FNSORG505: Report on Financial and Business Performance Information

This report, based on the FNSORG505 module, provides a comprehensive analysis of financial and business performance information, focusing on the context of the Wesfarmers company. It addresses key areas such as directors' concerns regarding resource allocation for monitoring processes, the objectives of an audit committee, and recommendations for its terms of reference and composition. The report also explores the interaction between the audit committee and both internal and external audit functions, using the 2017 balance sheet and cash flow statements of Wesfarmers as examples. The conclusion highlights the importance of financial reports and statements for interpreting business activities and supporting decision-making, emphasizing the role of the audit committee in ensuring the accuracy of financial statements. The report also references relevant literature and online resources to support its findings.

FNSORG505 Provide Financial
and business performance
information Assessment 2

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
a) Director’s concern about the amount of resources being allocated to the monitoring process
.....................................................................................................................................................1
b) Objectives of an audit committee............................................................................................1
c) Recommend terms of reference for the committee................................................................2
d) Identify who should constitute the committee........................................................................2
e) Interaction between the audit committee and both the internal and external audit functions. 2
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Financial information is necessary to assess the business situations and conditions.
Eventually, financial information is provided with the use of financial statements like profit and
loss account, balance sheet, income statements etc. (Jha, A., 2019). In the absence of these
reports it, will be difficult to analyse the business situation. Herein, the project report
Wesfarmers company is selected. It has its headquarters in the Perth, Australia. The company
produce different kind of financial reports which are discussed in this project report.
MAIN BODY
a) Director’s concern about the amount of resources being allocated to the monitoring process
The companies need to make financial reports for presenting the profit and loss. For this
purpose, they require to follow statutory requirement and information. In the absence of proper
information it will be difficult to make the reports. As well as organisations make the financial
reports to meet the statutory requirement. The statutory requirement can be for the shareholders
and for the audit committee. This is the reason that, it is necessary to make the financial reports
for the shareholders because they need to know about the financial situation of the company so
that they can invest in the company accordingly.
Apart from it, financial reports are required for the audit committee because this
committee checks the prepared financial statements to evaluate the accuracy of financial reports.
So these are the statutory requirement to prepare the financial statements.
b) Objectives of an audit committee
Additionally, the audit committee has own roles and responsibilities that fulfil the
objectives of organisation are needed to be followed (Loughranand McDonald, 2014). Some of
them are as follows:
Objective of audit committee:
 To look after the performance of internal audit function.
 To minimise the impact of external changes upon the financial statement and its
performance.
 To integrate the financial statements and reports.
 Proper engagement with the external auditors.
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 Make Internal control and risk management more adequate
So these are the legal statutory requirement for the audit committee of the Wesfarmer
company. As well as it is necessary for the audit committee to follow these roles and
responsibilities.
c) Recommend terms of reference for the committee
It is necessary to have a wide range of informations to make the financial reports because
without proper information it is impossible to make the financial statements. There are many
kind of informations and data that are needed during preparation of reports (Sun, Lan and Liu,
2014). For example to prepare the balance sheet, companies are required to have the knowledge
of all the assets and liabilities as well to make the income statements many informations are
needed like total expenses and income. Herein, the Wesfarmer company they make different
types of financial statements like balance sheet, income statement, profit & loss, cash flow etc.
d) Identify who should constitute the committee
The Nomination Committee is responsible for scheduling formal performance reviews of
the Board and its committees at least every two years. Mr Graham from the Board in July 2018,
the Gresham Mandate Review Committee was disbanded in August 2018 who is responsible for
constituting the committee.
e) Interaction between the audit committee and both the internal and external audit functions.
Both internal and external committee remain interrelated with the external and internal
audit functions. As the nominative committee, members and internal auditors report to the board
of directors to make these functions.
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Balance sheet for 2017
Interpretation- As per the above balance sheet of the Wesfarmers company it has been
analysed that company has the net assets of $40117 in 2017, that is more then to the liabilities. It
shows that company has the enough assets to pay their creditors.
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Cash flow for year ending 2017
Interpretation- The cash flow of the company is presenting that they have cash out flow
of $ (3771) in year 2017. It indicates that company is spending more cash in compare to earn.
CONCLUSION
From above project report it has been concluded that financial reports and statements
interpret the business activities in an effective manner. Due to these financial statements,
companies can take the future important decisions for further. Eventually, these reports and
statements are not only beneficial for the companies but also for the external parties. Apart from
it, the project report conclude that audit committee is necessary to evaluate the accuracy of
prepared financial statements. This committee has its own roles and responsibilities which are
needed to be followed. As well as organisations need to collect all the information before
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preparation of the financial statements because without these information it is difficult to make
the reports.
REFERENCES
Books and journals:
Jha, A., 2019. Financial reports and social capital.Journal of Business Ethics. 155(2). pp.567-
596.
Loughran, T. and McDonald, B., 2014. Measuring readability in financial disclosures.The
Journal of Finance. 69(4). pp.1643-1671.
Sun, J., Lan, G. and Liu, G., 2014. Independent audit committee characteristics and real earnings
management.Managerial Auditing Journal. 29(2). pp.153-172.
Online
About financial information of company. 2017. [Online]. Available through:
<https://www.wesfarmers.com.au/docs/default-source/default-document-library/2017-
annual-report.pdf?sfvrsn=0>
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