ACC00145: Financial Reporting, AASB & Myer Holdings Ltd. Analysis

This report provides an analysis of financial reporting, focusing on the importance of social accountability within the framework of General Purpose Financial Reports (GPFR). It examines the role and development of Australian Accounting Standards Boards (AASBs) in shaping business practices in Australia. The report further delves into the types of information disclosed by ASX-listed company Myer Holdings Ltd., including required incentive disclosures, and assesses the impact of this information on investors' decisions. Key aspects covered include the AASB's conceptual framework, disclosure requirements for various types of entities, and an evaluation of Myer Holdings Ltd.'s financial performance based on its annual report, considering factors like profitability, liquidity, and solvency. The analysis concludes that the information presented in financial reports significantly influences investor perceptions and decisions in the securities market.

Running head: FINANCIAL REPORTING
Financial reporting
Name of the student
Name of the university
Student ID
Author note

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Executive summary
The purpose of the report is to provide the comments on importance of social accountability
as part of the GPFR objective. Further, the report will focus on the importance of
establishment and development of AASBs or the business practices in Australia. It will
further highlight the types of information provided in the ASX listed company Myer
Holdings Ltd. and the incentives disclosures required by the entity. It will further state the
impact of information provided in annual reports of the company to the investors.

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Table of Contents
Introduction................................................................................................................................3
Answer 1....................................................................................................................................3
Answer 2....................................................................................................................................4
Answer 3....................................................................................................................................5
Answer 4....................................................................................................................................6
Answer 5....................................................................................................................................8
Conclusion..................................................................................................................................9
Reference..................................................................................................................................11

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Introduction
Social accountability is an important part of GPFR. Accounting standards used by the
Australian business establishments to prepare and present their financial statement in
accordance with the Corporation law are generally referred as the AASBs prepared by the
AASB (Australian accounting standard board) (Aasb.gov.au 2019).
Answer 1
“Social accountability is considered in the (AASB Conceptual) Framework as part
of the objectives of general purpose financial reports (GPFR)” – comments
The term accountability is regarded as an imprecise concept. Therefore, it is
considered as the separate objective that may require the GPFR (general purpose financial
reports) to provide different types of the information such as reporting for social
responsibility. Whereas it is already established bu AASB that there is an interrelation
between the intended scope for the GPFR and objectives, it shall be directly addressed and
shall not define the term inadvertently through expressing the objectives (Luke 2016). Based
on the suggestions of AASB, the conceptual framework as an inseparable part of the GPFR
shall –
 Include accountability of objectives unambiguously for the purpose of decision
making by depicting the concept of accountability as a responsibility to deliver the
information that will assist the users of financial statement to make informed
decisions. the decisions are taken considering the performance of the entity, its
financial position and the compliance made by it while evaluated and made
decisions regarding allocation of scarce resources. This decision will also include

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analysis regarding the efficiency of management with regard to usage of scarce
resources (Luke 2017).
 Describe the user’s decision with regard to distribution of scarce resources including
decisions regarding influence of the management’s decision making approaches.
Further, the decision shall also focus into the decisions of the management with
regard to distribution of scarce resources through voting system or lobby system
(Huber 2017).
Hence, it is determined that the social accountability forms part of AASB conceptual
framework while following the GPFR.
Answer 2
Requirement of establishment and development of AASBs for Australian business practices
AASB development in Australia involves numerous steps including the procedure for
public consultation and accompanying discussion associated with that, wherever applicable.
Different disclosure requirements are there for reporting the financial statement and the
requirements vary with the types of entity those are particularly based on the level of public
interest (Mazhambe 2014). The entities are segregated as follows –
 Small proprietary concerns
 Large proprietary concerns and public companies those are unlisted and fulfils at
least 2 criteria from 3 as follows –
 Number of employees 50 or more than that
 Value of gross asset is $ 5 million or more
 Value of gross operating revenue $ 10 million or more

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 Disclosing companies including mainly the listed entities and the managed registered
undertakings. These organisations have issued share capital or have listed securities
from circulation of prospectus (Newberry 2015)
In accordance with AASB all the above mentioned entities are obliged to maintain
records associated with the accurate transactions related to finance and accounting. Further, it
must enable the preparation of the financial statements and auditing of the statements. Except
the small proprietary concerns, all other entities shall prepare financial reports on annual
basis. Generally the financial statement includes cash flow statements, balance sheet, income
statement and statement of changes in equity (Aasb.gov.au 2019). Matters required to be
disclosed under the financial reports are mentioned in accounting standards issued by
AASBs. Apart from that, force of law is applicable on it in accordance with Corporation aw.
Further, it has been mentioned in Corporation Law that the companies shall prepare the
consolidated financial report wherever it is required by the accounting standard. Apart from
that the reported financial statement shall be circulated to the company members and must be
lodged with the ASIC (Australian securities and investment commission). Along with
meeting the annual disclosure requirements, the disclosing entities shall prepare half-year
financial report that is considered as the abridged version of annual financial statement. This
half yearly financial report shall also be lodged with the ASIC. However, it is not required to
be circulated to the members (Aasb.gov.au 2019).
Hence, for Australian business establishments it is required to establish and develop
the AASB to enhance transparency, eliminating override of true and fair view and improving
the requirements related to disclosures.
Answer 3
Information delivered through the annual report of Myer Holdings Ltd

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Different information delivered through the annual report of Myer Holdings Ltd for
the year closed on 25th October 2018 are as follows –
 Chairman’s report
 Performance review
 Meet John King, CEO and Managing Director of the company
 Sustainability at Myer
 Year under review
 Director’s report
 Independence declaration of the auditor
 Remuneration report
 Financial statement including cash flow statements, balance sheet, income statement
and statement of changes in equity and notes to the financial reports
 Declaration of directors
 Report of independent auditor
 Information of shareholders
 Corporate directory (Investor.myer.com.au 2019).
Further, the financial report of the entity is general purpose financial report and
prepared as per the requirement of AAS and the interpretation released by AASB and
Corporation Act 2001. Myer Holdings Ltd is a for profit organisation in context for
preparation of the financial reports. Further, the reports are complied with the IFRS issued by
AASB (Investor.myer.com.au 2019).
Answer 4
Disclosure requirements for incentives

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For the specified directors and specified executives disclosures are required as follows
–
 Total remuneration amount for the reporting period. Remuneration generally includes
salaries, bonus, fees, allowances, perquisites, personal benefits, equity investments
and personal benefits. However, it does not include the expenses carried out by the
employee on behalf of the entity or the subsidiary of the entity. Further, the
remuneration must be measured in compliance with AASB 1028 on employee
benefits. However, if any particular item is not included under the AASB 1028, the
entity shall measure it on the basis of the expenses incurred by it for providing the
benefit (Aasb.gov.au 2019).
 Aggregate or total individual remuneration and aggregate for each of the component
must be disclosed with regard to –
 Specific directors
 Specific executives
 Disclosure of comparative value for the previous reporting period is not required for
individuals who were not categorized as specific for the concerned period. However,
disclosure for comparative amount is required for aggregate components and total
remuneration
 Further details regarding remuneration to specified directors and specified executives
–
 How and whether principle relation is linked between remuneration paid and
performance of the company
 Principle used to determine the remuneration nature and amount (Aasb.gov.au 2019).
 For each of the service contract between specified directors and specified executives
and the reporting entity explanations shall be there regarding how the remuneration

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amount is determined. Further, it determines how the terms of contract have an impact
on the future period remuneration.
 Terms and condition for granting cash bonus, performance related bonus and share
based payment as compensation and impact of the grant on future period
remuneration. It includes (i) grant date (ii) nature of remuneration granted (iii)
performance criteria and service criteria used to determine amount of remuneration
(iv)alteration of terms and conditions regarding date, impact, grand date, grant amount
with all details of alteration, if any (Yong, Lim and Tan 2016).
 Apart from above additional terms and conditions required to be disclosed are – (i) if
shareholder’s approval are required (ii) whether benefits are payable on annual basis
or during performance period or at end of grant period (ii) restriction on transfer of
equity instrument after vesting, if any.
Remuneration details for Myer Holding Ltd are as follows –
Answer 5
Investor’s reaction regarding the disclosures of annual report

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On the basis of the information presented in the financial reports the investors take
various decisions regarding the liquidity, profitability and solvency. From the financial report
of Myer Holdings Ltd, following information generated –
It can be identified from the above that the profitability position of the entity has been
deteriorated and the company was not able to generate any profit for the year 2018. Hence,
the entity’s profit earning ability has been worsened over the years. Looking into the current
ratio of the entity it can be stated that the liquidity position of the company has been
improved as the current ratio has been increased to 1.46 in 2018 from 1.35 in 2017. Hence,
the ability of the company to meet its short term obligation has been improved (Penman
2015). If the solvency aspect is considered, it can be stated that the entity became more
dependent on debt as compared to previous year. It is noticed that the debt equity ratio has
been increased to 1.32 in 2018 as compared to 0.75 in 2017. Hence, the company has become
more leveraged that will threat its long term sustainability (Boyas and Teeter 2017). Hence,
looking at overall performance of the entity it can be stated that it is not a good company
from investor’s perspective. Therefore, it is determined that the securities market or the
investors react on the disclosures made by the company regarding its performances in its
annual report.

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Conclusion
Financial reports represent the financial position and performance of the entity for the
specific period of time. On the basis of the information presented in the financial reports the
investors take various decisions regarding the liquidity, profitability and solvency. Hence,
social accountability forms an important part of GPFR and Australian business shall follow
accounting standards while preparing their financial reports.

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Reference
Aasb.gov.au. 2019. [online] Available at:
https://www.aasb.gov.au/admin/file/content102/c3/AASB1046_01-04.pdf [Accessed 5 Feb.
2019].
Boyas, E. and Teeter, R., 2017. Teaching Financial Ratio Analysis using XBRL.
In Developments in Business Simulation and Experiential Learning: Proceedings of the
Annual ABSEL conference (Vol. 44, No. 1).
Huber, W., 2017. Irreconcilable differences? The FASB's conceptual framework and the
public interest. International Journal of Critical Accounting, 9(5/6), pp.514-523.
Investor.myer.com.au., 2019. Myer Investor Relations. [online] Available at:
http://investor.myer.com.au/Investor-Centre/ [Accessed 5 Feb. 2019].
Luke, B., 2016. Measuring and reporting on social performance: from numbers and narratives
to a useful reporting framework for social enterprises. Social and Environmental
Accountability Journal, 36(2), pp.103-123.
Luke, B., 2017. Statement of social performance: Opportunities and barriers to
adoption. Social and Environmental Accountability Journal, 37(2), pp.118-136.
Mazhambe, Z., 2014. Review of International Accounting Standards Board (IASB) Proposed
New Conceptual Framework: Discussion Paper (DP/2013/1). Journal of Modern Accounting
and Auditing, 10(8).
Newberry, S., 2015. Public sector accounting: shifting concepts of accountability. Public
Money & Management, 35(5), pp.371-376.