Financial Accounting and Reporting: Analysis of Paladin Energy Ltd

This report analyzes the financial accounting and reporting practices of Paladin Energy Ltd., a uranium mining company. It covers the company's structure, including subsidiaries and joint ventures, and examines the preparation of consolidated financial statements according to IFRS 10. The report discusses non-controlling interests, goodwill arising from acquisitions, intra-group transactions, and the treatment of foreign subsidiaries. It highlights the company's policies on corporate governance, audit committee, and sustainability, as presented in its financial statements. The report emphasizes the importance of clear management analysis and the application of IFRS in financial reporting, with references to relevant academic literature.

Running head: FINANCIAL ACCOUNTING AND REPORTING
Financial Accounting and Reporting
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FINANCIAL ACCOUNTING AND REPORTING 1
Memorandum
To: Boards of Directors
From: Paladin Energy Ltd.
Date: 12.09.2018
Subject: Financial Accounting and Reporting
1. Palagin Energy Ltd was started by Uranerz Australia in 1970 at Perth, Western
Australia with John Borshoff. It is a mining company producing uranium. Currently it is
operating mines in Africa at Nambibia and Malawi. It has joint venture with Isa Uranium.
Palagin Energy has 100% owned subsidiary in two companies Fusion Resource Pty. Ltd and
Valhalla Uranium Pty Ltd.
2. Parent Company has to draw consolidated financial statement though subsidiary is a
permissible distinct entity because the creditors and bondholders of subsidiary generally have no
privilege on the parent company. Also, bondholders do not share the part of proceeds with the
parent company. Though, consolidated financial statements are of importance for those who are
interested in attainment of material about income, capital liabilities and assets. Palagin Energy
Ltd satisfies the conditions of preparing consolidated financial statement as per IFRS10. In the
consolidated comprehensive income statement adjustments related to its subsidiary is recorded.
( Rabbiosi and Santangelo 2013).
3. The non-controlling interest on assets is documented in the consolidated shareholders’
equity and the privilege on net income is documented at the time of apportionment of

2FINANCIAL ACCOUNTING AND REPORTING
consolidating net income. Non- controlling interest is positioned at the consolidated balance
sheet normally between the liabilities and the shareholder`s equity. A direct non- controlling
interest is comprehensive of pre and post-acquisition figure of equities. Indirect non-controlling
interest is received after the acquisition had taken place. It is adjusted while calculating the
figures for preparing consolidated financial statement. As per stated in the annual report Summit
holds 50 percent interest in the Valhalla/Skal Projects by the further 50% interest detained by
the Paladin Group. As a significance of the overthrow of the Summit Group, the above
mentioned percentage now replicates 100 percent of the Valhalla/Skal Projects with the non-
controlling interest imitated on the appearance of the declaration of the Financial Position. The
figure in the consolidated balance sheet is US$104540000 in the year 2017 and US$78500000.
(Maroun and Zijl,2016).
4. The difference figure arrived after deduction of the figure of tangible and intangible
asset of the acquiring firm is referred as Goodwill. The acquisition is documented by the
procurer company in the consolidated balance sheet and the adjustments related to this is shown
under notes to accounts. Goodwill is recorded in the assets side of the balance sheet. An
impairment of assets of US$243900000 in 2017 was recorded in the balance sheet.
5. Intra- group transactions are recognized as monetary or commercial transactions where
two companies are involved in the cluster concurrently. Intra- group transaction is recognized in
both the financial statements of both units of the entity at the arms-length with unrelated parties.
Intra transaction is not recorded in the consolidated financial statement of the group to avoid
counting twice of asset and liabilities. The Palagin Group subsidiary Summit Resouces
contributed equity of $99381000.

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6. Palagin Energy Group has foreign subsidiaries and their items incorporated in the
Financial Statements of every of the Group's entities of Palagin Energy are calculated by
the coinage of the main monetary surroundings in which the body functions known as the
practical exchange. The Consolidated Financial Statements are accessible in United States
dollars which is the Company’s efficient and appearance exchange.
7. The company policy on Corporate Governance, Audit committee and Sustainability is
presented in the financial statement of the Group Company as well in the financial statements of
subsidiary company. Accounting polices is disclosed for both the investors present and the
potential. Palagin Energy Ltd has presented the companies policies in the annual report under the
different heading as per the conditions laid down by ASB. Sustainability and Corporate
Governance report is presented before the financial statements. The reports provide overall
insight of soundness of the Group. Corporate Governance report of Palagin Energy states about
the growth, good practice and current legislation of the company. Audit of Palagin Energy Ltd is
done by PWC. ( Allen and Kowalewski 2013).
8. Board of Director’s shall put more stress in explaining the management analysis and its
decision of expanding. They shall consider the reasons of losses and selling of its assets
reasonably so that they can clearly present their financial statements to its share holders and
other new investors. They could merely show how the application of IFRS has been implied
while preparing the financial reports. (Bepari and Mollik 2015).

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Reference:
Allen, F., Gu, X. and Kowalewski, O., 2013. Corporate governance and intra-group transactions
in European bank holding companies during the crisis. In Global Banking, Financial Markets
and Crises (pp. 365-431). Emerald Group Publishing Limited.
Bepari, M.K. and Mollik, A.T., 2015. Effect of audit quality and accounting and finance
backgrounds of audit committee members on firms’ compliance with IFRS for goodwill
impairment testing. Journal of Applied Accounting Research, 16(2), pp.196-220.
Buchuk, D., Larrain, B., Muñoz, F. and Urzúa, F., 2014. The internal capital markets of business
groups: Evidence from intra-group loans. Journal of Financial Economics, 112(2), pp.190-212.
Gluzová, T., 2016. Disclosure of subsidiaries with non-controlling interest in accordance with
IFRS 12: case of materiality. Acta Universitatis Agriculturae et Silviculturae Mendelianae
Brunensis, 64(1), pp.275-281.
Kaunda, C.S., 2013. Energy situation, potential and application status of small-scale hydropower
systems in Malawi. Renewable and Sustainable Energy Reviews, 26, pp.1-19.
Lee, T.A. and Parker, R.H., 2014. Company financial statements: an essay in business history
1830–1950. In Evolution of Corporate Financial Reporting (RLE Accounting)(pp. 27-51).
Routledge.
Maroun, W. and van Zijl, W., 2016. Isomorphism and resistance in implementing IFRS 10 and
IFRS 12. The British Accounting Review, 48(2), pp.220-239.

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Pucheta‐Martínez, M.C. and García‐Meca, E., 2014. Institutional investors on boards and audit
committees and their effects on financial reporting quality. Corporate Governance: An
International Review, 22(4), pp.347-363.
Rabbiosi, L. and Santangelo, G.D., 2013. Parent company benefits from reverse knowledge
transfer: The role of the liability of newness in MNEs. Journal of World Business, 48(1), pp.160-
170.