ACC00145 Financial Reporting and Analysis Report - Semester 2

This report provides a comprehensive analysis of financial reporting, focusing on the application of Australian Accounting Standards (AASB) within the context of General Purpose Financial Reports (GPFR). The report begins by examining the role of social accountability within the AASB conceptual framework, followed by a discussion on the development and establishment of AASBs for business practices in Australia. The core of the report involves an in-depth examination of the annual report of Coca-Cola Amatil, extracting key information and highlighting the company's compliance with AAS and IFRS. The report also details the disclosure requirements for executive remuneration, including the components and conditions of such remuneration. Finally, the report considers the reactions of investors to the information disclosed in annual reports, drawing conclusions about the impact of financial reporting on investment decisions. The report utilizes the provided annual report data to provide a real-world example of financial reporting analysis.

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

1FINANCIAL REPORTING AND ANALYSIS
Executive summary
The main objective of the report is to comment on the statement that whether social
accountability will be considered as part of the objective of GPFR. The report will further
focus on the importance of developing and establishing the AASBs for the business practices
carried in Australia. The report will take into consideration the annual report of Coca Cola
Amatil and will highlight the information provided by the company in its annual report.
Moreover the report will explain the disclosure requirement for manager’s benefit. Finally,
the report will focus on the reaction of investors regarding the information disclosed in
annual report.

2FINANCIAL REPORTING AND ANALYSIS
Table of Contents
Body of contents........................................................................................................................3
Answer 1....................................................................................................................................3
Answer 2....................................................................................................................................4
Answer 3....................................................................................................................................5
Answer 4....................................................................................................................................6
Answer 5....................................................................................................................................8
Reference....................................................................................................................................9
Appendix..................................................................................................................................11

3FINANCIAL REPORTING AND ANALYSIS
Body of contents
Answer 1
“Social accountability is considered in the (AASB Conceptual) Framework as part
of the objectives of general purpose financial reports (GPFR)” – comments
Accountability is considered as the imprecise notion. Hence, it it is recognised as
separate objective, it may open up the GPFR (general purpose financial reports) to deliver all
types of information like reporting for social responsibility unintentionally like reporting for
social responsibility (Luke 2017). While it is acknowledged by AASB regarding the
interrelations among scope and objectives, intended scope for GPFR shall be addressed
directly and not defining the term inadvertently through articulating the objectives
(Aasb.gov.au 2018). Based on this AASB suggests that the conceptual framework as part of
GPFR objectives shall –
 Explain the decision of the users regarding the allocation of the scarce resources that
includes the decision for influencing the decision making by the management of
reporting company. The decision further includes the management’s decision
regarding the company’s scarce resource allocation basis through lobbying or voting
(Yong, Lim and Tan 2016).
 Unambiguously includes the accountability for the objectives of decision making
through defining the term accountability as responsibility for proving the information
that will enable the users in making informed judgements. The judgements are made
with regard to the company’s performance, its financial position and the compliance
with the objective of evaluating and making the decisions regarding scarce resources
allocation. These will further include the judgements regarding whether the

4FINANCIAL REPORTING AND ANALYSIS
management of the company has made effective and efficient use of company’s
resources (Barth 2013).
Therefore, it can be stated that social accountability is taken into consideration under
the AASB conceptual framework as an important part of GPFR.
Answer 2
Requirement for establishing and developing AASBs for the business practices in Australia
Accounting standard those are used by the business entities in Australia for preparing
and presenting their financial reports as per the Corporation law those are commonly referred
as AASBs are prepared by AASB. Development of AASB in Australia is multi-step
procedure that includes the process of public consultation and supplementary discussions,
wherever appropriate. Australia has differential disclosure requirement under which
requirement for financial reporting are set on the basis of type of the company, specifically
based on public interest level in the company. Companies are classified as –
 Disclosing entities that mainly includes listed organizations and registered managed
undertakings. These companies have issued the share or have listed and other
securities owing to prospectus circulation (Luke 2016).
 Large proprietary and unlisted public companies those have at least 2 criteria among 3
– (i) gross operating revenue amounting to $ 10 million or more (ii) gross assets
amounting to $ 5 million or more (iii) employee number 50 or more.
 Small proprietary entities
However, as per AASB all the above mentioned companies are required to maintain
the records that record their accounting and financial transactions accurately. It shall further
enable preparing the financial reports and auditing of these financial reports. Further, all the

5FINANCIAL REPORTING AND ANALYSIS
entities except the small proprietary entities shall prepare the financial statement on annual
basis. These financial reports include profit and loss statement, balance sheet and Cash flow
statement. Matters those are needed to be disclosed under financial reports are stated in the
accounting standards that are issued by the AASBs. Further it has force of law as per the
corporation law. Corporation law further stated that the consolidated financial report shall be
prepared where preparation of these statements are required by the by accounting standard.
Financial statements prepared annually shall be circulated to the members of company and
shall be lodged with ASIC (Australian securities and investment commission). Apart from
meeting the requirements for annual disclosures, the disclosing companies shall prepare
financial statement on half-yearly basis. This half-yearly statement is the abridged version of
the financial statements prepared annually. It shall be lodged with the ASIC but is not
required to be distributed to the members (Palmer 2013).
Therefore, for Australian business practices it is necessary to develop and establish
the AASBs to provide transparency, removing true and fair override and enhancing the
disclosure requirement.
Answer 3
Information given in annual report of Coca – Cola Amatil
Major information provided in the annual report of Coca Cola Amatil for the year
ended 2017 are as follows –
 Remuneration report
 Director’s report
 Corporate governance
 Financial and operating review

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 Shareholder information
 5 year financial summary
 Independence auditor’s report
 Financial reports including consolidated income statements, consolidated
comprehensive income statement, consolidated statement for changes in the equity,
consolidated balance sheet and consolidated statement for cash flows
 Notes to the financial statements (Ccamatil.com 2018).
Further it has been stated in the company’s annual report that the general purpose
financial report of the company has been prepared in compliance with the AAS (Australian
accounting standards) and various other authoritative pronouncements of AASB and
Corporation Act 2001. The financial reports of the company further complied with the IFRS
issued by IASB.
Answer 4
With regard to each specified executive and specified director below mentioned
details shall be disclosed –
 Total amount of remuneration covering the reporting period. Remuneration includes
bonuses, salaries, fees, expenses allowance, personal benefits, perquisites, post
employment benefits and equity investment. However, it excludes the reimbursement
with regard to the expenses incurred for entity’s benefit or the benefit of its
subsidiary. The remuneration shall be measured as per the requirement of AASB 1028
on employee benefits. However, if the standard does not prescribe any requirement
for measurement for any particular amount of remuneration, it shall be measured
depending on the cost to the company for providing the item (Pwc.com.au 2018).

7FINANCIAL REPORTING AND ANALYSIS
 Aggregate for total remuneration of individual and aggregate for each component
shall be disclosed for each of following groups –
 Specifies executives
 Specified directors
 Disclosure of the comparative amounts for previous reporting period is not necessary
for the individuals who were not been specified in that period. Disclosing the
comparative amounts for that period is necessary for each category of entire
remuneration and aggregate of the components.
 It is not required to separate the disclosure for remuneration of specified executives
into economic entity and parent entity on the basis of which the entity employs its
employees.
 Below mentioned details with regard to the remuneration shall be disclosed for
specified executive and specified directors –
 Principle used for determining the amount and nature of remuneration
 Whether and how relationship principle established among the remuneration and the
company’s performance
 For each service contract among specified executive or specified executives and
disclosing entity explanations those are required for providing the understanding
regarding how remuneration amount in current period of reporting was determined. It
further determines the way in which the contract terms impacted the remuneration for
future period (Pwc.com.au 2018).
 For each of the grant of cash bonus, share based compensation benefit payment or
bonus related to performance, conditions and terms for each grant that has an impact
on the remuneration in current or future accounting period. it includes – (i) date of
grant (ii) nature of granted remuneration (iii) Performance and service criteria used

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for determining the remuneration amount (iv) in case of any alteration of conditions
and terms of grant since the date of grant, the date, effect and details of each of the
alteration.
 Further the additional conditions and terms required to be disclosed are – (i) whether
approval from the shareholder required (ii) whether any other benefits are payable
during performance period on annual basis or at the end of the grant period (iii)
restrictions, if any on transfer of the equity instrument after the vesting (Mazhambe
2014).
Answer 5
Reaction of investors on annual report disclosures
Financial statement is considered as the financial information with regard to the
financial performance and position of the company. Based on the financial information the
investors take various decisions regarding the profitability, liquidity and leverage position of
the company. For instance, it can be found from the annual report of Coca Cola Amatil for
the year ended 2017 that the net profit of the company has been increased to $ 461 million as
compared to $ 257.3 million in 2016 (Appendix 1). It is indicating that the profitability
position of the company has been improved (Newberry 2015). Looking into the balance
sheet of the company for the same period it is found that amount of total current liabilities are
$ 2799.6 million whereas the amount of current liabilities was $ 1838.8 million (Appendix 2).
Therefore, the short term assets of the company are sufficient to pay off the short term
obligation of the company. It is indicating that the liquidity position of the company strong
(Ccamatil.com 2018). Therefore, it can be decided that the company is good in investment
aspect. Hence, it can be stated that investors or the securities market react on disclosure of the
information provided in annual report.

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Reference
Aasb.gov.au. (2018). [online] Available at:
https://www.aasb.gov.au/admin/file/content102/c3/AASB1046_01-04.pdf [Accessed 20 Sep.
2018].
Barth, M.E., 2013. Measurement in financial reporting: The need for concepts. Accounting
Horizons, 28(2), pp.331-352.
Ccamatil.com. (2018). [online] Available at:
https://www.ccamatil.com/-/media/Cca/Corporate/Files/Annual-Reports/2018/Annual-
Report-2017.ashx [Accessed 20 Sep. 2018].
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.
Palmer, P.D., 2013. Exploring attitudes to financial reporting in the Australian not‐for‐profit
sector. Accounting & Finance, 53(1), pp.217-241.

10FINANCIAL REPORTING AND ANALYSIS
Pwc.com.au. (2018). [online] Available at:
https://www.pwc.com.au/assurance/ifrs/assets/kmp-remuneration-disclosures-apr14.pdf
[Accessed 20 Sep. 2018].
Yong, K.O., Lim, C.Y. and Tan, P., 2016. Theory and practice of the proposed conceptual
framework: Evidence from the field. Advances in accounting, 35, pp.62-74.

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Appendix
1. Profitability
2. Current assets and current liabilities