AbstractThe Australian Accounting Standards are set forth by the Australian Accounting Standards Board (AASB). These standards require companies to make disclosures on investment in joint ventures, reportable segments, and related party transaction and disclosures in line with AASB 128, 8, and 124. Santos Limited and AGL Energy Limited have disclosures made on these items in their most recent published annual reports. This paper compares the disclosures made in the financial statements by Santos and AGL Energy. Keywords: disclosures, reports, industryFinancial Reporting Disclosures in Australian Corporate SectorIntroductionDagwell, Wines and Lambert (2006) argue that directors of company’s in Australia must ensure that their company’s financial reports are made out in accordance with the applicable accounting standards that the Australian Accounting Standards Board (AASB) has approved (p.
504). In any case a compliance with these standards does not result into the presentation of a true and fair view; the standard’s provision will still apply. Dagwell, Wines and Lambert (2006) further argue that these standards provide more detailed guidance through prescribing allowable accounting policies and the required disclosures of certain details of transactions and balances. Some of these disclosures are on; investment in joint ventures, reportable segments, and related party transaction.
These are in line with AASB 128, 8, and 124. This paper compares the disclosures made in the financial statements of two Australian Companies; Santos Limited and AGL Energy Limited, to those required by the Australian Accounting Standards, and between themselves. Company OverviewAGL Energy is among the leading integrated energy firms in Australia involved in the purchase and sale of electricity and gas; construction and operation of energy processing infrastructure and power generation; and development of natural gas manufacture facilities among others.
This company has major investments in wind and hydro and ongoing developments in vital renewable energy areas like biomass, geothermal, bagasse, and solar among others. This company realised a profit after tax of 558.7 Million in 2011 compared to 356.1 million in 2010.Santos Limited is also among the leading Energy firms in Australia; a leader in the Australian domestic market gas production. It majors in petroleum and gas exploration and production, treatment and marketing of crude oil, natural gas, petroleum gas, condensate and naphtha.
It also carries out transportation of crude oil by pipeline. This company is pursuing a transformational liquefied natural gas strategy (LNG) as one of its joint ventures. Disclosure RequirementsThe major aim of the AASB accounting standards is to provide a detailed guidance through prescribing the allowable accounting policies and requiring the disclosure of specific details of various transactions and balances. AASB 101 requires the financial reports to be clearly identified and distinguished from other information contained in the same published document. According to Deegan (2009), the financial report when incorporated in the annual report of the company, should be clearly identified.
In addition, certain items in the financial report recognized by the firm should be disclosed on the face of the report or in the notes to the financial statement. Items to be disclosed range from; cash and cash equivalents, liabilities and assets for current tax, equity items, dividends, investment in joint ventures, reportable segments, and related party transaction and disclosures among others. AASB 128, 124 and 8 cover investment in joint ventures, reportable segments, and related party transactions and disclosures respectively.