Question:
Discuss about the Accounting Standards of Charter Hall Group.
Charter Hall Group has been established in 1991 to and considered as Australia’s one of the leading property groups with a total portfolio amounting to $20.4 billion. The total owned and managed commercial has been further discerned as 329 in Australia itself. This has included office buildings, supermarket, anchored retail centres and dynamic growth in the industrial assets as per institutional retail and whole sale investors. The group was listed under “Australian Securities Exchange (ASX)” in the year 2005, under the ASX code and stapled along with “Charter Hall Limited (CHL)”.
The main aspects of the study have considered the adherence of conceptual framework for reporting. The report will be further able to evaluate adherence of the company for recognition of “assets, liabilities, equities, expenses and revenues”. The second part of the study has been further seen to consider compliance of the company for “assets, liabilities, equities, expenses and revenues”. The third part of the study will be considered with the quality of characteristics as per the annual report and the same will be evaluated for the reliability and faithfulness in description of the financial events. The final part of the discourse will be able to evaluate the quality characteristics in terms of depicting the comparability and timeliness of information presented in the financial report (Rahman 2013).
The important conceptual framework operating in Australia has been seen with “Australian Accounting Standards Board (AASB)”, which is conducive in developing financial report in both public and private companies. The primary contributing role of the AASB has been considered with “Australian securities and investment commission at 2001”. The data given in December 2013 has been aimed at making significant improvement in “measurement, presentation, reporting entity and de-recognition”. The main form of the amendments has been further able to bring the changes which have been able to drive management stewardship associated to entities (Camfferman and Zeff 2015).
The information as per “Charter Hall Group Limited” annual report, it has been discerned that the financial statement has been prepared as per “Australian Accounting Standards (AASBs)” which has been created with “Australian Accounting Standards Board and the Corporations Act 2001”. The consolidation of the financial statement has been further done with “International Financial Reporting Standards (IFRS)” and the interpretations of the same are adopted with “International Accounting Standards Board”. The implementation of new measures has been seen to be implemented in 17 August 2017 (Howieson et al. 2014).
The new standards which are yet to be adopted and implemented has been further seen to be taken into consideration based on “AASB 9 Financial Instruments”. Some of the other standards which are yet to be adopted has been discerned with detailed assessment of the impact of “AASB 9 and its interaction with AASB 15 Revenue from Contracts with Customers” (Navarro?García and Madrid?Guijarro 2014).
Based on the depiction of financial statements of foreign operations the assets and liabilities have been seen to be translated into company’s functional currency at foreign exchange ratings and the same has been considered for the ruling date as per the date of the transaction. The preparation of the financial statements has been further able to consider the conformity of the IFRS requirements which has been able to make the necessary judgements for the estimates and assumptions with the accounting policies amounting to assets, liabilities, income and expenses. It has been also seen that the underlying assumptions are reviewed with the ingoing progress and the revisions made in the accounting estimates which is recognised with revisions made in the future years. The critical judgements to apply the necessary accounting policies has been seen to be having significant effect on Employee benefit liabilities, Share based payments, Intangible assets, Business combinations, contingent liabilities and financial risk management (Crawford et al. 2014).
Revenues, expenses and the assets are seen with the recognition of the net amount of GST. The intangible assets are tested for impairment on an annual basis. The monetary issues in the assets and liabilities has been denominated as per the foreign currency on the date of reporting and the same is translated with the functional currency at a foreign exchange rate ruling at that date. On the other hand, the different types of the Non-monetary assets and liabilities are seen to be denominated as per the foreign currencies which are stated at fair value (Brown Preiato and Tarca 2014).
As per financial notes 5.6 Provisions, the provision in the balance sheet is seen with reliable estimate which can be made with total amount of the obligations. The board of Charter Hall Group has been discerned with the main approach to enhancing characteristics of financial reporting with the Board and executive remuneration is seen to be in balance with fair and equitable rewards which motivates experienced and successful executive team to deliver ongoing business growth which meets the expectation of the shareholders in the long-term. As per the statement of comprehensive income the company considers the Effective portion of changes in fair value of cash flow hedges, net of tax. The fair value method of measurement of the derivate instruments and the same is seen to be available for the selling of the investments. The various types of the Non-monetary assets and liabilities have been stated as per fair value translation to the functional currency as per foreign exchange rulings and determination of the fair value. It has been also discerned that in the assessment of the net changes in the fair value available for the purpose of selling in the net profit is considered as enhancing characteristics of the financial report. It has been also seen that in the statement of changes of equity also the qualitative characteristics is maintained with changes in the fair value of the cash flow hedges and net tax.
Charter Hall Group has used enhancing qualitative characteristics in terms of executive KMP STI against the sales revenue and EBIT. This is depicted with a bar graph and histogram in the annual report. It has further used stacked horizontal bar graphs for the comparison of fixed, short term incentives, deferred short term incentives and long-term incentives. The income statement of the company has been able to present the data with previous year. The timeliness aspect in the report has been evident with considered with preparation of the report in accordance with “Australian Accounting Standards (AASBs)” and coloration of the same as on 17th August 2017. As per the notes to financial statement the assets has been considered with assets, liabilities in both present and previous year. Similarly for a better comparability of the results the employee benefit has been depicted in both 2017 and 2016. It has been also seen that the fair value of the options and performance has been depicted with EPS performance based conditions, TSR based conditions and deferred STI service based conditions. The same has been compared on monthly basis (Ordelheide 2016).
Conclusion
The study has been able to reveal that Charter Hall Group annual report has adhered to the objectives prescribed as per “Australian Accounting Standards (AASBs)” which has been created with “Australian Accounting Standards Board and the Corporations Act 2001”. The preparation of the financial statements has been further able to consider the conformity of the IFRS requirements which has been able to make the necessary judgements for the estimates and assumptions with the accounting policies amounting to assets, liabilities, income and expenses. The board of Charter Hall Group has been discerned with the main approach to enhancing characteristics of financial reporting with the Board and executive remuneration is seen to be in balance with fair and equitable rewards which motivates experienced and successful executive team to deliver ongoing business growth which meets the expectation of the shareholders in the long-term. The comparability of the information has been discerned with histogram and bar graph. It has been further discerned that the company has compared all the relevant financial data with the prior year which is discerned as the main qualitative characteristics.
References
Brown, P., Preiato, J. and Tarca, A., 2014. Measuring country differences in enforcement of accounting standards: An audit and enforcement proxy. Journal of Business Finance & Accounting, 41(1-2), pp.1-52.
Camfferman, K. and Zeff, S.A., 2015. Aiming for global accounting standards: the International Accounting Standards Board, 2001-2011. Oxford University Press, USA.
Crawford, L., Helliar, C., Monk, E. and Veneziani, M., 2014, March. International Accounting Education Standards Board: Organisational legitimacy within the field of professional accountancy education. In Accounting Forum (Vol. 38, No. 1, pp. 67-89). Elsevier.
Howieson, B., Hancock, P., Segal, N., Kavanagh, M., Tempone, I. and Kent, J., 2014. Who should teach what? Australian perceptions of the roles of universities and practice in the education of professional accountants. Journal of Accounting Education, 32(3), pp.259-275.
Navarro?García, J.C. and Madrid?Guijarro, A., 2014. The influence of improvements in accounting standards on earnings management: The case of IFRS. Australian Accounting Review, 24(2), pp.154-170.
Ordelheide, D., 2016. Transnational accounting. Springer.
Rahman, A.R., 2013. The Australian Accounting Standards Review Board (RLE Accounting): The Establishment of Its Participative Review Process. Routledge.
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