G107309 Accounting and Financial Control

G107309 Accounting and Financial Control

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01/25/2015

G107309 Accounting and Financial Control

Financial Reporting
Companys background
Woolworths Limited (The Company) is an Australia based company founded by
Percy Christmas in 1924 in Sydney, with extensive retail interest throughout Australia and
New Zealand. The Company is the largest retailer in Australia and New Zealand by market
capitalization and turnover and largest food retailer in Australia and second largest in New
Zealand and also, the largest takeaway liquor retailer Company in Australia. The Company
also manages some of Australia's most recognized & trusted brand. Company prepares its
financial report for the year was for 52 weeks period ended 29 June 2014 and comprises the
company and its subsidiaries (together referred to as the consolidated entity or Group).
The Comparative year was for the 53 weeks period ended 30 June 2013.
Accounting Framework:
The financial is prepared in accordance with the Corporation Act 2001, Australian
Accounting Standard (Includes Australian equivalent to International Financial Reporting
Standards), which ensures that the financial statement and notes to the consolidated entity
comply with International financial reporting Standards and Interpretations, and compliance
with other requirements of the law. The financial report represents the consolidated financial
statement. The company is for profit entity for the preparation of the financial statement. The
financial reporting frameworks and standards are made to ensure that the reporting made by
the company must disclose true and fair view of the accounts. These standards are made to
ensure that the reporting is made on the basis of standards made which gives stakeholders a
confidence over their investment decisions. Keeping in view the interest of the stakeholders,
the auditors disclose the facts and figures in their report. Auditors responsibility is to
comment on whether the financial statement discloses the true and fair view of accounts. The

G107309 Accounting and Financial Control

detection of fraud is vested on those charged with the governance and management must
disclose the fraud detected during the year in their Annual report.

Accounting Policies:
Related party disclosure: As per company policy, group only disclose the key
managerial personal compensation in total and for each of the categories as required in AASB
124 which has been disclosed in the remuneration report due to amendment to corporation
regulations 2001 issued in June 2013, comparative disclosures are made in Note 24 in the
June 2013 financial statement.
As per International reporting Standards, Company must disclose the following
details in addition the details of remuneration to the key management personal:

Nature of relationship

Nature of transaction

Amount of transaction

Name of related party

Outstanding balance at the end of the period

Apart from that company shall also disclose that the transaction made with the related

party is made on the arms length price.

It has been observed that the company has also engaged in the insurance business and
Woolworth is insured by the Woolworths insurance, which means that they are taking money
from one pocket and keeping in the other. Thus, the companies are covered under same
group, transaction is eliminated at the consolidated level and it seems that there will not be
any insurance cost to the company which does not hold true. The insurance cost incurred by
the company should be disclosed in the statement of comprehensive income.

G107309 Accounting and Financial Control

Segment reporting; Segment reporting is done on the basis of business segment and
geographical segment. Business segments are reportable based on the internal reports on the
components of the group, regularly reviewed by the chief operating officer so that resources
are allocated to the segments. Geographical segments are reportable on the basis of
geographical location of the business.
It has been observed that company has disclosed five reportable segments relating to
continuing operation based on the different technology and marketing strategies. The
reportable segments are:

Australian Food, Liquor and petrol.

New Zealand super market.

General Merchandise

Hotels

Home Improvement.
The unallocated segment represents group other operating segment that has not been

reportable separately including other support function and head office cost.
Apart from the following details are also required to be disclosed as per International
Financial reporting Standards for each reportable segment:

segment revenue, classified into segment revenue from sales to external customers
and segment revenue from transactions with other segments;

segment result;

total carrying amount of segment assets;

total amount of segment liabilities;

total cost incurred during the period to acquire segment assets that are expected to be
used during more than one period(tangible and intangible fixed assets);

G107309 Accounting and Financial Control

total amount of expense included in the segment result for depreciation and
amortization in respect of segment assets forth period; and

total amount of significant non-cash expenses, other than depreciation and

amortization in respect of segment assets, that were included in segment expense and,
therefore, deducted in measuring segment result (Gardiner, 2013)

Ethical policy:
Since company is engaged in retail trading, company must be committed to the
provision of goods and service to the customer to satisfy their needs. The code of conduct
must contain the ethical sourcing policy. Ethical sourcing policy should be based primarily on
the Ethical Trade Initiative (ETI) and International Labor Organization (ILO) conventions. It
includes:

1. Policy with the supplier: It is the policy with the supplier, in case if the supplier is
unable to comply with the company ethical sourcing policy, company must reserve
the right to terminate the agreement.

2. Legal requirements: Supplier must comply with the all the local laws and
regulations regarding labor, health, safety and the environment. It also complies with
the legal requirements of the country in which it operates.

3. Wages and benefits: Wages and benefits should be paid in accordance with the
statutory requirements, must meet as a minimum national and industry standards,
whichever is higher. All the workers must be provided with the written and
understandable set of their employment details in respect to their wages during

G107309 Accounting and Financial Control

employment and post-employment. These include working hours, overtime, job
profile, bonus, deduction, statutory deduction, disciplinary measures etc.

4. Labor procurement: employment shall be freely chosen. The workers are required to
submit their details such as identity, qualification, residential proof etc. with the
supplier. It shall not use the work of bonded labor, forced labor and involuntary labor.
Using child labor is prohibited and supplier shall not use the work of child labor. In
order to comply with the prohibition of child labor, company should verify the details
such as age proof documents, to verify the age of all the employees and workers.

5. Working condition: Company must provide the suitable working condition to all of
its employees keeping in knowledge the industry and use of materials in the industry.
Extra precautions should be made in case on hazardous materials. Plant and work
place should be safe and hygienic for work. Proper training should be given to all the
employees. All the machineries should be protected by fencing it. Workers must be
given access to the clean toilets, clean drinking water and foods.

6. Discrimination : There will not any discrimination in based on caste , race, gender,
nationality, religion , age, marital status, sexual orientation, political affiliation at the
time of hiring, compensation, access to training, termination or retirement

7. Work place harassment: Company must lay down the policy in respect of work
place harassment. Physical abuse, sexual and verbal harassment, or other forms of
intimidation shall be strictly prohibited.

G107309 Accounting and Financial Control

8. Business integrity: Supplier shall engage the professional business ethics in dealings,
shall comply with the anti- bribery policy, shall not engage in corruption and provide
the transparent document and records.

9. Environment: Supplier must comply with the local and international laws and
regulations, international standards on environment protection. (Gardiner, 2013)

Coles Annual Report Analysis

In every country a set of rules and framework are being made in order to understand that
there is a strong relation between the frameworks set and the accounting done using these
frameworks. The companies tend to follow these frame work to organise the reporting as
systematic and understanding. The companies that are incorporated tend to be ethical and this
can be done by following the ethical principles of reporting. The companies should ensure
that there are such strong standards that they follow the accounting framework without any
issue. It is generally noticed that the companies fail to disclose the facts as they find it
hampering the interest of the stakeholders but these hurts the ethics point of view of the
company. The corporate generally tend to highlight the various areas where it has got success
and the areas of failure and negative actions are being hidden from the stakeholders as they
find it misleading.
The financial reporting principle focuses on the fact that the reporting should be in true and
fair manner even if it covers some negative activities it should be disclosed in the annual
report clearly, this helps the stakeholders to take correct decisions and ensure ethical
reporting from the view point of the company. The companies generally believe that there are

G107309 Accounting and Financial Control

huge chances that the stakeholders would trust the reports and act on behalf of it. When there
are cases when the companies hide the facts and then its disclosed then it become fraud in
the eyes of the public at large which brings a great issue for the public. The company should
understand there is a huge scope of expansion in the long run if the company continues to be
ethical in its reporting principles. (Gardiner, 2013)
So keeping in mind the importance of the ethics and accounting principles in the reporting
principles the report of Coles focus on the areas where the company had improved and not
discussing any areas that are not being dealt with. The company should ensure that there is a
proper correlation between the activities taking place in the year and the reporting as the
public should be aware of the facts taking place for the company. As the Coles was being
merged within the entity Wesfarmers after the year 2007 so it is the duty of this company to
report on the same. Also the annual report by Coles witnessed that there are various
highlighted that are positives for the stakeholders but the report is not focusing on the
negative impacts of their business on the economy. It could be seen than in the annual report
of 2014 the company is showing that there are growth in the sale of vegetables but there is
no such reporting that this had created loss to the share of the small business doers or grocers
who are not able to compete with these structured business forms. The company should
ensure that there is scope of growth in the business but they should ensure that this moves on
with protection to all societies of people around the economy. So this an ethical miss in the
annual report of Coles. The company missed out the impacts of the market expansion in the
field of vegetables etc. On conducting research activities it was found that the on an article
dated January 31st no report on the theft of their goods around the year due to failure of the
self scans equipments. This was one of the big scandals for the last year and thus needs to be
reported which was neither done as Coles would be; losing some interest if such news comes
into the mind of the people. The company should ensure that such issues such be disclosed in

G107309 Accounting and Financial Control

the reports so that ethical accounting practises could be followed otherwise it could create
problem in future. The billion dollar theft is one of the principles not reported in the balance
sheet. The companies should ensure that there are chances to change the trend by applying
principles. The annual report focused on the areas of interest but other activities were gone
down. (Carter, 2014)
Also news came out on August 2013 where it was given that due to the loss of a payout battle
with the customer accused of eating prawns and the company paid an amount of 50000
dollars as the compensation for the wrong case filed. These cases are not finding any place in
the report from the company because there is an issue which would not favour the repo of the
company in the front of the stakeholders. The reporting standards of the corporate are facing
huge problems because of such actions being remaining unreported about the company.
(Gardiner, 2013)
Such reporting habits also destroys the habits of the other companies in order to meet the
competition they also take wrong steps which turn out to be problematic for them in the long
run, These actions are not all supporting the accounting framework and thus are in no
manner the ethical from the view point of the company. These facts when hiding make the
decisions of the stakeholders go wrong and thus are the reasons for various scams that take
place in the accounting world. The annual report of Coles is only talking about the new
developments but in no manner taking about the section that needs to be improved by the
company in future. The ethical rules of accounting and the framework as described by the
Australian GAAP and the IFRS are being subjected to huge risks due to these facts and
happenings taking place in the corporate in the country Australia and even around the world.
The companies should ensure that financial reporting is a responsible task and they should do
it with full genuine efforts without defrauding the creditors by the wrong belief of growth to
them in the long run.

G107309 Accounting and Financial Control

The annual report of Coles and Wesfarmers have a section called Directors report where no
shortcomings had been disclosed by the company and there are chances that the directors
dont really seem to report the negative impacts of their business to the public, economy and
also the stakeholders of the company. The company Coles is in such a field of work that there
is a scope of exploitation of the small scale industries and this would results in conflicts in the
world of economy.
The misleading facts that are not kept for the reporting purpose tend to have great impacts on
the result of the public. There is a lack of disclosure by the company surely as two big events
are being not disclosed properly under nay head and thus leading to inaccurate reporting from
the companys board. These facts itself present the unethical and week reporting practice by
the companies and

when these news are public and interested stakeholders find no

information on the annual report they have a doubt in the performance of the company. The
company in the annual report had included all the social service performed or initiated during
the year but it failed to present the other part for the same which is the loss and disruption to
the social services in the people and the society.
Conclusion
The purpose of financial reporting could be read out as proving the stakeholders with
all type of proper information about the world and thus helping them to understand the facts
that it happening inside the company for better decision making. When the corporate report
they change their prospective and only think to attract the investors by providing accurate
reporting rather than true reporting and these changes the complete scenario of the accounting
framework and the principles being followed around the world. There are certain facts that
these reports convey to the stakeholders and reporting should be done following these only.
The study of the reports of both the companies showed some loopholes that need to be

G107309 Accounting and Financial Control

fulfilled in the accounting system that would be a better reporting option for any company
around the world.

G107309 Accounting and Financial Control

References
Carter, C. (2014). Self-scan fail: Supermarkets lose billions as thieving customers help
themselves. THE AGE MONEY , 1.
Gardiner, S. (2013). Coles loses $50,000 payout battle against man wrongly accused of eating
stolen raw prawns. The Sydney Morning Herald , 1-1.
Breton, G. (n.d.). Semiotic Analysis of Storytelling in the Annual Report. SSRN Journal.
Coles.com.au, (2015). Coles Supermarkets. [online] Available at: http://www.coles.com.au/
[Accessed 27 Jan. 2015].
Limited, C. (2015). Coles Group Limited: Private Company Information - Businessweek.
[online] Businessweek.com. Available at:
http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=262198
[Accessed 27 Jan. 2015].
ltd, w. (2015). WOOLWORTHS LTD (WOW:Australian Stock Exchange Ltd): Stock Quote &
Company Profile - Businessweek. [online] Businessweek.com. Available at:
http://www.bloomberg.com/research/stocks/snapshot/snapshot.asp?ticker=WOW:AU
[Accessed 27 Jan. 2015].
Woolworthslimited.com.au, (2015). Quality Brands and Trusted Retailing - Woolworths
Limited. [online] Available at: http://www.woolworthslimited.com.au/ [Accessed 27 Jan.
2015].
Woolworthslimited.com.au, (2015). Woolworths Annual Report 2014. [online] Available at:
http://www.woolworthslimited.com.au/annualreport/2014/index.html [Accessed 27 Jan.
2015].