Presentation of Accounting Information: Telstra Financial Report 2017

This presentation provides an overview of Telstra's 2017 audited financial statements. It analyzes the company's adherence to corporate governance policies, highlighting its commitment to stakeholder communication and compliance with ASX recommendations. The presentation further examines Telstra's sustainability reporting, outlining its strategies and goals. It details the role of the Audit and Risk Committee in financial reporting and risk management. The analysis includes the disclosure of non-controlling interests, the treatment of goodwill, and the impact of foreign currency transactions. It also discusses the introduction of new accounting standards that will affect future financial reporting periods. The presentation references the Telstra Annual Report 2017 and other relevant sources.

Presentation of Accounting Information by Telstra 1
PRESENTATION OF ACCOUNTING INFORMATION
by (Your Name)
Company Accounting
Professor’s Name
Name of Institution
Location of Institution
Date

Presentation of Accounting Information by Telstra 2
Presentation of Accounting Information
TO: The Board of Directors
FROM: The Accounting and Finance Team
DATE: 12th May 2018
SUBJECT: FINANCIAL STATEMENT ANALYSIS
We are hereby writing to provide you with an overview of the 2017 audited financial
statements. All of you can agree with us that 2017 was a very challenging year for the company
due to the numerous financial and operational challenges that we faced. Nevertheless, we are
happy that we were able to attain a number of financial set targets by the year-end. This memo
intends to highlight a few issues regarding the manner in which the company is reporting the
corporate governance policies, sustainability solvency, the role of the audit committee, the
disclosure of information about the non-controlling interest, issues to do with goodwill and
foreign currency transactions.
Corporate Governance Policies at Telstra
Adherence to the established set of corporate governance policies is very important.
Telstra has been showing commitment towards providing excellent communication to all the
relevant stakeholders. This has been done through timely, transparent and accountable reporting
of the all the pertinent issues relating to how the management is making use of the established
corporate governance issues. When you look at the 2017 annual reports, you can realize that the
company disclosed all the corporate governance policies that are currently in place. (Telstra
Annual Report 2017, pp. 20). This is intended to provide long-term leadership as well as

Presentation of Accounting Information by Telstra 3
sustainability for the company. The management has also placed a lot of importance on corporate
governance policies as a way of enhancing the interest of the shareholders and other
stakeholders. This is because governance framework plays a very important role of providing a
structure in which corporate strategies and objectives are set, monitored and the related risks
managed in time (Choudhury and Petrin, 2018, np.). It also provides a clearer framework for
accountability in decision making across all the business sections by giving a guidance on the
behavioural standards that are expected.
Because there are constant changes in the market concerning corporate governance
practices, the company leadership is taking a key role in reviewing the current policies to ensure
that they align with prevailing marketplace practices, regulations and expectations
(Telstra.com.au, 2018, np.). For instance, the company has disclosed in its 2017 annual report
Corporate Governance Statement about its compliance with the third edition of Australia's
Securities Exchange ASX corporate Governance Councils Corporate Governance Principles and
Recommendation popularly known as the ASX Recommendations. The reporting of the
company's corporate governance framework is taken to be an important matter because it plays a
very integral role in supporting the business affairs and also in delivering the company's financial
strategies.
Sustainability Solvency Reporting by Telstra
Tesla being one of the large telecommunication and technology companies in Australia
places a lot of importance on sustainability reporting. Apart from helping the community and
customers to adapt to the technological opportunities and changes, the company has also
disclosed its intention to enable everyone to thrive in a digital world (Telstra Exchange, 2018,
np.).

Presentation of Accounting Information by Telstra 4
Telstra Sustainability Strategies
Through its 2017 annual reports, Telstra has reported its purpose of creating a brilliant
technology connected future for all the stakeholders of the company (Telstra Annual Report
2017, pp. 16-17). The purpose is indented to be achieved through a set of strategies that reflects
the material issues of the company. To attain the requirements of world sustainability solvency,
Telstra is also aiming at making use of the areas in which it has expertise in making a significant
impact to the all the stakeholders of the organization (Burger et al., 2014, pp.8345). In situations
where opportunities arise, the company has shown commitment to use innovation and
technology-based solutions to help address a diverse array of major societal opportunities and
challenges.
The Role of the Audit Committee
As per the constitution of Telstra rule 26.6, the Audit and Risk Committee is a committee
of the Board that is tasked with a number of roles. They Include:
 To assist the Board of Directors in discharging responsibilities on matters pertaining to
financial reporting, risk management, compliance, internal and external audit, corporate
governance developments and Telstra’s Structural Separation Undertaking (SSU)
(AUDIT & RISK COMMITTEE CHARTER, 2018, pp.2).
 The committee provides a forum for communication between the management and the
Board on internal and external audit assignments (AUDIT & RISK COMMITTEE
CHARTER, 2018, pp 4).
 Provides a conduit to the Board for external advice on audit, compliance matters and risk
management (AUDIT & RISK COMMITTEE CHARTER, 2018, pp.5).

Presentation of Accounting Information by Telstra 5
For the 2017 financial reports, we are confident that the financial reports being presented
to you have been adequately scrutinized by the audit and risk Committee to ensure that there are
no material misstatements. The published set of group financial statements that were released in
2017, therefore, reflects the company's accounting and finance policy.
Disclosure of Information about Non-Controlling Interests
Telstra’s information regarding non-controlling interest is disclosed in the Telstra
Corporation Limited financial statement report and controlled entities section of the annual
report. In this section, information involving shareholding companies that have non-controlling
interest at Telstra are disclosed. On page 100 of the 2017 annual report, the annual reports show
the companies that Telstra has a minority interest (Non-controlling interest). Non-controlling
interest means those entities that Telstra has invested shares in them which is not more than 50%.
Some of the companies include Telstra Inc. (US), Telstra Ltd India, Telstra New Zealand Ltd and
Telstra Clear Ltd in New Zealand (Telstra Corporation Limited and controlled entities, 2017, 97-
105).
Report on Goodwill, Gain on Purchase and Impairment of Assets
As most of you are aware, goodwill for the company is being categorized separately from
the other assets of the company. This is because IAS recommends that since goodwill is both an
unidentifiable and indefinite asset, it should be categorized differently from the other intangible
assets. Information about goodwill and other intangible assets is found on page 94 of the 2017
annual report. For the year, goodwill worth $ 22 million was recognized after the acquisition of
the controlled entities in 2016. There was also an impairment of assets loss amounting to $ 64
million which was recognized against goodwill(Foye and Foye, 2018, np.). Remember that the

Presentation of Accounting Information by Telstra 6
value used in the calculations of the impairment and the goodwill is based on assumptions such
as discount rates, cash flow forecasts and terminal cash flow growth rates. Finer details about
the specifics of the goodwill and intangible assets are found on page 94-98 of the annual report
(Telstra Annual Report 2017, pp. 94-98).
Foreign Currency Transaction
Since Telstra has many subsidiary companies, it is greatly affected by foreign currency
transactions. At the end of the entities financial period, the foreign currency transactions are
usually translated into the parent company's functional currency which is done at the spot
exchange rate as at the date of the transaction. It would therefore important to bring to your
attention that the company’s financial and business performance is very sensitive to movements
in foreign exchange rates at countries in which Telstra has subsidiaries or joint control in. In the
2017 annual report, foreign currency transactions are disclosed on page 114. (Telstra Annual
Report 2017, pp. 114-115).
Foreign currency disclosure is important because, through it, the company is able to
reveal the foreign currency risks that the company faces from both operating and transactional
activities in foreign countries. For instance, the amounts receivable and payable have to be
translated from each of the functional currencies to the currency of the parent country. Any
losses and gains are included in the income statement. Through such disclosure, appropriate
measures to manage risks are instituted.
Other Notes to the Financial Statement Report
Lastly, we consider it important to update you on the introduction of new accounting standards
that are going to be applied for future financial reporting periods. The new accounting standards

Presentation of Accounting Information by Telstra 7
may not have been adopted in the financial year 2017 because they were still at the formulation
stage, this will, however, be applicable in future reporting periods. Some of the items that are
likely to be affected include the accounting treatment of impairment of assets, accounting
treatment for revenue earned from contracts with customers and accounting for leases. (Telstra
Annual Report 2017, pp. 141-143). This information is found on page 141- 143 of the annual
report.

Presentation of Accounting Information by Telstra 8
References
AUDIT & RISK COMMITTEE CHARTER. (2018). [ebook] Telstra, pp.2-5. Available at:
https://www.telstra.com.au/content/...us/.../telstra-audit-and-risk-committee-charter.pdf
[Accessed 12 May 2018].
Burger, P., Frecè, J., Scherrer, Y. and Daub, C. (2014). Strategies for Sustainability: Institutional
and Organisational Challenges. Sustainability, 6(11), pp.8342-8347.
Choudhury, B. and Petrin, M. (2018). Corporate Governance that Works for Everyonee:
Promoting Public Policies Through Corporate Governance Mechanisms. SSRN
Electronic Journal.
Foye, B. and Foye, B. (2018). Telstra writes off $273 million in goodwill from Ooyala, exits ad
tech business. [online] CRN Australia. Available at:
https://www.crn.com.au/news/telstra-writes-off-273-million-in-goodwill-from-ooyala-
exits-ad-tech-business-484279 [Accessed 12 May 2018].
Telstra Annual Report 2017. (2017). [ebook] p.20. Available at:
https://www.telstra.com.au/content/dam/tcom/about-us/investors/pdf-e/Annual-Report-
2017.PDF [Accessed 12 May 2018].
Telstra.com.au. (2018). Telstra - Corporate Governance - Investors. [online] Available at:
https://www.telstra.com.au/aboutus/investors/governance-at-telstra [Accessed 12 May
2018].

Presentation of Accounting Information by Telstra 9
Telstra Exchange. (2018). Sustainability Report 2017 | What's important | Telstra Exchange.
[online] Available at: https://exchange.telstra.com.au/sustainability-report-2017-whats-
important/ [Accessed 12 May 2018].
Telstra Corporation Limited and controlled entities. (2017). [ebook] Telstra, pp.97-105.
Available at: https://www.telstra.com.au/content/dam/tcom/.../170817-Group-Structure-
2017.pdf [Accessed 12 May 2018].