Financial Accounting Report: Analysis of Telstra's Annual Report 2016

This report provides an analysis of Telstra's 2016 annual report, examining its financial statements, accounting practices, and overall financial performance. The report begins with an executive summary and an introduction to Telstra as a leading telecommunications company. The analysis delves into ...Read More

Management
accounting

1
By student name
Professor
Date: 08 September, 2017.
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Executive Summary
In this project, we will be discussing the concerns in modern contemporary accounting,
and whether or not the standards that are set by the general purpose accounting standards are
followed by the organisation. The Annual report of one of the biggest listed company of
Australia is downloaded and analysed.
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Contents
Introduction………………………………………………………………………………………………….….4
Concept and Analysis……………………...................................................................... 4
Conclusions and recommendations......................................................................9
References............................................................................................................ 10
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Introduction
Telstra is an international company that provides digital telecommunication services to the
people. It compromises of mobile, internet and other cloud computing services. The company ahs the
highest market share with the level of growth improving every quarter. It is one of the leading
companies in the telecommunication sector. The company is now fully privatized and has operations in
all the parts of the world. It is having a global approach which it wants to manifest through its quest of
expansion. The company has it’s headquarter in Australia. The annual reports of the company have been
extracted and analyzed and all the important point related to the same has been put in details (Abbott &
Kantor, 2017).
Analysis
The 2016 annual report of the company have been prepared by the management of the
company and all the accounts are properly audited for the use of the stakeholders. The books of
accounts have been prepared on the basis of the AASB and the same is based on the concept of IFRS.
The books are audited to show that the accounts are relevant and are showing a true and fair view of
the business. The auditor has stated its views in the audit report that is duly signed by the same. The
annual report of the company consists of 91 pages. In the director declaration the director have stated
that the company has prepared its statements as per the applicable reporting framework and
appropriate disclosures regarding the overall policies of the company has been given. The books are
prepared with the objective of showing true and fair view of the overall financial statements. The
company has followed the basic of historical costing for all its relevant items, except the assets and
liabilities that are valued on the basis of fair value costing method. These are the accounting
assumptions and estimates that are undertaken by the company and the details of the same have been
provided in the financial statements of the company. The auditor has given an opinion that the books of
the company are prepared with all the relevant details and all the relevant disclosures have been given
in the notes of account of the company. The financial statements have been prepared on the basis of
consolidation where all the important details related to the subsidiaries and the holding company is
taken into consideration for the preparation of the accounts. Extracts from the auditor’s report and the
director declaration is given below (Birt, Muthusamy, & Bir, 2017).
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Details from the financial statements of the company has been undertaken to do the necessary
ratio analysis and comment on the liquidity of the company. Extracts from the same has been given
below, along with the necessary explanations (Malone, Tarca, & Wee, 2016)
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In case of Telstra we see that return on assets, return on equity all have reduced that shows that
the company is not performing well. The gross profit ratio, the current ratio and the liquidity ratios are
much better than TGP that shows that the company having strong internal control measures. Also the
company is taking advantage of its trading on equity and hence it is also the master leader in the
Australian economy. The ratios show that the company is making good use of its equity position making
the most of its share in the market. Even if the return on shares is not that good, the company is
performing very well given to its strong liquidity position that is reflected in its current and liquidity
ratios (Maynard, 2017).
From the disclosure perspective, again Telstra is on positive side as it has almost mentioned the
entire possible break up and their method of valuation. From the profitability perspective, inventory can
have major impact on the assets side when technological essence is taken into consideration and
estimation of inventory value is done. Profits can be declined in case inventory is impaired materially
due to huge technological changes and innovations, due to which the taxes will also have a downward
increase resulting in less cash flow for the organization (Minnis & Sutherland, 2017).
In case of valuation of the intangibles it can be seen that the company does not have that clear
policies that may support overall transparency of the system. In case of Telstra most of the policies are
dependent on the decision of the management and the management governs the same. It is thus
important that the company must clearly state all its policies and should be free from the overall
judgement of the people and the outsiders. It is important that consistency should be maintained so
that the accounts are free from any kind of errors and glitches. Any changes in the overall accounting
methods like in this company the method of valuation of the fixed assets is continuously changing so
companies should try to maintain proper uniformity. All the necessary assumptions must be stated,
expert opinion must be taken before undertaking any new policy by the management. Overall the
annual reports of the company have been able to showcase and provide a snapshot of the policies that
governs the company (Venezia, 2017).
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Conclusion
Telstra is a big player in the industry and have been in the business for long. It should focus on
the fact that it makes strong use of its market share position and tries to get the best returns for its
shareholders who are dependent on the company. These are the few ways by which the company can
improve its overall financial position and make the best of the resources that it has. Overall the annual
reports are accurate and up to the mark (Werner, 2017).
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Refrences
Abbott, M., & Kantor, A. (2017). Fair Value Measurement and Mandated Accounting Changes: The Case
of the Victorian Rail Track Corporation. Australian accounting Review .
Birt, J., Muthusamy, K., & Bir, P. (2017). "XBRL and the qualitative characteristics of useful financial
information". Accounting Research Journal , 30 (1), 107-126.
Malone, L., Tarca, A., & Wee, M. (2016). IFRS non-GAAP earnings disclosures and fair value
measurement. Accounting and Finance/ , 56 (1), 59-97.
Maynard, J. (2017). Financial accounting reporting and analysis (second ed.). United Kingdom: Oxford
University Press.
Minnis, M., & Sutherland, A. (2017). Financial Statements as Monitoring Mechanism: Evidence from
small Commercial loans. Journal Of Accounting Research , 55 (1), 197-233.
Venezia, I. (2017). Behavioral Finance: 'Where Do Investors'' Biases Come From?'. Singapore: WORLD
SCIENTIFIC.
Werner, M. (2017). Financial process mining - Accounting data structure dependent control flow
inference. International Journal of Accounting Information Systems , 25, 57-80.
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