Financial Reporting: The Role of the Continuous Disclosure Framework

This report analyzes the continuous disclosure framework, emphasizing its importance for listed entities to ensure market integrity and protect investors. It examines the rationale behind continuous disclosure, which aims to provide investors with equal access to price-sensitive information, enhancing market efficiency and investor confidence. The report discusses the principles of continuous disclosure, including timely release of information, equal access, and the protection of commercial interests. It also addresses enforcement mechanisms and remedies for non-compliance, highlighting the role of ASIC. The analysis includes a case study of Surfstitch Group, examining financial challenges and the impact of foreign exchange, goodwill, impairment costs, and administrative expenses. The report concludes that continuous disclosure is essential for informed decision-making by investors and maintaining a transparent financial market.

The Role of the Continuous
Disclosure Framework

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Part 1................................................................................................................................................1
Ans. 1......................................................................................................................................1
Ans. 2......................................................................................................................................1
Ans. 3......................................................................................................................................1
Ans. 4......................................................................................................................................2
Part 2................................................................................................................................................2
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Disclosure regulatory requirements are the main aspects which are required to be
followed by organizations in order to have sustainability. Continuous disclosure requirements by
listed entity renders adequate and efficient market and also motivate moral to investors by way
of providing enough information to them in order to take investment decisions. This study aims
at analysing the current financial statement and money related issue faced by Surfstich group.
Project has emphasized on evaluating profit and statement if the company. This report will
explain the significance and requirement of continuous reporting regimes for disclosures entities
and its effectiveness.
PART 1
Ans. 1
With the help of consolidated financial statements, Surfstich limited faces so many
predicaments during 2016 year (Faden and et. al., 2013.). By reviewing the annual report of
2016, there is a big issue which is faced by the cited organization during 2016.
Foreign exchange impact:
SurfStitch group Ltd financial performance went worse in 2016 as compare to previous
year operations. As, this is having their operations in Australia, Europe and USA. Such model
serves as a natural FX hedge, enabling for lowering realised foreign exchange profits or losses.
Cited company faces currency exchange rate translation risk in their operations. During 2016, the
foreign exchange rates were unfavourable as this was decline of about 20% in the GBP: AUD
FX rate in comparison to the last corresponding year.
Ans. 2
During 2015, the consolidated goodwill amount was 73832. This year, inner structure
was executed for listing of the cited company on the ASE. Which emerge a newly incorporated
firm, SGL becomes the legal parent company of SHPL group. Emerged on SHPL's acquisition of
SurfStitch Ltd. This is attributable entirely to the skills and technological skills of cited
company's administration and its employees and synergies are expected to be attained from
integrating surf and fashion and clothing fashion accessories retailing firm into a one group
which have an international presence (Shokri, Freudiger and Hubaux, 2010). Due to the firm
merger SHPL'S administration measured assets and liabilities which attain at the fair market
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value with the part of purchase consideration being allotted to goodwill. The fair market value of
intangible assets is being calculated provisionally fulfilment of an independent valuation.
Ans. 3. According to the profit and loss statement of Surfstitich Group 2016, it has been observed
that:
Impairment cost: It included that under expenses those are recorded when the book
value of an assets increases the redeemable amount. It is a decreasing quality, amount and value
of a commodity. In the given profit and loss statement it has been found that there are expenses
of around 88999 during the year which is much higher than previous year.
Selling and distribution expenses: It includes those costs those are incurred by sales
administration. It consists of administrative salaries and wages and commission. The income
statement is a kind of record of trading business over a specific period. It mainly tends to shows
difference among total income and cost (Administrative Expenses, 2017). In 2016, total expenses
done by the company are 101268 which is maximum form that previous year which was only
44683.
Administrative expenses: They are those expenses which are directly related to the
production of product and services (Shokri. Freudiger and Hubaux. 2010). It includes rent,
utilities and managerial salaries. These expense are associated with an organisation as a whole as
conflicting to separate department. In the company Surfstitch group total of 49237 is incurred by
the companies. It has been observed that above expense need to impact the profitability of the
company.
Ans. 4
On the basis of analysis, this has been seen that surfstich group Ltd shares were under
performed and within last one year the share price were fallen 66.83%. , this company's share
price were under performed. Hence, clients need to purchase shares in this situation.
PART 2
Continuous Disclosure: It refers to the legal necessity of a company in order to inform
the public about various regulatory norms which are applicable to the company being complied
or not. An effective and timely discloser is used to measure of product governance according to
the corporate governance principle. In Australia financial disclosure are not new to the company
laws those are operating in that country. The present continuous disclosure regime was emerged
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in 1994 and was regulated in corporation’s act those are listed under chapter 3 of ASX rules.
Continuous disclosure aims not to limit information imbalance among managers and investors,
but also among various categories of investors.
Disclosure is key to market integrity and investor security. Continuous disclosure is
an important element of the present Australian framework (Sollecito and Johnson, 2011). It aims
to ensure that investors have equal access to material price sensitive information in relation to
securities listed on secondary market.
Rationale for continuous disclosure: The primary rationale for continuous disclosure in
order to enhance confident and informed participation by investors in that market. This can be
anticipated to increase the depth, liquidity and efficiency of secondary markets. Continuous
disclosure of materially price sensitive information could help to increase the price of securities
that reflects their underlying economic values. It will also limit the volatility of securities prices,
since investors will have access to more information regarding a disclosure of entity
performance. ASIC has a various enforcement options that are accessible to it where a company
breaches its continuous disclosure obligations. It consists of civil penalty proceedings with less
amount of 1 million. Compliance with a violation notice dose not, include under ASIC from
taking civil penalty against persons those are associated in the alleged breach.
However, misconduct notice alter breaches to be dealt. There is a possibility that large
companies may see infringement notices and enforceable as an easy (Kifer and Machanavajjhala.
2012). It has economic ways out with less disrepute impact. According to ASIC's policing
activities the states of continuous disclosure's regime can be judged.
ASIC new policy is to convene spontaneous checking with the selected groups of
companies, regulating and monitoring compliances which are applicable to the company. With
the help of this policy, cited company can avoid severe criminal penalty. It consists of various
sentiment and punishment. It is clear that corporate governance can only be monitored and
improve if there is effective involvement in decision making process.
The disclosure obligation are not at all new for the company legal document in Australia
and in this the timely disclosure of all the material information is required. The continuous
disclosure do not mainly aim to decrease the data imbalance which is between the investors as
well the managers, but it is also between the various categorise which are of the investors. If the
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information can be passed on timely basis then the decisions regarding the prices and other
things can be taken in correct time and proper way.
Principle of continuous disclosures: It has been seen that for an effective continuous disclosure
regime there are various characteristics that are need to be followed (Willenborg and De Waal.
2012). Some principles are need to be follows regarding this:
In case of properly informed market: In relation to pricing of their securities cited
companies should release sufficient information to the investors in order to make corrective
judgement. Any information which are false or deceptive are not to be release by entities.
 Timely release of information: Material price sensitive information should be disclosed
by entities in the market as soon as it becomes aware to everyone. External rumours are
necessary to make corrective respond by the entities whenever they required to do so. If
information is being provided to the market and the investors on a proper time period
then it will be beneficial to the firm as well as the investors.
 Equal access to information: Price sensitive data should be available to investors on an
equal importance. In the absence of selective disclosure is fundamental to market
integrity. It will be also help to create potential for insider trading. While the information
is being provided has to be in appropriate way and that should be given to the equal and
proper way to each one.
 Commercial interests: In order to protect the interest of material price sensitive
information and disclosing of interest to an entity (Ismail and Rahman, 2011). It is
applied only in those situation where confidentiality has been given more priority in
relation to these matters.
 Confidentiality of information withheld from disclosure: It is essential to keep price
sensitive information very confidentially which is controlled by the investors. At the time
the firm should distribute the information to the commercial partners and the consultant,
and all these personnels should not merchandise in a legal document of the firm at the
time when they control the information which is not easily accessible to the investors.
At the time when the information which is widely acquirable as a consequence of a break
of the confidence, that should be properly revealed to all the investors of the firm on equal as
well as timely basis. It is essential for the investors to get proper and important information
which is regarding the price, so that proper decisions can be taken according to the legislation.
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 Enforcement and remedies- Disclosure regime has to be backed up by the effectual
enforcement (Mullins, Abdulhalim and Lavallee, 2012). The firm should properly get a
consistent and the clear guidance that is in abstraction form of disclosure which is to the
importance of price information. The program should specially include all the ranges of
the penalties can be helpful for them at different levels. The penalties which are been
included should be in effective way so that it can be maintained in effecient manner so
that it can be a safeguard.
There should be a proper mechanism so that it can be a remedy for those who had
incompetent disclosures. There should be some proper mechanism by which it will be helpful for
those people who had been suffered damages or loss in the consequence of the inadequate
disclosure should receive those amount.
Yes I agree for the statement that it is necessary to have a continuous reporting regime for
the disclosure entities, this helps in integrity the market and to protect the investors. This assist
the investors in having proper information which important about the price at appropriate time
period, so that the decision can be made in proper time and in correct way so that investors and
the person who faced the loss can get it in back (Walton and Rice, 2013). Even this help in
providing commercial interest to the entity so that they can get the loss back which they had been
faced. All the information which is been passed by the entity should be divided equally to the
investors. This can create a transparency to the firm which will aid them in performing their
activities in proper manner. ASX do not expect any of the firm the comments which are been
made the market speculation. The investors of the firm used to get a proper and specific
information which they require by the firm in an ethical way and in correct period, this will help
in collecting the proper information.
CONCLUSION
In this above report, it is been analysed that continuous disclosure is essential as this can
help the investor in getting proper and important information about the price sensitive. The
information which are been provided by the firm to the market is very important to the investors
as they can be able to proceed further. The decision marker has to get all the required
information so that they can be make appropriate decisions which will help in performing the
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work in better manner. Having continuous disclosure is better so that all the information can be
passed in the market on continuous basis.
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REFERENCES
Books and Journals
Faden. R.R and et. al. 2013. An ethics framework for a learning health care system: a departure
from traditional research ethics and clinical ethics. Hastings Center Report.43(s1).
Ismail. R. and Rahman. R.A. 2011. Institutional investors and board of directors' monitoring role
on risk management disclosure level in Malaysia. IUP Journal of Corporate
Governance.10(2). p.37.
Kifer D. and Machanavajjhala. A. 2012. May. A rigorous and customizable framework for
privacy. In Proceedings of the 31st ACM SIGMOD-SIGACT-SIGAI symposium on
Principles of Database Systems (pp. 77-88). ACM.
Mullins. C.D. Abdulhalim. A.M. and Lavallee. D.C. 2012. Continuous patient engagement in
comparative effectiveness research. Jama.307(15). pp.1587-1588.
Shokri. R. Freudiger. J. and Hubaux. J.P. 2010. A unified framework for location privacy (No.
EPFL-REPORT-148708).
Sollecito. W.A. and Johnson. J.K. 2011. McLaughlin and Kaluzny's continuous quality
improvement in health care. Jones & Bartlett Publishers.
Walton S.C. and Rice. R.E. 2013. Mediated disclosure on Twitter: The roles of gender and
identity in boundary impermeability, valence, disclosure, and stage. Computers in Human
Behavior .29(4). pp.1465-1474.
Willenborg L. and De Waal. T. 2012. Elements of statistical disclosure control (Vol. 155).
Springer Science & Business Media.
Online
Administrative Expenses. 2017. [Online]. Available through:
<https://www.readyratios.com/reference/accounting/administrative_expenses.html>.
[Accessed on 7th September 2017].
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