The chosen company of Boral Limited, as incorporated in 1960, is a global building and development materials organization. The Company offers development and building materials plasterboard in Australia. The Company group incorporate Construction Materials and Cement, which comprises of quarries, concrete, transport, landfill and cement placing; Building Products, which comprises of masonry and roofing, and timber items. Boral Australia is a provider of items and materials to the private and business development, and streets and designing markets. The Company offers a scope of administrations and credit application, which incorporate Material Technical Services, Pallet Pick-up and Roof Tiling Installers. The worth of sales is $4.39 billion in the year 2017, there exists about 16,000 employees in Boral working across 700 operating sites approximately that offers stable cash flows and comparatively low risks and it facilitates payment to the investors along with the potential long-term growth Mitchell, Van Buren, Greenwood and Freeman 2015). It seeks to establish the diversified portfolio with regard to regulated utility infrastructure assets and continuing to be in the lead position under the Australian infrastructure investment fund. Further, the values upon which the company is maintaining its growth are fairness, honesty, maximising the value of the security holder and maintenance of the high standards for corporate governance.
Part A
1.
a.The concept of Relevance is refers to the mechanism of the data created by a framework of accounting should impact the primary individual leadership who is in charge of data examination. The concept may involve the data substance or potentially its convenience, both of which can influence primary decision making (Vafeas and Vlittis 2015). In the chosen company of Boral limited the Importance is the idea that the data created by framework of accounting should impact the basic leadership of the person in charge of examination of the data. The concept can involve the substance of the data or potentially its convenience, both of which can impact the simple leadership. According to the Australian Accounting Standard boards, according to which the financial statement of Boral limited has been structured and made mentions that the information must be relevant to the user’s need, which is the case when the information affects the user’s economic decisions (Moutinho, and Vargas-Sanchez 2018).
This may include the reporting of the specific information which are relevant, or information whose misstatement or omission could impact the economics of user’s decisions. In the company the accounting policies are applied and selected in a manner that makes sure that the result of the financial information will satisfy the concept of relevance. Therefore, it ensures that substance of the following transactions and the events that are reported are on the basis of this conceptual framework. From the analysis of the annual report of 2017 and 2016 of Boral limited the example of the characteristics of relevance can be identified from the applicability of the financial results in their management process (Stein, Salterio and Shearer 2017).
For instance the quality financial information has been used in the predictions, forecasts, made by the investors and analysts to chart performance trends and make predictions about future profitability and performance. However, outdated financial information is not considered creditors or investors as any good when they are trying to make future and current verdicts in the Boral Company
On the other hand when it comes to comparability as per GAAP, it refers to the information of accounting’s quality that addresses the utility of finance based information. The Information which are prepared with the help of the similar techniques of measurement and reported in a similar fashion is considered comparable information because this information is similar and can be judged side by side other similar financial information. In the organisation of Boral limited without the comparability concept, financial ratios would not exist (Titman, Keown and 2017). The company could not compare financial information and conduct the ratio analysis as the financial information would not be compatible. The example of comparability that has been applied in the company of Boral can be found in the ratio analysis that the annual report comparisons of which took place both year wise and company wise. This helped in determining the financial position of Boral.
b.In the analysis of the annual report of the company of Boral limited it has been found out that the organisation environmental practices of reporting uses both the stakeholder theories and accountability. The analysis that relates to corporate environmental reporting suggests that information that are financial-related is relevant and essential to financial stakeholders (Warren and Jones 2018). In comparison, environmental information, the Boral group prompts the need to adapt the various corporate strategies that includes those for the purposes of company damage control, survival, public policy and effects competitive advantage. The practice voluntary disclosure is a socially responsible activity and is often used as a corporate strategy in managing stakeholders and portraying the image of good corporate citizenship, Boral considers deem fulfilling stakeholders’ information needs as essential (Schaeck and Cihák 2014). The investors and other stakeholders can analyse the ethical, social and environmental disclosures of the organisation. The AASB suggest that a Boral should differentiate the disclosures as per the type of investor-audience, and more financially-oriented information must be disclosed.
2.
The chosen company of Boral Limited has a-adapted the recommended framework of disclosures that has been set out by the International financial Stability Boards task force on climate related financial disclosures(TCFD). Therefore there is no lack in the discloser in the annual report of the company (Renz and Herman 2016). It can be said that the disclosures are adequate and changes are not required.
3.
This discussion identifies the recommendation to make the financial statements more effective in the company of Boral Limited in the process of communication of the financial information under the present IFRS. There is a highlight is on financial disclosures, rather than the broader context of financial reporting (Lau 2016). The technology enables for integrated solutions that provide the methodology for improvement of the communication of financial information effectiveness that are not available in the formats which are conventional. However, the setters of the standard and regulators continue to focus their regulatory efforts on reporting of the financial statements in the traditional printed format. The recommendations to the Top level management of Boral may include:
i.In the annual report of 2016 and 2017 of Boral limited the objectives of the entries of pre-acquisition in preparing the consolidated financial statements is to prevent the double assets counting of the entity and prevent double counting of the equity (Finkler et al. 2016). It also helps in recognising the gain or goodwill on bargain purchase on consolidation by recognising the liabilities and assets that are acquired within the organisation.
ii.On the day of the acquisition two kinds of dividends can be identified which are cum dividend and ex- dividend in case of cum dividend, which means “with dividend,” when a buyer of a security is entitled to receive a dividend that has been declared but not paid. A stock trade’s cum-dividend up until the ex-dividend date, after which the stock trades without its dividend rights (Jorissen, Lybaert, Orens, and Van der Tas 2014). The Boral considers the two dividends in preparing the pre-acquisition entries.
iii.It is necessary to differentiate pre-acquisition dividends from post-acquisition dividends when there is declaration of the dividend is from pre-acquisition profits, and later on received by purchaser of investment, then such amount of dividend is deducted from the investment of cost (Crane and Matten 2016). It helps in recognising the goodwill or gain on bargain purchase on consolidation by recognising the assets and liabilities that are acquired within the business. The dividend is termed as pre-acquisition dividend if it is received out of pre-acquisition profits. Similarly the dividend of post-acquisition if received should be credited to Profit & Loss Account. Dividend received out of post-acquisition profits is referred as post-acquisition dividend. The pre-acquisition dividend is recovery of cost whereas post-acquisition dividend is treated as income. It helps in preventing the entity assets double counting and prevent double equity counting.
iv.The pre-acquisition entry helps in eliminating the carrying amount that is associated in the parent company’s investment in the subsidiary and the portion of pre-acquisition equity. As per the AASB goodwill is acquired by the parent company is recognised on consolidation (Zietlow et al. 2018). The goodwill that is attributable to the minority interest is not recognised on consolidation. Therefore there is no effect on the pre-acquisition entry.
v.As per the AASB 3, passage 18, it requires the assets that are identifiable and the liabilities of the subsidiary are appeared at the fair value. The setters of standards trust that the fair value of the liabilities and the assets gives the most important data to the users. Despite the fact that the standard alludes to an allocation of the business cost combination the standard does not require the identifiable assets and liabilities gained to be recorded at cost. The main asset obtained that is not estimated at fair value is goodwill. The approach of fair value is emphasised by the required accounting for any bargain purchase on combination (Bhasin 2015). It is not represented as a lessening in the fair value of the identifiable liabilities and assets gained such that these items are recorded at cost. Instead, the fair values are unchanged and the excess is identified as a gain.
Conclusion
In order to analyze the annual report the chosen company listed on the Australian Stock exchange (ASX) is Boral which is the largest supplying manufacturing and building construction materials in Sydney, Australia. It deals with the operations that are extensive in the United States operations and Asia as well. It seeks to establish the diversified portfolio with regard to regulated utility infrastructure assets and continuing to be in the lead position under the Australian infrastructure investment fund. Further, the values upon which the company is maintaining its growth are fairness, honesty, maximising the value of the security holder and maintenance of the high standards for corporate governance.
References
Bhasin, M.L., 2015. Corporate accounting fraud: A case study of Satyam Computers Limited
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
Finkler, S.A., Smith, D.L., Calabrese, T.D. and Purtell, R.M., 2016. Financial management for public, health, and not-for-profit organizations. CQ Press.
Jorissen, A., Lybaert, N., Orens, R. and Van der Tas, L., 2014. Corporate participation in the due process of international accounting standard setting: An analysis of antecedents.
Lau, C., 2016. Financial Management.
Mitchell, R.K., Van Buren, H.J., Greenwood, M. and Freeman, R.E., 2015. Stakeholder inclusion and accounting for stakeholders. Journal of Management Studies, 52(7), pp.851-877.
Moutinho, L. and Vargas-Sanchez, A. eds., 2018. Strategic Management in Tourism, CABI Tourism Texts. Cabi.
Renz, D.O. and Herman, R.D. eds., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John Wiley & Sons.
Schaeck, K. and Cihák, M., 2014. Competition, efficiency, and stability in banking. Financial Management, 43(1), pp.215-241.
Stein, M.J., Salterio, S.E. and Shearer, T., 2017. “Transparency” in Accounting and Corporate Governance: Making Sense of Multiple Meanings. Accounting and the Public Interest, 17(1), pp.31-59.
Titman, S., Keown, A.J. and Martin, J.D., 2017. Financial management: Principles and applications. Pearson.
Vafeas, N. and Vlittis, A., 2015. Board influence on the selection of external accounting executives. The British Accounting Review, 47(1), pp.46-65.
Warren, C.S. and Jones, J., 2018. Corporate financial accounting. Cengage Learning.
Zietlow, J., Hankin, J.A., Seidner, A. and O’Brien, T., 2018. Financial management for nonprofit organizations: Policies and practices. John Wiley & Sons.
Zietlow, J., Hankin, J.A., Seidner, A. and O’Brien, T., 2018. Financial management for nonprofit organizations: Policies and practices. John Wiley & Sons.
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