Evaluation Of Financial Performance And Social Accountability In Australian Businesses

Explanation of Social Accountability and AASB frameworks

Evaluating the financial performance is one of the crucial elements for the investors and other stakeholders of the business. The annual report offers the various information and financial figures about the company to their stakeholders. AASB policies and standards play a major role in offering the information to the stakeholders of the business (Australian Accounting Standards Board, 2010). As these creates the similarity in the presentation, disclosure and recording of all the transaction in Australian companies in order to make it easier for the business and the related parties to maintain the consistency and comparability level in measuring the performance of the companies to reach over a conclusion about the position and performance of the company.

Social accountability is an approach which is used to build accountability in a business that relies on civic engagement. It briefs that a business is responsible for the society and thus it must make few efforts for the society as well. In this, an organization acts to improve the performance and living standard of the society through introducing new techniques and event. In case of General purpose financial reports and ASSB framework, it has been found that it is clearly mentioned for the companies to follow the rules of the AASB so that the similarity could be maintained and the comparison could be done properly for the betterment of the society and easiness of the stakeholders to make a better decision about the company (AASB, 2014). 

Such as, in case of CSL limited, it has been found that the company has followed the proper accounting standards and policies to offer the similarity and better comparison base to the shareholders. As well as, the social accountability has been improved by the company through offering the transparency and correct information about the activity of the business in the annual report of the company (Annual report, 2018).

The financial statement of an organization must make a good base for the stakeholders. In order to make the same, the governing body of that particular entity is accountable to those parties and society who has allocated their resources in the business. The company has also offered the financial notes in relevance to the financial activities of the company so that a better base could be offered. It explains that the social accountability is one of major objectives of GPFR in order to improve the stakeholder level.

The AASB formwork, conceptual and policies complies the general purpose financial statement with the accounting standards in order to present the fair and transparent financial position, cash flow position, financial performance of an organization to all the internal and external stakeholders of the company. this information of company which is presented on the basis of the AASB standards are useful to the creditors, analyst, shareholders, regulators, customers, owners etc to making and analyzing the decision about the economical asset allocation in the business (Australian Accounting Standards Board, 2011). 

In order to follow the AASB rules, the GPFR becomes more comparable than other organizations. This helps the investors and the analyst to compare the organization with other companies. In order to evaluate the CSL limited, it has been found that proper AASB framework has been followed by the company in order to offer the fair and transparent information about the company’s activity to the shareholders and other stakeholders of the business.
Annual report information:

The Importance of AASB Regulations in Australian Business Practices

Annual report (2018) of CSL limited explains that transparent financial position, cash flow position, financial performance of the company has been presented in compliance with the general purpose financial statement. The company has presented the financial items in the annual report on the basis of the Australian accounting standards so that the perfect performance and the position of the business could be conveyed to the shareholders and other stakeholders of the business (AASB, 2018). Such as, for the recording of the lease payment, the company is offering the oldest AASB and has announced to follow the AASB 16 soon. Same in the case of impairment of the asset, the company has offered the proper financial notes of testing the impaired amount of the asset and their impaired amount in the annual report (Guthrie and Pang, 2013).

The deferred tax assets and deferred tax liabilities of the company have also been described in proper manner (AASB, 2015). On the basis of those workings, a better conclusion could be got about the income tax expenses and the performance of the business. In addition, the other notes about the equity, retained earnings, reserve etc has also been presented in the annual report of the business to offer the fair, relevant and proper information about the business to the internal and external stakeholders of the business (AASB, 2014).

Managers and the internal stakeholders of the business ate required to disclose all the relevant information about the company and the financial figures of the company in the annual report. If the proper information has been offered by the managers to the stakeholders of the business than the credibility and the credit score of the business get increases in the capital market as well as the shareholder also get attractive towards the company (Kieso, Weygandt and Warfield, 2010).
If the disclosure is done properly in the business and the managers of the company than it basically improves the accessibility and trustworthiness of the business. Further, the managers also get better and required incentives, salary and bonuses from the business. The entire information about those incentive is also explained in well manner in the annual report of the business in order to manage and improve the performance of the business in the capital market.

A shareholder, creditor, financial institute, supplier and other parties expect the proper information from the company so that the better base could be got and a better conclusion could be made by the business on the basis of that. In case of investors of the company, it has been found that the main concern of the investors are shown on the net profit position, dividend payout ratio, total outstanding shares of the business, the credibility level, the financial risk and the leverage risk of the business (Hales, Venkataraman and Wilks, 2011).

The stakeholders react differently in case of different figure such as in case of higher profitability position, the shareholder get attract toward the company and vice versa. If the dividend payout ratio of the company is lower but the stock price of the company is continuously improving than the shareholder get attract towards the business in order to generate the return through selling the stock later in the market.

Evaluation of CSL Limited’s Compliance with AASB Regulations in its Annual Report

Further, the financial strategies also play important role in order to make decision about the investment in the company (AASB, 2015). It has been found that the lease, deferred tax assets, income tax payment, creditability position etc are also evaluated by them and investors judge the company on the basis of their presentation and compare it with other firm in the industry to reach over a conclusion about the exact performance of the company. 

In case of CSL limited, it has been found that the capital structure level has been maintained by the company and great level so that the financial risk of the company could be reduced and the better policies have been prepared for the liquidity position of the business as well. So that the investors could attract towards the business and the investment level of the business could be improved in the business (Annual report, 2017).

The annual report (2018) of CSL limited has been studied and measured on the basis of the various AASB policies and standards and it has been found that the company has conveyed the proper information about the overall cash level, financial performance and financial position of the company in the annual report of the business. For the presentation of the accounting figures, proper accounting rules have been followed by the company so that the understand level of the business could be improved. And a proper decision could be made by all the stakeholders about the company and its activities.

Conclusion:

In the report, the study has been done on AASB rules, GPFR, CSL limited’s annual report etc to identify the performance of AASB in an Australian organization. On the basis of the overall study on the AASB, annual report, it has been found that the company has followed the proper accounting policies and it is also beneficial for the business to maintain and follow the AASB rules in order to offer the fair, relevant and proper information about the business to the internal and external stakeholders of the business. 

References:

AASB, C. A. S. 2015. Investment Property. International Journal of Accounting, 25(4), 140. [online]. Available at: https://jade.io/j/?a=outline&id=500082 [accessed 19/9/18].

AASB, C.A.S., 2014. Business Combinations. Disclosure, 66, p.77. [online]. Available at: https://www.emeraldinsight.com/doi/abs/10.1108/eb060761 [accessed 19/9/18].

AASB. 2018. AASB 16. [online]. Available at: https://www.aasb.gov.au/admin/file/content105/c9/AASB16_02-16.pdf [accessed 19/9/18].

Annual report 2018. CSL limited. [online]. Available at: https://www.csl.com/-/media/csl/documents/annual-report-docs/csl-ltd-annual-report-2018-full.pdf [accessed 19/9/18].

Australian Accounting Standards Board (AASB), 2010. AASB Consultation Paper: Differential Financial Reporting–Reducing Disclosure Requirements. 52 (4), p.p. 42. [online]. Available at: https://www.aasb.gov.au/admin/file/content102/c3/AASB_Annual_Report_2010_Final.pdf [accessed 19/9/18].

Australian Accounting Standards Board (AASB), 2011. Accounting Standard AASB 10. Consolidated Financial Statements. 52 (3), pp.206. [online]. Available at: https://www.legislation.gov.au/Details/F2011L01941

Guthrie, J. and Pang, T.T., 2013. Disclosure of Goodwill Impairment under AASB 136 from 2005–2010. Australian Accounting Review, 23(3), pp.216-231.

Hales, J. W., Venkataraman, S., and Wilks, T. J. 2011. Accounting for lease renewal options: The informational effects of unit of account choices. The Accounting Review, 87(1), 173-197.

Kieso, D. E., Weygandt, J. J., and Warfield, T. D. 2010. Intermediate accounting: IFRS edition (Vol. 2). John Wiley and Sons.