Financial Analysis: Accounting Policies Report for Qantas Airways

This report provides a comprehensive analysis of the accounting policies adopted by Qantas Airways. It focuses on the changes in accounting policies, particularly concerning impairment testing under IAS-136 and the recognition of goodwill. The report examines the impact of these changes on the company's financial statements, including the reduction in asset values and the effect on earnings. It also explores the consistency of Qantas Airways' accounting policies with its overall business strategy, highlighting the company's adherence to IFRS and its commitment to transparency through CSR reporting. The report concludes by evaluating the appropriateness of the accounting changes and their connection to the company's mission and vision, emphasizing the alignment of accounting policies with the company's goals of maximizing profit and strengthening sustainable business practices.

Qantas Airway
Accounting policies Report
Accounting policy
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policies Report
Table of Contents
Changes in the company’s accounting policies, if so, explain the reasons for, and
consequences of, these changes.................................................................................................2
Opinion on the appropriateness of the accounting changes.......................................................2
Identify connections between the company’s accounting policies............................................2
Does any accounting policy support the company’s strategy in any way..................................3
References..................................................................................................................................4

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Changes in the company’s accounting policies, if so, explain the reasons for, and
consequences of, these changes.
With the changes in the economic conditions and ramified accounting policies and
frameworks, each and every organization on international level is setting harmonization in
the international and domestic accounting frameworks. Every company has its own process,
standards, policies and procedures to be used in the organization. Accounting policies are the
set of accounting standards which the organization has to follow in order to have consistency.
Accounting policies are the set of standards that govern that how a company prepares its
financial statements. In this report, Qantas Airway Company has been taken into
consideration. It is the flag carrier of Australia and its largest airline by fleet size,
international flights business around the globe (Nolan, Ritchie, & Rowcroft, 2014). The main
changes in the accounting policies implemented by the Qantas Airway Company are
generally related to impairment testing as per the IAS-136 and recognition of the goodwill,
research and development preparation cost. Qantas Company has followed IFRs accounting
policies and rules while recording and formulating the financial statements (Seck, 2017). One
of the major changes in the accounting policies has been taken out from the financial
statements which are related to the implementation of the impairment testing procedure.
Qantas Company adopted IAS-136 accounting standards to identify the carrying value of the
assets. The effect of this is that the overall earnings of the company as it resulted to the
reduction in the books value of the assets and charged higher impairment loss form the profit
and loss account (Rashid, 2016). There are no major changes found in the accounting
policies of Qantas Airway Company apart from the IAS-136. Other accounting changes are
found relevant and have no material effect on the company productivity and its image.
However, notes to disclosure given in the books of account of the Qantas Airway Company
have been given to compensate the changes in the accounting policies. This has shown that
company has adopted the international accounting frameworks and reported its financial
statements in effective manner. Qantas Airway Company has also adopted IAS-136 in order
to strengthen the true and fair view of assets and liabilities in its books of accounts. It allowed
company to implement the impairment test to keep the business more transparent. Another
impact is related to reduction in the return on capital employed due to high impairment loss
charge. The return on equity measured by the company showing the amount of profit earned

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in comparison to the amount invested by the investors, which is found to be increasing year
by year (Qantas Airway Company, 2017).
Opinion on the appropriateness of the accounting changes
Qantas Airway Company accounting policies and its strategy are running parallel to each
other and focused on setting up harmonization in its domestic and international reporting
compliance. Qantas Airway Company is using a combination of the policies, procedures and
processes in order to maintain the efficiency of the accounting policies to strengthen the
transparency in its business (Power, Cleary, & Donnelly, 2017).
Identify connections between the company’s accounting policies
All the strategy made by Qantas Airway Company is made in accordance with the mission
and vision statements of the company. Qantas Airway Company is using the CSR strategic
program by using its business more transparent towards its stakeholders which sets up more
effective harmonization in its domestic and international reporting frameworks (The
Australian, 2016).
Does any accounting policy support the company’s strategy in any way
Qantas Airway Company uses a set of accounting policies which aims to maximize the profit
so that company will have an aggressive behaviour that involves selecting the accounting
policies that includes lowering the cost in income statements. By using this policy in the
company, the long-term strategy of the company will be achieved. It also helps company to
strengthen the business outcomes and sustainable business practices in long run. Qantas
Airway Company complied with the applicable international accounting laws and regulations
to transparency of its recording and reporting frameworks and aligns the interest of the
stakeholders with the transparent accounting policies (Ball, Tyler, & Wells, 2015). While
evaluating the accounting statements and policies of Qantas Airway Company, it has been
analyzed that the accounting policies are consistent in nature and support the strategy by
using the CSR reporting program (Rashid, 2016).

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References
Ball, F., Tyler, J., & Wells, P. (2015). Is audit quality impacted by auditor
relationships?. Journal of Contemporary Accounting & Economics, 11(2), 166-181.
Nolan, J., Ritchie, P., & Rowcroft, J. (2014). International Mergers and Acquisitions in the
Airline Industry. In The Economics of International Airline Transport (pp. 127-150).
Emerald Group Publishing Limited.
Power, S. B., Cleary, P., & Donnelly, R. (2017). Accounting in the London Stock Exchange's
extractive industry: The effect of policy diversity on the value relevance of
exploration-related disclosures. The British Accounting Review, 49(6), 545-559.
Qantas Airway Company. (2017). 2017 Annual Report. Retrieved from:
http://investor.qantas.com/FormBuilder/_Resource/_module/doLLG5ufYkCyEPjF1tp
gyw/file/annual-reports/2018-Annual-Report-ASX.pdf
Rashid, F. (2016). Accounting and reporting system of airlines industry: A case study of
Biman Bangladesh (Doctoral dissertation, University of Dhaka).
Seck, K. (2017). Employment: Accountant liable as third party accessory to client's fair work
breaches. LSJ: Law Society of NSW Journal, (35), 78.