Ethics And Governance: Financial Reporting Of Wesfarmers Ltd

Stakeholders Involved

There are many of the ethic involved today when the company’s accounts are dealt with by the accountants. The management sometimes asks for the manipulation of the accounts or to show an increase the revenue when the actual amount of the revenue is quite less.  In such a case, the accountants must consider the ethics and then take the necessary step.

This report aims at discussing the issue and also answer the questions related with ethics and governance and financial reporting of Wes farmer Ltd.

Part A:

The following are the various stakeholders that are involved:

• Investors since they use the data contained in the financial statements for the purposes of making the decision as to whether the investment in that company be made or not (Knowledge Kaplan, 2017).
• Employee since their source of livelihood is the income that they earn from the company.
• Lenders since the company owes them the money and they are to receive the amount of the investment that they have made in the company along with the interest
• Government since the company owes them the amounts of the taxes.
• Suppliers since they supply raw material to the company and the company owes them the money
• Public since they always wish to assess the effects of the company on the economy etc.
• Customer since they would want to know that they whether the company would be able to supply goods to them in the future (Accounting verse, 2017).

Part B:

The main ethics that are involved in the same is the fact that the company’s financial statements are overstated and the company could face issues when it comes to the solvency issues for the company. The accountants of the company must never overstate the amounts of the receivables and so, they must state them at the values that the company could receive in return of those receivables.

Part C:

The following are the steps that are involved when resolving an ethical issue at workplace:

• Consulting the code of the ethics for the purposes of formal guidance is an utmost importance since that would help in solving the dilemma with much ease. This further depends on the comprehensive and the specific ethics statement of the company. The code of ethics are able to provide the backdrop on which the weight of the various pros and cons of the business decisions could be weighed down. This gives a clear picture of the decision which would be in line with the ethical commitments of the company.
• Further, the stated dilemma must be shared in with the supervisor so as to take its advantage. The front line employees usually face many of the ethical issues when it comes to making their decisions such as deciding as to whether to refund the money which is not in line with the different policies of the company and whether there is a suspicion of an internal theft. These are the ethical questions which involves the supervisors that could keep the employees out of the trouble when it comes to resolving the conflicts amongst the employees.
• The dilemma must be discussed with the other executives in one person is at the top most position of the organisation the executives and the owners of the company makes these decisions in any of the organisation and they add the weight and also challenges the ethical dilemmas. As an executive, it is an utmost importance to show that the competent of the person is at solving the problems of one own but then, there is actually nothing wrong when it comes to asking for help from the others. The other team member must be willing to make the right decision and also must provide the unique insights into the problem which is being discussed.
• Jane must speak with the peers and the colleagues from the other companies in case, if she is allowed to divulge the details about the secrets of the company. In case, one is a sole proprietor, then one may have to consult with the manager that are at a top level. Someone which could be trusted from the business networking must be consulted with and the previous employer or the college colleague must be given an insight into the matter. A friend must be consulted along with the people from the different cultural backgrounds in order to gain an insight into the matter.
• The past news must be read and the details of the company must be read so that the dilemmas could be solved. Then it could also be determined as to how the other people have dealt with this situation beforehand (Small business chron, 2017).

Part D:

If I would have been Jenny, then I would have approached my supervisor and asked him for his recommendation and suggestion. If he would have agreed that the ethics must not be violated and the receivables must be stated at its current values, then i would approached the higher authorities and blowed the whistle. The supervisors would have been consulted and past news must have been read along with the actions that were taken in the past which relates with the same case.

Answer 1:

The following are the figures pertaining to the receivables of the company:

	(Amounts in $ in millions)
Particulars	2016	2015	Change	% change
Receivables-trade and other	1,628.00	1,463.00	165.00	11.28%
Receivables- finance advances and loan	835.00	806.00	29.00	3.60%

 The receivables have increased when compared with the previous year. The above stated figures are net receivables.

There is no provision for doubtful debts stated in the annual report of the company. Also, there is no allowance for impairment of the losses stated in the annual report of the company.

The receivables- trade and other and also of the fiancé advances and loans are recorded in the annual report of the company.

GST would be reported in the current receivables if the amount that is to be received is receivable within the period of 12 months or one operating cycle. And if the GST is receivable within more than 1 year, then it would be included in the non-current receivables. The receivables –GST would be included in trade and other.

The following are the calculations required:

	(Amounts in $ in millions)
Particulars	2016	2015	Change	% change
Current assets	9,684.00	9,093.00	591.00	6.10%
Current liabilities	10,424.00	9,726.00	698.00	6.70%

The short term solvency is good for the company since the same have improved when compared with the previous year. Though there is an improvement in the figures but the current ratio of the company has deteriorated when compared with the previous which could also be seen from the following:

	(Amounts in $ in millions)
Particulars	2016	2015	Change	% change
Current assets	9,684.00	9,093.00	591.00	6.10%
Current liabilities	10,424.00	9,726.00	698.00	6.70%
current ratio	0.92901	0.934917

The other current assets includes the items apart from the receivables-trade and other, finance advances and loans. There is no provision of the receivables which is provision for the doubtful debts.

The other non-current assets includes the items apart from the receivables-trade and other, finance advances and loans.

The notes to accounts states that the group’s exposure to bad debts is not significant and default rates have historically been very low.

References:

accountingverse.com. (2017). Users of Financial Statements – AccountingVerse. [online] Available at: https://www.accountingverse.com/accounting-basics/users-of-financial-statements.html [Accessed 14 May 2017].

Kfknowledgebank.kaplan.co.uk. (2017). [online] Available at: https://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/The%20Users%20of%20Financial%20Statements.aspx [Accessed 14 May 2017].

Smallbusiness.chron.com. (2017). How to Resolve Ethical Dilemmas in the Workplace. [online] Available at: https://smallbusiness.chron.com/resolve-ethical-dilemmas-workplace-11008.html [Accessed 14 May 2017].

Wesfarmers.com.au. (2017). Cite a Website – Cite This For Me. [online] Available at: https://www.wesfarmers.com.au/docs/default-source/reports/2016-annual-report.pdf?sfvrsn=4 [Accessed 14 May 2017].