Accounting Theories For Telecommunication Companies

Conceptual Framework

Discuss about the Accounting Theories for Telecommunication Companies.

The leading company in the market of service industry and the telecommunication is the Telstra. The contribution of the company in the retail fixed broadband services is 3.6 million and the mobile services provided by the company is 17.2 million. The company believes that it would gain opportunities by connecting the people. Telstra being one of the largest mobile network in Australia, the company seeks to build technologies in a way that would be easily accessible. The company helps in improving the lives and the business work of the people it serves and has its network established in more than 22 countries. The company has worked hard in being where it is today by providing its consumers with the best products and services available in the market. The company has an eye to the future with ideas that will only develop them into a far better company. Telstra’s success story this year is based on three pillars involving improvement in customer advocacy, building new growth business and sustaining the core values of the organization.

One of the objectives of Telstra regarding the financial reporting is to assist its stakeholders in making decisions by offering valuable information. This would in turn help the company in identifying the useful economic resources         and destination the cash flow and making any changes if necessary. The financial statements of the company consist of statement of cash flow, balance sheet and income statement. All  the financial reporting are provided to the stakeholders of the company regarding the financial status of the company such as its assets, income, revenue, equities.

The principles of accounting and its assumptions are used to measure and recognize the financial concepts. Some of the characteristics, which need to be ensured, are the ability to understand, reliability, and to seek whether the reports are consistent and easy to compare.

The diversification of Telstra ranges from the clod consulting of network to its mobility. The company’s department is well branded as depicted by the Telstra organizational chart. The branding is in terms of the employees of the departments and the reporting the members appropriately.

The practice of the corporate governance make the organization to run in a controlled way and the incorporated in to the corporate governance is the guidelines, rules and regulations of the company. The policy of the Telstra concerning the corporate governance is to grow continuously and to increase the value of the shareholders. The decisions of the Board regarding the company are made in the framework of the proper guidelines. The guidelines ensures that the company is working by keeping itself align with the practices of the corporate governance and is in the shareholders interest and the interest of the community and the employees are largely met (Adams and Borsellino 2015).        

Corporate Governance

The Board of Directors implements the framing of strategies and the major decisions and they are appointed on several criteria such as the expertise level in handling the complex situations and the skills they possess and changing the fortune of the company by taking effective decisions. The working procedures of the directors are looked after and taken care of by various committees. The directors are responsible to carry out their duties in the interest of the shareholders and to make the judgments independently.  Whether there exists any relationship that is of fiscal nature or not is the director’s responsibility to declare the same in an open way. The rules of the corporate governance as laid down under the ASX provides the framework within which the directors should performs their duties. The policies concerning the risk management need to be upgraded timely in the presence of the upcoming and new challenges. Therefore, such conclusion can be made that the organization has an able of corporate governance at high level.

The regulations and rules in the book of the company is considered by the Telstra in the area in which it is conducting its business and it is one of its requirement. The guidelines concerning the policies of the company entrusts that the business activities are carried out in such a way that it is not against any laws. In order to ensure the proper channelization of the donations made in the politics, the company had anti bribery law and the taking of the bribe is strictly prohibited. If the members of the company had been involved in such acts, then it needs to be disclosed to the management of the company. the company makes to ensure that the base of the customers is made strong and is aligned with the quality control output and this is done by the focusing on the standards of the Quality control and this is evident to the fact that the company. (Loe, Ferrell and Mansfield 2013).

In the financial year 2016, Telstra provides ethical behavior training to 1700 employees spanning over 12 countries. A climate change risk assessment was carried out to recognize the risks caused and the ways to tackle this adverse situations within the business.

For the financial year 2017 the company has plans for rolling out risk training and awareness sessions across all departments and continue its good work with the ethical behavior risk assessment program.

Ethics

Telstra is a strong believer of human rights. Over the years it gone about its business in the most ethical and environmentally sound way. The Human rights policy of the company guidelines its work process and level of commitment to everyone who is associated with the firm in own way or the other. Telstra is a proud signatory of the United Nations Global Compact, a charitable programme to support ten globally established principles covering labor, environment and anti-corruption practices. The company lessens the overextension and this is depicted structure of the whole environment. It provides support to everyone to access the web in a safe and responsible way. The company has also taken the initiative of making people digital literate which will ensure everyone ripping the benefits of being on the net (Vadastreanu, Maier and Maier 2015).

Doing the business with appropriate freedom is one of the primary objectives of the Telstra. The company does not make sure of the aggressive policies and intends to maximize the profits in a cool manner.  The main business of the company is to serve the people and its stakeholders with the platform of technology enhancement.

Telstra has a Supplier Code of Conduct where it emphasis on the points related to labor, human rights, safety and environment and supply chain assortment. Telstra believes in excellence which is not stagnant and which improves on a regular basis. The supply code of conduct code assists that all the social and environmental factors are measured when selecting suppliers. They are in the process of continuously supporting their suppliers to diminish environmental impacts in their operations as well as in the products they deliver to the company. Te company’s whistle blowing process is a platform where if something is found to be illegal or unethical can be reported by one and all (Lee and Fargher 2013). An independent service provider (STOP line) supports it and the admissions are taken in confidence.

The main function of Telstra in the Australian market is to deliver the services and goods in a variety range of products. The company makes sure that the standard level is maintained and this has assurance as the company has good relation with the suppliers. Over the years, the business of Telstra is doing the business ethically. According to Audi (2012), One of the most impressive fact about the company is the stakes and prices which is associated with the products offered by the company. The company ensures the safety of the society and the company has put in the efforts. Another feature, which differentiate the company form others, is that the area of consumer deliverables are set at high standards. Telstra has always been committed to those who are a part of its everyday process.

Deontology

 They have put their focus on three main areas:

Employment involvement: The people of Telstra have always been part of the community service and stand for the issues that matters in daily life.

Environmental leadership: In Telstra effort has been made to diminish the environmental impact along with that of the consumers too. The company believes in communication technology providing a better innovative way to generate environmental solutions.

Everyone Connected: At Telstra the effort is been put in to make products for everybody so that everybody is connected irrespective of their age, ability, income and location. They want everybody to be a part of the digital family (Skelton 2015).

Every year Australians are affected a lot through bushfires, floods and cyclones destroying everything that stands in the way and creating havoc in the lives of the people (Van Hooft 2014. ). Being the largest telecommunication provider they have their task cut out. In 2014, the company has explored in to the advancement of technology and this is provided in terms of emergency services by the LTE advanced networks, and trials of LANES on a large scale, a technology that will assist emergency service producers with trustable wireless communication in emergency situation.

The Telstra works with the policy of serving its customers without any issues by providing the clear and good business. It has delivered its services worldwide apart from serving the customers in Australia. The company has been conducting in a good manner with the people its serve and this is depicted by the customer value it generates by doing the business over the years ((Livingstone 2014). The company has taken major initiatives  to gain the trst of the customers by providing the continued service over the years. (O’Connor 2014).

They have been striving hard in making customer experience more fruitful than ever before and for that, they do not rely on customer interaction but other processes too. Telstra hold business meetings every month involving all the employees just to discuss on the ways of improving customer service. They have set up a Check-in service where they interact with customers on making things better.

To be a leader the initiative needs to be taken as quickly as possible before others get on with it. They have been setting high standards in delivering better products that helps them stay ahead of its competitors.

All the work procedure of Telstra that leads to customer service is examined, experienced and enhanced. It’s a process that goes on for 24*7, finding new ways to make customer experience more enjoyable and hassle free.

Libertarianism

Over the years, the company has been contributing to the campaign by providing the donations and raising the funds for supporting the people. The company such as supporting society and children and thus serving the community has done several activities. The company has been able to raise ample amounts of funds with the help of suppliers, members and the customers. The Australian telecommunication industry involving Telstra, Vodafone and Optus have joined hands in starting a new fundraising channel pilot program named Premium SMS (PSMS) where 15 charities launching ‘text to donate’ campaigns over a period of twelve months (Oboler, Welsh and Cruz 2012). Each of the 15 charities will have their own unique code and each PSMS sent under this pilot program will cost $5 (GST) free. The donor needs to avail the PSMS service and the donation amount of $5 will be charged to the bill with no extra add up costs.

The fee points of individual directors and the making the proposal to the Board and this is done by the remuneration committee shapes the fees structure. The following advice is made to the shareholders by the board regarding the structure of fees.

Comparison of fees pool is made and it is done compared to other entities.

In order to draw and keep hold of directors, the required amount of fees which is of suitable ability

The existing remuneration policies of the company is accounted for

The comparison is made to the other organization regarding the individual directors fees

The nature and extent of responsibilities taken by the non executive directors in the committee membership and the Board forms the basis of their remuneration package. The 20% shares of the fees of the non-executive director5s would go into the shares of the company. such a policy is inculcated in the company to perform their business activities in the shareholders interest.

The board of the company is liable for fixing the non executive directors fees and this is depicted as the total remuneration package(Guiso, Sapienza  and Zingales 2015).  The role of the non-executive directors in the committee membership and the board forms the basis of the total remuneration package.

Over the last few years, the report remuneration framework of Telstra has remained constant. The company received various opinion form the market regarding having the clear view of the plan relating to the long term incentive and cash return investment made by the company. These opinions were provided at the annual general meeting of the company.

Virtue Ethics

The company offers the financial rewards based on the performance of the company. the company has been able to take good care of the shareholders but the few things have been depicted in the financial report of the company that company needs to improve the skills and knowledge of the customers (Heenetigala and Lokuwaduge 2013).

Incentive design and Performance Assessment:

The focus of the remuneration committee is to employ the healthy methods that would support the performance of the senior executives. Few incentive plan have been placed at the very beginning of the financial year in terms of short and long term incentives. The strategy implemented to increase the value of the share of the company is the use of the particular measures such as the performance measures. In order to settle the figures of the restricted shares under the long-term incentive plan and performance rights, a volume of the weighted average share price is utilized by the company (www.telstra.com.au 2016). In the case of performance targets, the company awards the fifty percent of the potential and this comprise of 200% of compensation that is fixed. In the event of over achievement, the company makes the maximum level payment and in the case of threshold performance, the company rewards no incentives. The board assess the financial performance of the company by rewiring the results of the non financial process and the financial results which is audited (Telstra 2016). After measuring the performance, the board assesses the percentage outcome of the incentives plan. The policy of the company that helps in generating the value to the shareholders by incorporating executive remuneration into the line are “executives share ownership policy”. The executives would be able to hold share to 100% extent of the fixed amount of remuneration, this is provided by the policy, and such shares would be allotted within the time span of five years after the appointment of senior executives.

Performance Measures	FY 16  $m	FY 15  $m	FY 14  $m
Earnings
Total Income	27050	26112	226296
EBITDA	10845	10533	11135
Net Profit	5780	4231	4275
Shareholder value
Share price	5.56	6.14	5.21
Total dividends paid per share (cents)	31.0	30.0	28.5

                                      Source:   (www.telstra.com.au 2016)

Note: the results from the operation in the financial year 2013 is included in the EBITDA

The net realizable value and the lower cost vale are used to measure the inventories in the company. The company using the basis of the weighted average costs allocates the cost concerning the inventories. The goods that are anticipated to be sold is at the net realizable value. The valuation is done at the selling price that is estimated by deducting the completion costs and the cost, which is estimated in the selling, distribution and marketing of the products.

Conclusion:

The factors, which can be attributed to the Telstra in becoming the market leader, is the company’s ethics and corporate governance policies. The community and the society that the company serves helped in maintain the position of the company at the top level. The consistency and the class of operations contributed to the Telstra’s reputation. Telstra, recently has indulged itself into fifteen acquisitions and ventures in remote diagnostics, secure health recordkeeping and telemetric. The company has made some strategic investments in the last few years to strengthen its bas e in the e-health services market.

References:

Adams, M. and Borsellino, G., 2015. Is there a positive link between corporate governance and board diversity? Lessons from Asia. Journal of Business Systems, Governance & Ethics, 10(1).

Audi, R., 2012. Virtue ethics as a resource in business. Business Ethics Quarterly, 22(02), pp.273Audi, R., 2012. Virtue ethics as a resource in business. Business Ethics Quarterly, 22(02), pp.273

Guiso, L., Sapienza, P. and Zingales, L., 2015. The value of corporate culture.Journal of Financial Economics, 117(1), pp.60-76. Guiso, L., Sapienza, P. and Zingales, L., 2015. The value of corporate culture.Journal of Financial Economics, 117(1), pp.60-76.

Heenetigala, K. and Lokuwaduge, C.S.D.S., 2013. Directors Duties and Responsibilities towards other Stakeholders: A Discussion of Case Studies on Corporate Disasters. Journal of Business Systems, Governance and Ethics, 8(1), p.51.

Klettner, A., Clarke, T. and 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), pp.145-165.

Lee, G. and Fargher, N.L., 2013. Whistle-blowing on financial misconduct: When do companies retaliate against whistle-blowers?. Available at SSRN 2266204.

Livingstone, C., 2014. Enabling business leaders to drive change for a flourishing Australian future.

Loe, T.W., Ferrell, L. and Mansfield, P., 2013. A review of empirical studies assessing ethical decision making in business. In Citation Classics from the Journal of Business Ethics (pp. 279-301). Springer Netherlands.

Oboler, A., Welsh, K. and Cruz, L., 2012. The danger of big data: Social media as computational social science. First Monday, 17(7).v

O’Connor, S., 2014. Responsible investment-What, how and why?. Equity,28(9), p.4.

Skelton, P., 2015. Telstra tackles digital home health. Connected Home Australia, (Dec 2015)

Telstra. (2016). Telstra. [online] Available at: https://www.telstra.com.au/aboutus/our-company [Accessed 2 Sep. 2016].

Telstra. (2016). Telstra. [online] Available at: https://www.telstra.com.au/aboutus/investors/financial-information/financial-resultshttps://www.telstra.com.au/aboutus/investors/financial-information/financial-results [Accessed 2 Sep. 2016]

Telstra. (2016). Telstra. [online] Available at: https://www.telstra.com.au/content/dam/tcom/about-us/investors/pdf-e/2016-Annual-Report.pdfv [Accessed 2 Sep. 2016].

Vadastreanu, A.M., Maier, D. and Maier, A., 2015. Is the Success Possible in Compliance with Ethics and Deontology in Business?. Procedia Economics and Finance, 26, pp.1068-1073.

Van Hooft, S., 2014. Understanding virtue ethics. Routledge.