Advanced Financial Accounting - the Annual Report of Stockland - Example

Advanced financial accounting Author’s name Institutional affiliation Advanced financial accounting Introduction Stockland is a renowned Australian diversified property group. Additionally, it develops, manages and own retail centers, logistic centers, residential communities, office buildings and retirement living apartments. Moreover, Stockland was established in the year 1952 with a defined vision not only to realize profits and growth but to contribute heavily to the economic growth of Australian cities as well as the country as a whole (Stockland, 2013). In other words, Stockland has a proud and long history of establishing and creating places that satisfies consumer needs and wants (Stockland, 2013). By so saying, it means that, Stockland realized that, creating a good and effective community is like establishing a new home. Therefore, each and every year, Stockland produces an overview of their previous activities in the form a report. Sustainability at Stockland revolves around balancing the social, financial and environmental factors of their organization in order to realize long-term success. By so saying, it means that, Stockland has progressed from viewing sustainability as just the right to perform to viewing and defining a long term value (Stockland, 2013). This essay will therefore provide a summary of the 2013 annual sustainability information report of Stockland and provide a critical overview of their sustainability information strategies report. Report summary The 2013 annual report of Stockland focused entirely on the environmental and social performance of Stockland in that particular financial year. Additionally, the report stipulated that, 2013 financial year was a very challenging year because net revenues were affected by residential market conditions of the previous financial year as well as the ongoing transitions in the organization (Stockland, 2013). In this case, in an effort to respond to these challenges, Stockland postulated a number of significant strategic decisions in order to position the organization to produce reliable returns. Stockland group maintained its great and strong concentration on prudent management of the balance sheet and in the process; they realized excellent credit rating (Stockland, 2013). However, the organization’s gearing was down due to the effect of effective cash management as a result of difficult trading conditions accompanied by $ 400million rising of equity in the year 2013 as shown in the balance sheet below. Balance sheet as at June 30 2013 Weighted average debt cost 6.2% Weight average debt maturity 5.4 years gearing 22.7% Return on equity 6.0 % Stockland also engaged in prudent cost management as well as operational efficiency in the financial year 2013. Additionally, the group decreased overheads by approximately 10 % in a period of around two years (Stockland, 2013). By way of explanation, it achieved overhead reduction by realizing savings via optimization of the organizations procurement services, continuing the concentration on efficiency and centralizing the group roles and functions. In its strategic policy regarding the workforce, Stockland realized an engaged and productive workforce score of eighty percent which was 4% lower than the previous financial year. However, this score remained above the stipulated Australian national Norm (Stockland, 2013). Moreover, the report indicates that, over 96 % of workers are more than willing to exploit their potential in order to help the Stockland organization to realize its goals and objectives. In terms of operation, the retail sector of Stockland incurred a very challenging customer environment in the 2013 financial year (Stockland, 2013). Additionally, the sales volume have reduced tremendously owing to the fact that, customers have become more selective and cautious and in the process, the sales continue to deleverage. However, as much as Scotland experienced subdued market conditions, its net operating income increased by 5% as compared to the previous year (Stockland, 2013). In summary, from the report, it can be noted that, the 2013 primary objective was to produce earnings per growth share as well as the total risk-adjusted returns of the shareholder to be above the stipulated Australian real estate trust investment index via establishing quality real estates and property assets as well as delivering good value for its customers (Stockland, 2013). Additionally, Stockland clearly defines the short goals and objectives for the Stockland group. In this case, they believe that, decisions that are basically made to improve the business situation in the short-term are at the same time capable of solving long-term solutions in the community they are operating (Stockland, 2013). Some of the challenges that were stipulated in the report include; the ongoing local and global economic uncertainty, the consumer cautiousness, the evolving nature of regulatory environment, the changing nature of the technology, as well as, business processes and consumer expectations. Critical overview Despite its success story of 2013, Stockland should also ensure that, its short term goals work in line with the long term strategies of the organization. By so saying, it means that, the board and the stakeholders should take on their leadership and governance roles with seriousness coupled with the appropriate mix of experience in order to oversee the organization with integrity, accountability and the necessary professional and ethical organization. Therefore, in order to critically analyze the Stockland’s report, it is important to use some of the corporate environment and social sustainability theories such as the legitimacy theory, institutional theory and the stakeholder’s theory. Stakeholder’s theory Stakeholder theory is basically a management tool in nature since it directs and reflects on how mangers performance operates rather than just focusing on management theorists as well as economics. By way of explanation, Stockland has a well set up stakeholder engagement framework (Stockland, 2013). Additionally, the stipulated framework revolves around five basic principles which offer guidance on how to engage with other stakeholders (Friedman & Miles, 2006). The five principles of Stockland’s stakeholders framework include; first, a harmonized and proactive approach across the business (Friedman & Miles, 2006). The second principle is prioritized stakeholder engagement. Third is clear comprehension of the stakeholders as well as their primary drivers. The fourth principle is regular communications and finally, the fifth approach is capturing the trends of the stakeholders. However, the main areas that Stockland organization should focus on as far as stakeholders are concerned should revolve around the purpose of the firm and the primary responsibility that the management have as far as stakeholders are concerned (Friedman & Miles, 2006). By so doing, it will propel Stockland organization to the next level and allows it to realize better performance in both the market as well as Stockland purpose (Stockland, 2013. Furthermore, all assets and projects of Stockland should have a clear plan that clearly identifies priority issues, clear contact plan and primary stakeholders. Legitimacy theory Legitimacy theory has established itself as one of the most talked about school of thoughts as far as the environmental and social accounting is concerned (Hoque, 2006). Additionally, it is employed by many companies to identify disclosure on sustainability information that in the end will be used as a communication strategy. In this case, Stockland established a Scotland-specific structured work program based on the principle that, training and education for the youth is a collective responsibility (Stockland, 2013). Moreover, Stockland is one of a number of select companies to pilot the project. By so doing, they are able to promote their industrial property and their business as well (Hoque, 2006). However, instead of just focusing on the measurable benefits that this program offers, Stockland should therefore, just rejoices in the fact that, being legitimate, it is able to attract more resources that are essential for survival. Stockland should therefore use their involvement in the pilot project program to critically unpack their objectives and goals disclosures (Hilty, 2008). Additionally, the knowledge that Stockland will achieve by allowing its workers and the youth to be involved in the program will enable it to make more informed decisions about the stakeholders (Hoque, 2006). Institutional theory Institutional theory revolves around the values, norms and beliefs of environmental and social accounting practices. Additionally, those norms that are well known by their environment and social life drive transformation better than instrumental rationalities that are increasing effectiveness (Furusten, 2013). In this case, Stockland values diversity and works towards establishing a more inclusive and vibrant workforce that reflects all the communities in which they operate. Additionally, Stockland aims at providing a more healthy culture where welfare and safety are major considerations (Stockland, 2013). However, in order to achieve this, it should be able to establish a risk mitigation program so as to identify potential risks that its employees are exposed to (Hoque, 2006). Therefore, Stockland should establish a configuration of systems and structures of organizing supported with a common interpretive scheme and orientation. By so saying, it means that, in case of any change, it should be in line with the underlying norms, values and beliefs of the local community (Furusten, 2013). Conclusion From the company report, it can be noted, that, Stockland recorded a slight improvement on most of its sustainability strategies apart from the employee engagement strategy. In other words, Stockland achieved its short-term goals and objectives (Hoque, 2006). However, despite its success story of 2013, Stockland should also ensure that, its short term goals work in line with the long term strategies of the organization (Hilty, 2008). A proper sustainability information evaluation will therefore help Stockland to improve on their preceding goals and objectives while at the same time postulating short-term goals in respect to the long-term survival of the company. References Friedman, A. L., & Miles, S. (2006). Stakeholders: Theory and practice. Oxford: Oxford University Press. Furusten, S. (2013). Institutional theory and organizational change. Hilty, L. M. (2008). Information technology and sustainability: Essays on the relationship between ICT and sustainable development. Norderstedt [Germany: Books on Demand GmbH. Hoque, Z. (2006). Methodological issues in accounting research: Theories, methods and issues. London: Spiramus Press. Stockland, (2013). Stockland annual report review. Retrieved from: http://www.stockland.com.au Read More