Considering the present status of corporate, for a company to sustain and grow in the market, adherence to the GPFR and its objectives, and compliance with the conceptual framework of accounting is important. This helps stakeholders in appropriate making and taking of decisions. It also enhances a company’s reputation. Adhering to the conceptual framework of accounting also helps in framing necessary measures like ease in understanding, timeliness, accuracy, etc. Organizations who do not adhere to the GPFR and its objectives may fail to sustain in today’s highly competitive and progressive market where the interpretation of financial information is important in order to make decisions effective (Davies & Crawford, 2012).
This report will provide assistance in evaluating the genuineness of Woodside Petroleum in adherence to the GPFR and its objectives, and compliance with the conceptual framework of accounting.
Woodside Petroleum has remained consistent in its approaches so that it can account for the objectives of GPFR. Woodside Petroleum has not only adhered to GPFR and its objectives but also ensured, that the stakeholders are provide updated, effective and useful financial information so that there can be significant decision-making. For this reason, the company has facilitated the availability of financial information to its users by enhancing its accessibility. The effectiveness of financial reporting and its relevant characteristics is easily understood by means of this. Various policies are made available to the stakeholders to comply with the objectives of GPFR (Petersen & Plenborg, 2012).
Woodside Petroleum also provides relevant and useful information that can harm its business. This information is mentioned in the report that is issued annually in its section that is made especially for risks. Not only this, Woodside Petroleum also shared requisite details about its strategies, which addresses its agendas (Leo, 2011). This proves that Woodside Petroleum has adhered to GPFR and its objectives.
Not all the required information for accounting purposes and decision-making is offered by GPFR. Still, the targeted audience can easily construe the information offered to them by evaluating these reports for taking decisions that are effective and worthy of bearing fruits in the years ahead (Woodside Petroleum, 2016). For example, the provision for social and other functions of the company assists users in evaluating if social and other issues have been sincerely sought for. The risks related details highlighted in the company’s risk section can be considered by the creditors, and lenders for their respective future decision making. The ability to source information by means of GPFR by the target audience is important (Needles & Powers, 2013).
Woodside Petroleum has disclosed information in context with few changes in financial claims and financial resources (excluding the information lend by investors, creditors, etc). This depicts the impending and former performance of the company in managing its inflows and outflows which the users can benefit from examining and evaluating.
Woodside Petroleum in its financial statements seems to have fulfilled the criteria of recognition of all the fundamentals. Woodside Petroleum effectively managed to satisfy all such vital elements in its statements such as bills payable and bills receivable, Currents assets, inventories, current liabilities, various provisions, gas and oil properties, payments from operating leases and all borrowings.
· Revenue
The revenues are recognized and evaluated at the values at which they were obtained by Woodside Petroleum. This makes easier for the financial benefits to flow in the company. The revenues are also recognized from the sales of hydrocarbons that were manufactured when possible risks and rewards of possession got transferred to the users (Choi & Meek, 2011). This yield recognition depends on engaging in the fields of generation. Pay/take contracts yield in proceeds when such commodity is taken back by consumers and is recognized as income unearned in other scenario.
· Borrowings
Such borrowings are carried at amortized expenses. The group also calculated borrowings at a value excluding transaction expenses. The variation or difference between the redemption value and received proceeds is also given recognition by use of effective interest method in the statement of income (Woodside Petroleum, 2016).
· Gas and oil properties
Gas and oil properties are recorded at a value derived after deducting impairment expenses and accumulated depreciation from the cost. These properties are the total of expenses made at the initial level of installation like construction, acquisition, completion, or installing infrastructure and production facilities like platforms and pipelines.
· Current assets and liabilities
Woodside Petroleum has calculated its current assets and liabilities at an anticipated amount that is to be paid or ascertained from taxation agencies. Also, deferred liabilities and assets are calculated on the basis of expected tax rates which needs to be raised when such liability needs to be settled off or assets needs to be realised (Woodside Petroleum, 2016).
· Operating lease payments
Woodside Petroleum has recognized payments as an expense related to operating leases in its income statement. The company has treated such payments for the complete duration of lease on a straight line method in its income statement. The concession derived from it is treated as a component of net lease expense in the profit and loss statement of the company. Looking at the recognition and treatment of major and important elements in the financial report of the company it can be said that this company has efficiently achieved the standards for financial reporting (Peirson et. al, 2015).
· Inventories
Woodside Petroleum has valued its inventories at a very lower cost which is also an amount totally realizable.
· Trade and receivables
Woodside Petroleum has recorded trade and other receivables respectively at its subsequent nominal numbers. Trade and receivables are then calculated at a value derived by deducting amortized expense minus allowance for uncollectible figures (Woodside Petroleum, 2016).
· Provisions
Woodside Petroleum has construed to all its provisions. Woodside Petroleum has recognized the provisions when it faced a legal or constructive obligation which was an outcome of past events. Thus, all the vital elements can be recognized in the financial statements of Woodside Petroleum clearly which sheds light on its accuracy in reporting (Woodside Petroleum, 2016).
Woodside Petroleum has not only exhibited fundamental qualitative characteristics effectively into its reporting framework but has also provided the company to stand tall in the competitive market. The stakeholders are provided desired assistance in their decision-making system with the governing of such compliance. The annual report of the company stands positive and states that the company has adhered to GPFR guidelines and has complied with its objectives (Woodside Petroleum, 2016).
If taken materiality into consideration, Woodside Petroleum follows a standard that lets it evaluate the importance of material details in regards to the ASX principles. The materiality criteria also seem to satisfy because the material risks that can impact its economical performance also seems to be mentioned in the risk segment (Laux, 2014). The financial statements of the company follows Section 295A of Corporations Act 2001 and the AAS respectively have been guaranteed by the directors as disclosed by Woodside Petroleum in its report (Woodside Petroleum, 2016). With such disclosures, Woodside Petroleum adherence to clarity in the presentation of its annual reporting can be seen.
Woodside Petroleum has taken the risk of reporting such details that can affect its financials, but to make its stakeholders construe upon the information and make necessary decisions, such information shall be disclosed (Merchant, 2012). Hence, it fulfils the exhibition of qualitative characteristics of financial reporting.
Woodside Petroleum has also disclosed required and reliable information with regards to its sustainability concerns that allows stakeholders in effective decision-making, thus meeting the criteria for an exhibition of relevant and qualitative corporate reporting (Woodside Petroleum, 2016).
Woodside Petroleum took all the necessary measures in order to provide reliable and effective information to its users from time to time. The company has also issued relevant and updated details on its website where the stakeholders of the company are offered all the necessary information from time to time. Therefore, fulfillment of timeliness qualitative characteristic of corporate reporting is seen and ensured (Svejenova et. al, 2010).
Furthermore, its performance graph can be utilized by users in analyzing and construing the fact if the company experienced growth in the past years or not over a period of time, thereby providing understandability to the users as well 9 Carmichael & Graham, 2012) For the users can make easy comparisons of the previous performance with respect to present performance and then take necessary decisions, the company also disclosed its performance summary for the previous year.
Hence, considering the reporting approach Woodside Petroleum has also adhered to enhancing the exhibition of its qualitative characteristics.
Recommendation & Conclusion
Woodside Petroleum has adhered to GPFR and its objectives and complied with the conceptual framework of accounting still it seems to have failed to disclose non-financial facts systematically. Non-financial measures are important and require disclosures in an effective manner. The financial statements and its usefulness make sense with presence of both financial and non-financial measures.
The worthiness of a Company is enhanced largely with the presence of non-financial measures. This helps target audience to depend on the details for effective decision-making. Therefore, to enhance the meaning and utility of corporate reporting it is always advisable and required that not just financial but non-financial measures should also be made available and disclosures must be present and disclosed
References
Carmichael, D.R. and Graham, L. (2012) Accountants Handbook. Financial Accounting and General Topics, John Wiley & Sons.
Choi, R.D. and Meek, G.K. (2011) International accounting. Pearson .
Davies, T. and Crawford, I. (2012) Financial accounting. Harlow, England: Pearson.
Laux, B. (2014) Discussion of The role of revenue recognition in performance reporting. Accounting and Business Research. [online]. 44(4), 380-382. Available from: https://doi.org/10.1080/00014788.2014.897867
Leo, K. J. (2011). Company Accounting. Boston:McGraw Hill
Merchant, K. A. (2012) Making Management Accounting Research More Useful. Pacific Accounting Review. [online]. 24(3), 1-34. Available from: https://pdfs.semanticscholar.org/6ccf/f78a452763f17ed5e4f4ddc6b96703801403.pdf Needles, B.E. & Powers, M. (2013) Principles of Financial Accounting. Financial Accounting Series: Cengage Learning.
Parrino, R, Kidwell, D. and Bates, T. (2012) Fundamentals of corporate finance. Hoboken, NJ: Wiley
Peirson, G, Brown, R., Easton, S, Howard, P. and Pinder, S. (2015) Business Finance, 12th ed. North Ryde: McGraw-Hill Australia.
Petersen, C. and Plenborg, T. (2012) Financial statement analysis. Harlow, England: Financial Times/Prentice Hall.
Svejenova, S., Planellas, M and Vives, L. (2010). An individual business model in the
making: Achef’s quest for creative freedom. Long range planning [online]. 43, 408-430. Available from: https://doi.org/10.1002/job.461 [18 April 2018]
Woodside Petroleum 2016, Woodside Petroleum Annual report & accounts 2016 [online]. Available from: https://www.woodside.com.au/Investors-Media/announcements/Documents/01.03.2017%20Annual%20Report%202016.pdf [Accessed 28 April 2018]
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