issue with the financial
reporting parties. Also, the board IASB is on a small scale, so may be the board is not
competent enough to understand the queries of the industry and the necessary actions that are
required in for the same.
Owner’s equity:
The following tables shows in the analysis of the various items of equity for the 4 companies
for 4 years:
Kaili resources:
Pa
rti
cul
ars
201
7
201
6
201
5
201
4
Change in NZ $ Change in
%
fro
m
201
4 to
201
5
Fro
m
201
5 to
201
6
fro
m
201
6 to
201
7
fr
o
m
20
14
to
20
F
ro
m
20
15
to
20
fr
o
m
20
16
to
20
Gen
eral
und
erst
andi
ng
Cause for
change

CORPORATE AND FINANCIAL REPORTING
10
15 16 17
fro
m
2014
to
2015
Fr
o
m
20
15
to
20
16
from
2016
to
2017
Sh
are
Ca
pit
al
9,8
2,6
69.
00
9,
82,
669
.00
9,
82,
669
.00
9,
02,
669
.00
80,
000
.00
- -
8.
86
%
0.
00
%
0.
00
%
these
are
the
amo
unts
that
are
inve
sted
into
the
com
pany
by
the
outsi
coul
d be
due
to
new
capit
al
bein
g
intro
duce
d
into
the
com
pany
N
o
ch
an
ge
No
chan
ge

CORPORATE AND FINANCIAL REPORTING
11
ders
Re
ser
ves
9,7
6,2
57.
00
16,
88,
364
.00
23,
13,
684
.00
17,
95,
525
.00
5,1
8,1
59.
00
-
6,25
,320
.00
-
7,12
,107
.00
28
.8
6
%
-
27
.0
3
%
-
42
.1
8
%
these
are
the
amo
unts
that
have
been
set
aside
by
the
com
pany
towa
rds
the
shar
es
optio
ns
coul
d be
due
to
new
capit
al
bein
g
intro
duce
d
into
the
com
pany
co
ul
d
be
du
e
to
re
pa
y
m
en
t
of
th
e
sh
ar
es
of
th
e
co
m
could
be
due
to
repay
ment
of
the
share
s of
the
comp
any

CORPORATE AND FINANCIAL REPORTING
12
pa
ny
T
ota
l
eq
uit
y
1
9,5
8,9
26.
00
26,
71,
033
.00
32,
96,
353
.00
26,
98,
194
.00
Kairiki Energy limited:
Partic
ulars
201
7
2016 201
5
201
4
Change in $ Change in
%
Gen
eral
und
erst
and
ing
Cause for
change
fr
o
m
20
14
to
20
Fro
m
201
5 to
201
6
fro
m
201
6 to
201
7
fr
o
m
2
0
1
4
Fr
o
m
20
15
to
20
fr
o
m
2
0
1
6
fro
m
20
14
to
20
Fr
om
20
15
to
20
fro
m
20
16
to
20

CORPORATE AND FINANCIAL REPORTING
13
15 to
2
0
1
5
16 to
2
0
1
7
15 16 17
Issue
d
capita
l
8
61,0
1,44
8.00
857,
83,0
48.0
0
85
6,60
,548
.00
85
6,60
,548
.00
- 1,22
,500
.00
3,18
,400
.00
0.
0
0
%
0.1
4
%
0.
3
7
%
thes
e
are
the
am
oun
ts
that
are
inve
sted
into
the
com
pan
y
by
the
outs
ider
co
ul
d
be
du
e
to
ne
w
ca
pit
al
bei
ng
int
ro
du
ce
d
int
co
ul
d
be
du
e
to
ne
w
ca
pit
al
bei
ng
int
ro
du
ce
d
int
co
ul
d
be
du
e
to
re
pa
y
me
nt
of
th
e
sh
ar
es

CORPORATE AND FINANCIAL REPORTING
14
s o
th
e
co
m
pa
ny,
bu
t
no
ch
an
ge
o
the
co
m
pa
ny
Reser
ves
-
68,8
5,35
5.00
-
68,7
6,53
2.00
-
20,8
5,82
0.00
-
20,8
5,82
0.00
-
-
47,9
0,71
2.00
-
8,82
3.00
0.
0
0
%
22
9.6
8
%
0.
1
3
%
thes
e
are
the
am
oun
ts
that
fro
m
the
sum
co
ul
d
be
du
e
to
th
e
los
ses
th
co
ul
d
be
du
e
to
the
los
ses
th
at
co
ul
d
be
du
e
to
th
e
los
ses
th

CORPORATE AND FINANCIAL REPORTING
15
tota
l of
the
past
ear
nin
gs
of
the
com
pan
y
at
th
e
co
m
pa
ny
co
ul
d
ha
ve
suf
fer
ed
in
th
e
pr
evi
ou
s
ye
ar
the
co
m
pa
ny
co
ul
d
ha
ve
suf
fer
ed
in
the
pr
evi
ou
s
ye
ar
at
th
e
co
m
pa
ny
co
ul
d
ha
ve
suf
fer
ed
in
th
e
pr
evi
ou
s
ye
ar
Accu - - - - - 0. - 0. thes co co co

CORPORATE AND FINANCIAL REPORTING
16
mulat
ed
losses
791,
55,2
15.0
0
790,
08,8
27.0
0
834,
87,5
69.0
0
834,
87,5
69.0
0
- 44,7
8,74
2.00
1,46
,388
.00
0
0
%
5.3
6
%
1
9
%
e
are
the
am
oun
ts
that
hav
e
bee
n
set
asid
e by
the
com
pan
y
tow
ard
s
the
sha
res
opti
ul
d
be
du
e
to
no
res
er
ve
of
th
e
co
m
pa
ny
ul
d
be
du
e
to
no
res
er
ve
of
the
co
m
pa
ny
ul
d
be
du
e
to
no
res
er
ve
of
th
e
co
m
pa
ny

CORPORATE AND FINANCIAL REPORTING
17
ons
Total
equity 60,8
78.0
0
-
1,02,
311.
00
87,1
59.0
0
87,1
59.0
0
Kangaroo resources limited:
Parti
cular
s
201
7
2016 201
5
201
4
Change in $ Change in
%
Ge
ner
al
un
der
sta
ndi
ng
Cause for
change
fro
m
201
4 to
201
5
Fro
m
201
5 to
201
6
fro
m
201
6
to
201
fr
o
m
20
14
to
Fr
o
m
20
15
to
f
r
o
m
2
0
fr
om
20
13
to
20
Fr
om
20
14
to
20
fro
m
20
15
to
20

CORPORATE AND FINANCIAL REPORTING
18
7 20
15
20
16
1
6
t
o
2
0
1
7
14 15 16
Issue
d
capit
al
4
698
,67,
326
.00
4698
,67,3
26.0
0
4
698
,67,
326
.00
4
698,
67,3
26.0
0
- - -
0.
00
%
0.
00
%
0.
0
0
%
the
se
are
the
am
ou
nts
tha
t
are
inv
est
ed
int
o
the
co
No
Ch
an
ge
No
Ch
an
ge
No
Ch
an
ge

CORPORATE AND FINANCIAL REPORTING
19
mp
an
y
by
the
out
sid
ers
Reser
ves 14,
16,
280
.00
15,1
8,61
8.00
23,
10,
325
.00
10,9
8,43
9.00
12,1
1,88
6.00
-
7,91
,707
.00
-
1,0
2,3
38.
00
11
0.
33
%
-
34
.2
7
%
-
6.
7
4
%
the
se
are
the
am
ou
nts
tha
t
fro
m
the
su
m
tot
al
of
co
uld
be
du
e
to
the
los
ses
tha
t
the
co
mp
an
y
co
co
uld
be
du
e
to
the
los
ses
tha
t
the
co
mp
an
y
co
co
uld
be
du
e
to
the
los
ses
tha
t
the
co
mp
an
y
co

CORPORATE AND FINANCIAL REPORTING
20
the
pas
t
ear
nin
gs
of
the
co
mp
an
y
uld
ha
ve
suf
fer
ed
in
the
pr
evi
ou
s
ye
ar
uld
ha
ve
suf
fer
ed
in
the
pr
evi
ou
s
ye
ar
uld
ha
ve
suf
fer
ed
in
the
pr
evi
ou
s
ye
ar
Non-
contr
olling
inter
est
8,5
2,9
27.
00
8,75,
499.
00
12,
99,
164
.00
16,4
4,37
2.00
the
se
are
the
am
ou
nts
tha
t
are
inv
co
uld
be
du
e
to
sal
e
of
no
n-
co
uld
be
du
e
to
sal
e
of
no
n-
co
uld
be
du
e
to
sal
e
of
no
n-

CORPORATE AND FINANCIAL REPORTING
21
est
ed
by
the
co
mp
an
y
by
the
sha
reh
old
ers
tha
t
are
bey
on
d
the
con
tro
l of
the
co
ntr
olli
ng
int
ere
sts
co
ntr
olli
ng
int
ere
sts
co
ntr
olli
ng
int
ere
sts

CORPORATE AND FINANCIAL REPORTING
22
co
mp
an
y
Retai
ned
earni
ngs/(
Accu
mula
ted
losses
)
-
359
6,3
3,0
99.
00
-
3564
,43,9
68.0
0
-
313
9,9
7,0
76.
00
-
283
9,41
,250
.00
-
300,
55,8
26.0
0
-
424,
46,8
92.0
0
-
31,
89,
131
.00
10
.5
9
%
13
.5
2
%
0.
8
9
%
am
ou
nts
per
tai
nin
g
to
the
pre
vio
us
yea
rs
pro
fits
or
los
ses
co
uld
be
du
e
to
acc
um
ula
tio
n
of
the
los
ses
pe
rta
ini
ng
to
the
co
uld
be
du
e
to
acc
um
ula
tio
n
of
the
los
ses
pe
rta
ini
ng
to
the
co
uld
be
du
e
to
acc
um
ula
tio
n
of
the
los
ses
pe
rta
ini
ng
to
the

CORPORATE AND FINANCIAL REPORTING
23
pr
evi
ou
s
ye
ars
pr
evi
ou
s
ye
ars
pr
evi
ou
s
ye
ars
Total
equit
y
1
125
,03,
434
.00
1158
,17,4
75.0
0
1
594
,79,
739
.00
1
886,
68,8
87.0
0
Key petroleum limited:
Parti
cular
s
201
7
201
6
201
5
201
4
Change in $ Change in
%
Ge
ner
al
un
der
sta
ndi
ng
Cause for
change
fr
om
Fro
m
fro
m
f
r
Fr
om
fr
o
fr
om
Fr
om
fro
m

CORPORATE AND FINANCIAL REPORTING
24
201
4
to
201
5
201
5 to
201
6
201
6 to
201
7
o
m
2
0
1
4
to
2
0
1
5
201
5
to
201
6
m
2
0
1
6
to
2
0
1
7
20
13
to
20
14
20
14
to
20
15
20
15
to
20
16
Contr
ibute
d
equit
y
385,
35,2
83.0
0
375
,40,
470
.00
368
,44,
550
.00
353,
01,5
10.0
0
1
5,4
3,0
40.
00
6,95
,920
.00
9,9
4,8
13.
00
4.
3
7
%
1.8
9%
2.
6
5
%
the
se
are
the
am
ou
nts
tha
t
are
inv
est
ed
int
co
uld
be
du
e
to
ne
w
ca
pit
al
bei
ng
int
co
uld
be
du
e
to
ne
w
ca
pit
al
bei
ng
int
co
uld
be
du
e
to
rep
ay
me
nt
of
the
sha
res

CORPORATE AND FINANCIAL REPORTING
25
o
the
co
mp
any
by
the
out
sid
ers
ro
du
ced
int
o
the
co
mp
an
y
ro
du
ced
int
o
the
co
mp
an
y
Reser
ves 6,13
,744
.00
5,4
4,2
45.
00
4,8
1,0
65.
00
3,86
,849
.00
94,
216
.00
63,1
80.0
0
69,
499
.00
2
4.
3
5
%
13.
13
%
1
2.
7
7
%
the
se
are
the
am
ou
nts
tha
t
fro
m
the
su
m
tot
co
uld
be
du
e
to
the
los
ses
tha
t
the
co
mp
an
co
uld
be
du
e
to
the
los
ses
tha
t
the
co
mp
an
co
uld
be
du
e
to
the
los
ses
tha
t
the
co
mp
an

CORPORATE AND FINANCIAL REPORTING
26
al
of
the
pas
t
ear
nin
gs
of
the
co
mp
any
y
co
uld
ha
ve
suf
fer
ed
in
the
pre
vio
us
yea
r
y
co
uld
ha
ve
suf
fer
ed
in
the
pre
vio
us
yea
r
y
co
uld
ha
ve
suf
fer
ed
in
the
pre
vio
us
yea
r
Retai
ned
earni
ngs/(
Accu
mulat
ed
losses
)
-
361,
01,4
79.0
0
-
349
,56,
748
.00
-
327
,70,
039
.00
-
306,
52,3
04.0
0
-
21,
17,
735
.00
-
21,8
6,70
9.00
-
11,
44,
731
.00
6.
9
1
%
6.6
7%
3.
2
7
%
am
ou
nts
per
tai
nin
g to
the
pre
vio
co
uld
be
du
e
to
acc
um
ula
tio
co
uld
be
du
e
to
acc
um
ula
tio
co
uld
be
du
e
to
acc
um
ula
tio

CORPORATE AND FINANCIAL REPORTING
27
us
yea
rs
pro
fits
or
loss
es
n
of
the
los
ses
per
tai
nin
g
to
the
pre
vio
us
yea
rs
n
of
the
los
ses
per
tai
nin
g
to
the
pre
vio
us
yea
rs
n
of
the
los
ses
per
tai
nin
g
to
the
pre
vio
us
yea
rs
Non-
contr
olling
intere
sts
- -
Total
equit
y
30,4
7,54
31,
27,
45,
55,
50,3
6,05

CORPORATE AND FINANCIAL REPORTING
28
8.00 967
.00
576
.00
5.00
(Annual reports, 2017 and 2015).
Debt to equity of the selected companies:
The following table shows in the debt to equity ratio of the companies:
Particulars Kaili Kairiki Kangaroo
Key
petroleum
Debt 73,408.00
2,14,426.0
0
848,15,175.00 30,79,423.00
Equity 19,58,926.00 60,878.00 1125,03,434.00 30,47,548.00
Debt to
equity ratio
0.037473595 3.5222248 0.753889655 1.010459228
This is the ratio which is also termed as the risk ratio which calculated in the weights of the
total amount of the debt of the company as against the total equity that the company has.
The higher this ratio, the better it is for the company (Corporate finance, 2018).
In the given case, the debt equity ratio of Kairiki Energy Limited seems to be the best and
that of Kaili energy limited seems to be the worst.

CORPORATE AND FINANCIAL REPORTING
29

CORPORATE AND FINANCIAL REPORTING
30
Conclusion:
In the nutshell, the role of the financial accounting and reporting is of an utmost importance
since if the managers are given the liberty of deciding on the format and the reporting
requirements of the managers, then the whole purpose of the financial accounting and
reporting would be defeated. The roles of IASB is only confined to the recommending of the
interpretations of the accounting standards and no more.
The debt to equity ratio is also termed as the risk ratio which means that the higher this ratio,
the lesser levered the company is and lesser riskier it is.

CORPORATE AND FINANCIAL REPORTING
31
References:
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https://www.aasb.gov.au/About-the-AASB/Frequently-asked-questions.aspx#qa1522
[Accessed 20 Sep. 2018].
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Corporate Finance Institute. (2018). Debt to Equity Ratio - How to Calculate Leverage,
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CORPORATE AND FINANCIAL REPORTING
32
keypetroleum.com.au. (2018). Annual report 2017. [online] Available at:
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