Financial Reporting Analysis: Examining Company Reports and Issues

This report undertakes a detailed financial reporting analysis, focusing on company reports, and the application of accounting standards (AASB) and the conceptual framework. It examines the implications of financial reporting decisions, such as overstatement and understatement of assets, liabilities, and revenues, and the impact of prudence. The report considers how remuneration practices and other factors, like legal liabilities and transfer pricing, influence financial reporting outcomes. It also explores the role of the conceptual framework, and how it affects reporting, benefits, and criticisms. The analysis includes examples from company annual reports to illustrate key concepts, emphasizing how financial decisions affect profit and reporting quality.

SUGGESTIONS REGARDING ASSIGNMENT 1
USE YOUR INDEX WISELY……
Go to Balance Sheet, Income Statements, NOTE 1 (methods adopted by company) and other notes
from the financial reports, Remuneration Report, Auditors Report
REMUNERATION REPORT – SCREEN SHOT OR TAKE ELEMENTS FROM ACTUAL REPORT IN RELATION
TO EXECUTIVE REMUNERATION. LINKED TO PROFIT? SHARE PRICE? OR OTHER - consider how this
drives culture with organisations including a desire to obtain profit to receive bonus payments.
ISSUES WITH REMUNERATION can be SELF INTEREST – SHORT TERM DECISION MAKING,
TELEOPATHY (unhealthy pursuit of goals), manipulation of accounts, not adhering to the conceptual
framework, aasb issues like in leases
In your discussion using examples from annual reports (of many companies) will assist however
focus should be on your company(ies)
GPFR – general purpose financial reports – for users to make financial decisions
perhaps to affect profit rather than in accordance with AASB or conceptual framework
INVENTORY – OVERSTATE- aasb VALUED AT COST OR LOWER OF COST OR MARKET.
ACCOUNTS RECEIVABLE – OVERSTATE – ESTIMATION OF PROVISION FOR BAD AND DOUBTFUL
DEBTS – UNDERSTATE YOUR PROVISION
PPE – OVERVALUE – EXCESS VALUATION (PRUDENCE) – DEPRECIATION – CHOOSE METHODS
perhaps to affect profit rather than in accordance with AASB or conceptual framework
LIABILITIES – LEASES – INTANGIBLE ASSETS – NOTES – LOOK FOR EVIDENCE OF ANY LEASING
Contingent legal liabilities – where companies have had to pay out legal obligations due to issues
LEASES HAVE BEEN LEFT OFF BALANCE SHEETS – LIMIT RATIO – ATTRACT INVESTORS
Overstated Revenues, sales returns
Understated expenses
TAXATION
TRANSFER PRICING – FACEBOOK -TAXATION
Eg.TRANSFER PRICING – FACEBOOK -3-5 BN additional tax payments

DISCUSS PRUDENCE – WHAT IS PROPOSED FOR UPDATING THE CONCEPTUAL FRAMEWORK
HOW YOU THINK THIS WILL AFFECT THE REPORTING? BENEFITS AND CRITICISMS (cpa eg)
The inclusion of prudence, then removal and now addition again by accounting.
Or are the issue much more complex than that? Do accountants adhere to the CF? Perhaps
addressing remuneration and other issues would achieve better outcomes? Etc etc etc