Financial Analysis: Coca-Cola Amatil and Treasury Wine Estate Report

This report provides a comparative financial analysis of Coca-Cola Amatil (CCA) and Treasury Wine Estate (TWE), focusing on their accounting policies, governance mechanisms, and CSR practices. It begins with an introduction to accounting and sustainability, followed by a detailed examination of accounting standards (AASB) and policies used by both companies for property, plant, and equipment recognition and measurement. The report highlights differences in accounting theories (normative vs. positive) and policies between CCA and TWE. Furthermore, it delves into CCA's governance mechanisms for addressing sustainability, including the role of the Board Risk & Sustainability Committee and risk management systems. The report also explores the guidance used by CCA for implementing social and environmental performance reporting. Finally, it contrasts the voluntary CSR disclosures of CCA and TWE, noting variations in their focus areas, strategic frameworks, and key performance indicators. The report concludes with a summary of the findings and references used.

COMPANIES'
COMPARISON

Table of Contents
INTRODUCTION...........................................................................................................................3
SECTION 3: PART A.....................................................................................................................3
Employing widely used accounting theories and comparison for accounting............................7
SECTION 4: PART B......................................................................................................................8
Coca-Cola Amatil 's governance mechanism to address sustainability......................................8
How risk management systems of Coca-Cola Amatil are addressed and incorporated..............8
Guidance used by Coca-Cola Amatil to implement social and environmental performance and
reporting systems........................................................................................................................9
How CSR voluntary disclosure varies across different companies............................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Accounting refers to the practice which is adopted by organisations to ensure effective
measurement, processing as well as communication of certain crucial financial information
within a company (Hussain, Rigoni and Orij, 2018). On the other hand, sustainability is another
effective and essential practice which allow an organisation to conduct its operations in ways
which contributes maximum to preserving, protecting and improving the state of environment,
social as well as sustainable aspects of a firm. The report below is based on Coca-Cola Amatil
and Treasury Wine Estate, which are effective companies dealing in consumer staples, especially
beverages. It includes description of recognition and measurement components of policy for
accounting for each class of property, plant and equipment. It also covers comparing accounting
policies and governance mechanisms to address sustainability. The report also includes
addressing and incorporation systems within the firm and guidance used by Coca-Cola Amatil in
implementing environmental and social performance and reporting systems (Bouten and Hoozée,
2015).
SECTION 3: PART A
Accounting policies and standard are set by Australian Accounting standard Board
(AASB), which is independent Australian Government agency (Khan and Gray, 2016). The
standards are the legislative requirements for companies that need to be apply for run a business.
Such as Coca- Cola Amatil and Treasure wine Estate corporation use accounting standard and
policies to run a business. Financial reporting help both companies to prepare the financial report
and compare the profits from past years. Every organisation should follow the rules and
regulation which is governed by government.
CCA uses financial report framework to prepare the financial report as per Accounting
standard that help to identify the policies. By following Australian accounting standard board
CCA get relevant information and statutory which is required to prepare financial reports.
TWE is also uses Australian accounting standard to prepare and maintain the financial
reports. By following accounting standard TWE gets relevancy and reliability of information
which is most important within organisation.
Recognition and measurement

CCA and TWE states the assets, liabilities, equity, revenues and expenses which is
defined in the accounting concepts SAC4. It uses the accounting standard to evaluate the
performance of organisation. It follows AASB 116 which help to maintain the plant and
equipment and selling of assets. Australian accounting standard framework in plant and
machinery is defined as probable useful life of plant and equipment and the warranty number
which help to calculate accurately. Its shows in the financial statement after depreciating value.
Additionally, it shown in foot note of balance sheet which helps to understand the actual value of
plant and equipment. CCA prepares annual report every year that help to define the turn over and
profitability situation of the company (Boiral, 2016). It contains all income and expenditure data
in financial report which is shown end of the year. The plant and equipment information of CCA
is described as-
The annual report of Coca Cola Amatil ending of year

Above mentioned information stated that in 2018 the cost of plant and equipment is $
298.5 without depreciation. The actual cost of plant and equipment in 2017 was $ 209. The
movement are stated from 1 January 2018 such as additions, classified for sale the plant and
equipment, reclassification and foreign exchange and other movements that impact on business.
These information are shows as foot note that help to maintain the plant and other equipmet at
valuation value.

The Annual report of TWE ending of year
According to TWE's annual report it has been stated that in 2017 the opening balance of
plant and equipment is $1328.5 and in 2018 is $1416.5. The depreciation is charged on the
opening value of asset that defines the revaluation value at which the company should sell the
assets and liabilities. The depreciation is charges on the opening value of fixed assets.

Employing widely used accounting theories and comparison for accounting
As per AASB 116, CCA states that it records the plant and equipment at cost less
accumulated depreciation. The cost of these assets are transfer from equity of gains or losses that
defines the actual cost of assets. Further expenses are concluded in capital expenditure which is
associated with the expenditure (Retolaza, San-Jose and Ruíz-Roqueñi, 2016). The useful life of
CCA's equipment is 3 to 15 years and depreciation is calculated on straight line basis.
According to AASB 116 , TWE records the plant and equipment at cost then reduced by
accumulated depreciation. These assets are depreciated so assets can be written down at residual
value over its useful life by using straight line method. As per AASB 116 the depreciation rate at
plant and machinery is 3.3% to 40.0% which reveals depreciated value.
Comparison between CCA and TWE
Basis CCA TWE
Accounting theory CCA is using normative
accounting theory that help to
explain actual accounting
policies. In other words, it help to
explain that what should incurs or
not and what is the actual cost of
assets.
TWE is using positive accounting
theory that states what should
occur instead of predication.
Accounting policies CCA is multinational company
which is using revenue
recognition accounting policies
that help to define the relevancy
of information. According to
AASB1001, the company records
all expenses at cost and
depreciation is charged at 3.30 -
40%.
TWE is using the cost accounting
policies that help to maintain the
cost at actual cost and depreciation
is charged at straight line method.
By following this, it get reliable
and relevant information which
help to gain long term profit within
industry.

According to Australian accounting standard board 116 it has been recommended that
organisation CCA and TWE follows different accounting policies whi8ch help to maintain the
assets at cost. The AASB states that if organisation is using old pant and equipment then further
expenses which is incurred by organisation should be included in revenue expenditure instead of
capital expenditure. Additionally, if plant and equipment is new then installation cost will be
included in the purchasing cost of plant and equipment.
SECTION 4: PART B
Coca-Cola Amatil 's governance mechanism to address sustainability
Sustainability is a procedure adopted by companies in relation to maintaining appropriate
as well as essential change within an environment in which focus of the company is upon
appropriate and effective exploitation of resources (Maas, Schaltegger and Crutzen, 2016). In
context with Coca-Cola Amatil, board of directors of the organisation have taken sustainability
quite seriously in recent times and promotes highest standards of corporate governance. The
board has also formed Board Risk & Sustainability Committee which is responsible for handling
out sustainable practices within the organisation (Coca Cola Amatil: Annual Report 2018, 2018).
There are several governance mechanisms adopted by Coca-Cola Amatil in relation to
attain sustainability. These mechanisms are discussed below:
 The committee is set up to assess as well as oversee effectiveness of the firm's
sustainability framework, which includes several practices such as sustainable packaging.
Furthermore, all the practices performed by the firm in relation to their employees,
customers, environment as well as community are appropriately monitored by the board
as a part of sustainability culture (Thoradeniya and et. al., 2015).
 In addition to this, they appropriately manage and approve several initiatives and policies
which help in ensuring that best practices in terms of sustainability and better and
enhanced methods to achieve the same.
How risk management systems of Coca-Cola Amatil are addressed and incorporated
As ethical and social responsibility of an organisation, it is very important that a proper
and long term risk management systems be incorporated within the company, contributing to the
organisation in terms of sustainability (Komori, 2015). Board Risk & Sustainability Committee
within Coca-Cola Amatil is also responsible for addressing several risks and incorporate

appropriate management systems for the same. Some of the examples for its working is
mentioned below:
 Risk culture of the company is monitored as well as reviewed periodically .
 Along with implementation of sustainability strategy, the company also analyse various
factors which could possibly be risk for the firm and its strategies. Further, several
implementation plans are formulated taking in account these factors for incorporation of
suitable and relevant risk management strategies. Moreover, all these plans are
formulated in light to combat the existing and potential risks which might affect
sustainability within the company's operations.
Guidance used by Coca-Cola Amatil to implement social and environmental performance and
reporting systems.
It is crucial for an organisation to implement social and environmental performance as an
effective part of their sustainability strategy (Coca Cola Amatil: Sustainability Report 2018,
2018). Furthermore, it is also required that they acquire proper guidance on implementation of
such performance as well as on reporting systems. There are several guidance based on both of
these factors which are discussed below:
 As for reporting systems, Coca-Cola Amatil is guided by Global Reporting Initiative
Standards along with feedbacks by stakeholders on their previous reports. Follow ups of
both these entities allow the firm to improve its quality of reporting and how gaps could
be fulfilled in future reporting.
 As for environmental and social performance, the company receives active and essential
guidance related to several practices to ensure consistent and improved performance. For
instance well being of stakeholders along with methods applied for packaging and other
processes allow Coca-Cola Amatil to be socially active and environmentally sound in
whatever effective practice they perform within their company (Schneider, 2015).
How CSR voluntary disclosure varies across different companies
Corporate Social Responsibility refers to a self regulation, which provides an ethical
framework to organisations to effectively conduct their operations with providing immense
social and environmental benefits to the firm itself as well as to community. In addition to this,
with rising awareness about CSR, there has been a substantial rise within the voluntary CSR
disclosure as well as sustainability reports (Jain, Keneley and Thomson, 2015). Organisations

voluntarily disclose their Corporate Social Responsibilities adopted by them to gain appropriate
support from political end as well as from communities.
However, there is a significant difference between this disclosure across different
companies. For instance, in context of Coca-Cola Amatil, the disclosure of this firm's Corporate
Social Responsibility focuses on four main aspects, which are people of the company, well
being, community as well as environment. Furthermore, the overall emphasis of the firm's CSR
disclosure is situated upon how the firm is delivering and satisfying these four pillars. Moreover,
its reporting also has a strategic framework, which the company would be adopting in relation to
deliver its corporate social responsibility.
As far as Treasury Wine Estates is considered, the firm's voluntary disclosure related to
CSR has differed in terms of including certain other aspects along with the ones discussed above.
There are certain aspects related to the product responsibility and product quality which has been
given appropriate importance within the disclosure and how well the future policies have been
laid down (Treasury Wine Estate: 2018 Sustainability Report, 2018), In addition to this, unlike
the disclosure of Coca-Cola Amatil, the organisation has also laid down several Key
Performance indicators in response to the future CSR practice adopted by the firm. Another
difference between the voluntary disclosure of these companies is the limitations within practices
which has been showcased.
In context with industries, there is a huge difference in CSR voluntary disclosure,
especially between companies belonging to resources, technology as well as industrial products.
Reason for the same is that large organisations operating within these industries often opt
sustainability reports rather than CSR voluntary disclosure. However, while there are several
similar contents within their disclosures such as policies for equality and human rights, there are
several information which differs depending upon industries. For instance, technological
industries focuses on disclosing aspects such as using techniques for low carbon footprint,
whereas emphasis of industries focusing on development of products is upon sustainable
packaging and delivery. More or less, the prime focus of each industry is related to the best
practices followed by businesses in their sectors. Still, there is a lot of difference between their
CSR voluntary disclosures (Wuttichindanon, 2017). Furthermore, there is also a significant
difference between reporting of these voluntary disclosures, the major one being timeline of their
respective reporting (Hąbek and Wolniak, 2016). As an example, each industry has different time

schedules lined up for CSR disclosure, moreover, some even consider then irregularly. In
addition to this, distinct industries have different indicators. For instance, companies like Coca-
Cola Amatil as well as Treasury Wine Estates could use different indicators for measuring their
CSR activities. Furthermore, there is no set format of reporting of these voluntary disclosures.
Furthermore, there are different sets of metrics used by businesses within different industries.
The major determinant factor of the same is related to the understandability of the country in
which the industry is situated in. there are several countries which do not stress about adoption of
CSR practices and does not welcome the idea of CSR voluntary disclosures. Whereas, within
some countries like Australia and UK, there have been emphasis given on such reporting. Thus,
there is a significant difference between CSR voluntary disclosures, however, it is an imperative
practice and must be adopted by businesses of each sector to ensure effective and necessary
sustainability (O'Dwyer and Unerman, 2016).
CONCLUSION
Thus, it is concluded from the above report, that accounting and sustainability are crucial
practices for business organisations. It is essential to describe measurement and recognition
components of accounting policies for the firm. Furthermore, accounting theories also hold a
necessary position in comparing the policies for accounting. In addition to this, governance
mechanisms, risk management systems and several guidances are necessary for firms to follow
with respect to achieving effective sustainability. Lastly, it is important that difference between
CSR voluntary disclosure is highlighted to ensure better understandability of this concept.

REFERENCES
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Online
Coca Cola Amatil: Annual Report 2018. [Online] Available Through:
<https://www.ccamatil.com/-/media/Cca/Corporate/Files/Annual-Reports/2019/2018-
Annual-Report.ashx>
Coca Cola Amatil: Sustainability Report 2018. 2018. [Online] Available Through:
<https://www.ccamatil.com/-/media/Cca/Corporate/Files/Annual-Reports/2019/2018-
Sustainability-Report.ashx>
Treasury Wine Estate: 2018 Sustainability Report. 2018. [Online] Available Through:
<https://www.tweglobal.com/-/media/Files/Global/Responsibility/2018-Sustainability-
Report.ashx>