ACC302 Advanced Financial Reporting

ACC302 Advanced Financial Reporting

Question

ACC302 Advanced Financial Reporting “Over the past decades, interest in corporate governance practices has increased as a direct result of highly publicised cases of corporate misconduct and concerns over the management of corporation” (Rankin et al 2018, p.202).  It is also viewed that corporate governance suffers from being a multilevel concept which differs between the country (or economic) and individual levels.  As such, there is an emergence of corporate governance reforms in various countries; which have created significant implications for auditors and increased responsibilities for accounting professionals.

Students are required to obtain copies of recent (2017 or 2018) annual financial reports of two companies listed in the Australian Stock Exchange. The names of two sample companies for each group will be allocated to students in Week 3 of the semester.

Requirement:

The Group Assignment develops students’ theoretical and technical skills in accounting theory and corporate governance as well as their written communication skills.

The Group Assignment is comprised of two parts:

Part A:  Case study using ASX listed Companies

Part B:  Essay – Written Assignment

Assignment Questions:

There are two requirements for this assessment.

Part A Involves Case Study On The Following Questions

  1. Identify and illustrate how the two sample companies disclose their corporate governance strategies, policies and practices. (i.e., approaches considered)
  2. Compute the following corporate governance indicators from the collected annual reports for the selected two companies:
    1. Total number of directors (i.e., board size);
    2. Percentage of non-executive directors (if any);
    3. Percentage of independent directors (if any);
    4. The name of the Chief Executive Officer (CEO) and/or Chairman and the summary of his/her statement in the annual reports for the selected companies;
    5. Percentage of share hold by the executive directors; and
    6. Percentage of shares owned by the block-holders and institutional investors.
  3. Compare the corporate governance indicators of the selected two companies and discuss the effectiveness, strength, and adequacy of the corporate governance practices and principles adopted by these companies.

Part B Involves Writing An Essay On Corporate Governance

ACC302 Advanced Financial Reporting The essay is to be written on the role of corporate governance in accounting. Your essay should demonstrate a wide range of aspects of corporate governance including practices in relation to corporate failure, approaches to corporate governance, roles of ASIC and CLERP 9 in Australia, independent director, ethics and integrated reporting and its reflection of international perspectives and developments. You must incorporate academic and professional research including theoretical praxis in your essay.

Answer:

Part A

Condition 1

JB HI-FI and Wesfarmers have published their strategies with regards to corporate governance, practices and policies in a private section in the annual report called the “Overview of Corporate Governance” and Statement of Corporate Governance respectively. The work for these organizations is to give out to the stakeholder specific and important information. The information regarding the function and responsibilities of the associates of the board, strategies related to risk management, board composition, auditor’s freedom and the compensation of the directors have even disclosed in the annual report published by the organization (jbhifi.com.au, 2019).

Condition 2
  1. According to the Wesfarmers’s annual report, the organization presently has nine directors (wesfarmers.com.au, 2019). The annual report of JB HI-FI Limited for the year 2018 reveals that there are 7 directors (com.au, 2019).
  2. Eight of them are non-executive directors. The percentage has been found to be 88.89% (wesfarmers.com.au, 2019) for the non-executive directors. In JB HI-FI, 6 of them are non-executive directors and percentile is found to be to 85.71%.
  3. According to 2018 annual report for Wesfarmers, all the non-executive directors are independent and the percentage comes to 88.89%.

According to Annual Report of JB HI-FI for 2018, all the directors are independent and percentage comes to 100%.

  1. According to the Annual Report of Wesfarmers for 2018, Michael Chaney AO is thechairman of the organization (com.au, 2019). The company has taken some of the hard decisions for the betterment of the company in 2018. The profit recorded was from the continuing operation otherwise over all the company witnessed fall in the net profit of 2018. The company is following the strategies of feasible (wesfarmers.com.au, 2019).

According to the Annual Report of JB HI-FI for the year 2018, Richard Murray and Greg Richards are known to be the chairman and group Chief Executive officer of the organization. The increment sale, gross profit and also net profit has been registered in 2018. Along it the company has taken some of the crucial decision for the company in 2018 (jbhifi.com.au, 2019).

  1. In 2018 the company of Wesfarmers issued a share of 2342000 shares in which the director holds 4180000 shares. The percentage is 17.85% (wesfarmers.com.au, 2019).

In Annual report of JB HI-FI, directors holds a share total 461969 the percentage comes to 0.40% (jbhifi.com.au, 2019).

  1. Two of the company has not provided the information on the barred holders.

Condition 3

It is concluded that the percentile of directors who are independent in JB HI-FI is higher than that of Wesfarmers (wesfarmers.com.au, 2019). Two of the organizations have non-executive directors and both follows the corporate governance principles of Australian corporate frame work. Both the company has provided all adequate important knowledge about the necessary aspects of the organisational corporate governance (jbhifi.com.au, 2019). The company is also following the corporate regulations to adhere to the rules and regulation of the governance. Both the company is well adherence to the corporate governance. This will help them to work smoothly without any hindrance from the Australian government. It can therefore be inferred that both the organizations have sufficiently published the essential information with regards to corporate governance.

Part B

Introduction

To assist the governing of the company Corporate Governance lays the system, principles and processes.  The corporate governance structure of an organization has an effective role to play with the help of which the essential guidelines are provided to the organizations with respect to which they control and direct their business activities with the help of which the organizational goals can be attained. To achieve organisational goal Corporate Governance have a fundamental function in laying the essential guidelines to the organizations. It directs and controls the business activities (Dahan, Hadani & Schuler, 2013). It is seen that financial and accounting practices have an essential role to play in the development of the organizations. But, there are chances where significant level of manipulations are done within practices of accounting of the companies in order to attain certain gains in the business. Sometime illegal practise happen in companies due to manipulation of the financial data leading to fraud. To avoid frauds and manipulation implementation of effective corporate governance strategies needs to be practised (Darrat et al., 2016). The manipulation happens due to the non-adherence of the laws which leads to a bad management and bad reputation of the company in the eyes of the stakeholder. The goal of this report is to investigate the important function of corporate governance in the field of accounting by considering essential aspects.