TACC608: Financial Risk Management Analysis of Telstra Corporation

This report provides an in-depth analysis of financial risk management practices within Telstra Corporation Limited. It begins with an executive summary that highlights the importance of financial risk management in organizations, focusing on market, credit, and liquidity risks. The report then delves into Telstra's operations, including asset capitalization and the treatment of assets such as goodwill and internally developed intangible assets. It identifies audit risks related to the company, emphasizing the role of internal audits and the methods used to mitigate risks. The report explores the methodologies that structure Telstra's overall risk management, including improvements to the risk management structure, enhanced duties, and regular reviews. Furthermore, the report examines key audit matters such as revenue recognition and its associated complexities, providing a comprehensive overview of Telstra's approach to financial risk management. The report also includes references to relevant academic literature and industry resources.

FINANCIAL RISK MANAGEMENT
Executive Summary
Financial risk management is viewed as a definitive routine with regards to monetary incentives
in an organization by utilizing instruments to oversee risks introduction, for example, market

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risk, credit risk, and liquidity risk (Black, Kirkwood, Williams, and Rai, 2013). Financial risk
management, for the most part, happens when a specific speculator or a store supervisor dissects
and endeavors to evaluate the likelihood of misfortunes in protections, and they attempt the
correct activity given their risk resilience and venture targets. This task talks about the part of
financial risk management in Telstra Corporation Limited and how the organization uses Hedge
bookkeeping rules in its activities.
Table of Contents
Telstra Corporation Limited Overview 3
CAPITALIZATION OF ASSETS 3
Treatment of Assets in Telstra 4
Audit Risk related to the organization 5
Internal Audit 5
Methods to Mitigate Risks 6
Methodologies that structure the general risks management 7
References 8

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Telstra Corporation Limited Overview
Telstra Corporation Limited is known to be the most significant media and media transmission
organization domiciled in Melbourne, Australia. The organization makes and works media
transmission frameworks and markets versatile, pay-TV, web access, voice, and different other
media transmission items. The organization was framed in 1901 because of Australian
Federation. Telstra Corporation Limited has a long history in Australia as it started its tasks as an
administration office.

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CAPITALIZATION OF ASSETS
When the company computes costs, they order them as either working costs or capital costs.
Telstra cost working costs to the announcement of budgetary execution as they are brought
about. They just underwrite costs where they think what they will create future monetary
advantages. Capital costs are recorded as assets and appeared in their announcement of financial
position dependent on the benefit class considered most suitable to those costs.
They underwrite direct costs related to the advancement of the system and business
programming for inward use, where they respect the accomplishment of a task to be plausible.
The executives apply judgment to survey this likelihood. Telstra underwrites costs, for example:
● Outer direct costs of materials and administrations devoured;
● Finance and direct finance-related expenses for workers;
● Contractual workers straightforwardly connected with a venture and obtaining prices
brought about while building up the product.
Purchasing costs are gained by all assets built. They don't explicitly get to support the
development of assets because of the consistent idea of our development procedure. Therefore
the designation of getting costs to these assets is general and doesn't reflect reserves explicitly
obtained for every benefit.
Treatment of Assets in Telstra
Goodwill: Telstra gauges the measure of goodwill on the date of buying the possession
enthusiasm for the element. While Telstra purchases a substance that will be constrained by the

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organization, the standard of the evaluated goodwill is reported under the head of the immaterial
resources in the financial record. Then again, when obtaining it, speculation happens if there is
an occurrence of the related substance or joint endeavor. Goodwill will be considered as a
significant aspect of the cost of venture Treatment of Internally created Intangible Assets in
Telstra
Software Assets: The immediate cost identified with the advancement of software for inside
utilize, for example, material cost, utilization of administration, finance, and so on, is recorded.
The getting costs are promoted, which is legitimately connected with the generation, securing
advancement (Singh, 2007). The software assets which are being used and which are being
created are assessed.
Deferred Expenditure: In Telstra, partial cost incorporate the cost caused because of the
fundamental access establishment just as association charges. The current and the new assistance
alongside the regular price to set up a client contract. The deferred consumption is amortized on
the standard time frame in which the focal points are anticipated to be figured out.
Audit Risk related to the organization
The executives are in charge of the planning, introduction, and trustworthiness of Telstra's fiscal
summaries. The executives are in the cost of keeping up suitable bookkeeping and budgetary
reporting standards and strategies, chance administration procedures, and internal controls and
techniques intended to guarantee consistency with bookkeeping measures and relevant laws and
regulations. The Audit and Risk Committee has essential oversight of the Board in its
presentation of the capacities. Notwithstanding the problem the executive's procedures sketched

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out somewhere else in the Charter. The Audit and Risk Committee likewise has more extensive
duties concerning danger the executives.
Internal Audit
Prompting the Board on the arrangement and, should it be fundamental, the end of the work of
the Director Group Internal Audit2.
Regulating the compensation surveys for the Director Group, Internal Audit considered or
affirmed by the Remuneration Committee and the aftereffects of the yearly execution audit of the
Director Group Internal Audit. Occasionally meeting with the Director Group Internal Audit to
talk about any issues that ought to be examined secretly and guaranteeing the Director Group
Internal Audit has full access to meet with the Chairman of the Audit and Risk Committee.
Methods to Mitigate Risks
As the more significant part of Telstra Corporation Limited, exercises are presented to different
financial risks. The organization officials try to mitigate these risks by utilizing various account
instruments, for example, protections. The organization employs the accompanying angles as
essential risks for moderating risks — fair worth financing cost risk management.
In request to deal with the loan cost risk, Telstra Corporation Limited chooses to keep up the
correct blend between the fixed and skimming interests' borrowings and furthermore utilizing the
interest rate swap contracts (Dong, Kouvelis, and Su, 2014). These sorts of exercises are
frequently assessed to ensure that supporting methods are lined up with interest rates sees.

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Management of credit risks: For the organization to limit this sort of risk, the organization just
manages the creditworthiness counterparties. The credit reliable and the credit rating is regularly
observed by the total expense of the finished up exchange, which is mostly isolated among
endorsed colleagues since there is no compelling credit risk presentation to a solitary accomplice
(Hull, 2012). Telstra Corporation Limited mitigates this sort of risk by guaranteeing that its
business activities are performed viably.
Methodologies that structure the general risks management
Improvement of risk management structure: This system is created and actualized in Telstra
Corporation Limited as it is conflicting with the bookkeeping norms utilized in Australia
(Brigham, and Ehrhardt, 2013). The Risk management system recognizes, screens, and evaluates
the risks. The perspective additionally creates and executes the procedure of risk management.
Enhanced duties: According to the part of risk management, obligations are arranged among the
Audit and Risk Management part, board, and organization management. Each gathering holds
onto its responsibilities as it will ensure that the organization mitigates its risks at all levels.
Survey: The risk management arrangements and structure are frequently observed are standard
bases to quantify its prosperity (Conway, 2012). Telstra Corporation Limited regularly screens
and assesses its risk management structures to check for adequacy and supplant any system and
strategy that is inadequate.
Reception: Telstra Corporation Limited receives the risk management strategy and structure to
guarantee that the organization preparations are improved.

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References
Conway, S. L. (2012). Guidelines for Corporate Governance Disclosure–are Australian listed
companies conforming?. Journal of the Asia-Pacific Centre for Environmental Accountability,
18(1), 5-24.
Black, S., Kirkwood, J., Williams, T., & Rai, A. (2013). A history of Australian corporate
bonds.Australian Economic History Review, 53(3), 292-317.
Brigham, E. F., & Ehrhardt, M. C. (2013). Financial management: Theory & practice. Cengage
Learning.
L., Kouvelis, P., & Su, P. (2014). Operational hedging strategies and competitive
exposure to exchange rates. International Journal of Production Economics, 153, 215-
229.
Chang, C. L., Gonzá lez-Serrano, L., & Jimenez-Martin, J. A. (2013). Currency hedging
strategies using dynamic multivariate GARCH. Mathematics and Computers in Simulation, 94,
164-182.
Christoffersen, P. F. (2012). Elements of financial risk management. Academic Press. Dong,
Hull, J. (2012). Risk Management and Financial Institutions,+ Web Site (Vol. 733). John Wiley
& Sons.
Kaplan, R. S., & Mikes, A. (2012). Managing risks: a new framework.

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Klettner, A., Clarke, T., & Boersma, M. (2014). The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible business
strategy. Journal of Business Ethics, 122(1), 145-165.
Mayorga, D. M., & Sidhu, B. K. (2012). Corporate disclosures of the major sources of estimation
uncertainties. Australian Accounting Review, 22(1), 25-39.