International Financial Reporting & Analysis - Coursework Example

 International Financial Reporting & Analysis Tesco’s Corporate Governance disclosures Tesco’s corporate governance disclosures of the year 2012 covers statements that include those about future revenues’ expectation, earnings and capital expenditure, activities and future revenues. The basis of these statements is on the present expectations, which involve several uncertainties and factors that could result to actual outcomes differing from the expected. The risks included are the background risks of the industry of the drilling services, such as operational risks like the potential changes or delays in plans with respect to the development or exploration projects or capital expenditures of the customer; the projections and estimates uncertainty in relation to the rental activities levels; the projections and estimates uncertainty of the expenses together with costs; risks in carrying out foreign operations such as economic and political instability, and fluctuations in the rate of exchange; risks and uncertainties in the technical performance and results of technology. Tesco has adhered to all the provisions of the Code of best of the Cadbury Committee known as ‘the Code.’ This board has a commitment to appropriate corporate governance standards and will go on to ensure that the procedures are kept under review in case the Code is developed. All through the year that ended 31 March 2012, we find that the corporation complied with all of the Code’s provision except for, a very short period, when the number of Board members, who were non-executive, with the exclusion of the chairman, fell below half as necessitated by Code’s B.1.2 section. This was essentially as a result of the difference in the timing between the times of retirement of some members and joining by some others.Considering that the Board was not planned to- and never met during this short time, it is believed that governance was never impacted. In the review, we find that the audit committee had a successful completion of its review of the efficiency or effectiveness of the systems of internal control of the Group during the year as well as up to the date of the Annual Report, according to the prerequisite of the Internal Control’s revised Turnbull Guidance. The report has actually revealed very little or no weaknesses or failings 2011/2012 review. However, the areas where some slight problems were found, we find that there are some processes put in place to help in ensuring that the appropriate action is taken and the development is monitored. In the report, the performance has been successfully related or measured against the period of operation. It is particularly important as we have been told how the company managed to deliver reasonable profit growth in an environment that is highly challenging economically, with a very strong global performance that is largely credited to the decrease in the United Kingdom profits. From this, the reader of the financial statements is able to gauge the performance of the company adequately and also easily compare it with the past as well as those of the other companies. The review has also well reported about the reinforcement of the corporation’s commitment of being a good corporate citizen during the year 2012; as an employer, a neighbor and also as a retailer. It is reported that the company employs more than half a million individuals from all over the world, which puts her in a good position of making a good difference in the communities or areas where they do business. However, we have not been told about the process or criteria that are used in the process of hiring these employees as well as how they have directly or indirectly contributed to the success or performance of the corporation during the same year. In addition, in matters regarding the management of the group, we find that the report has highlighted on the issue of how the company has implemented the new management structures since last year. We are told that the new management structures that have been implemented by the company have actually had some great impact in the positive performance of the company during that particular year. This information is particularly important to the reader of the financial statements of the company as it enables them to measure the outcomes against the company’s goals or objectives before and after the introduction and implementation of those particular structures. Nevertheless, the report has also done well in talking about one of the company’s her largest elements of her investment, which is increased levels of staffing, training as well as equipment for major departments in the available stores like meat and produce. As a result we are told that the corporation saw a considerable improvement in the satisfactions of the perceptions of the clients and sales performance of two hundred pilot stores. This is also important to the reader of the financial statements whereby they are able to comprehend how this success has given the company the confidence to move quickly in the application of the changes to all of her large stores; thus the good performance. International Financial Reporting & Analysis In this report, we are going to analyze the financial statements of Tesco Corporation in relation to the its Corporate Social Responsibility and the sustainability program for the purposes of objectively evaluating as well as having a critical examination of the information given within the report to find out whether it offers a real and fair representation of the corporate social responsibility of the company, whether there is actually a connection or continuity in relation to the methods that were used every year and also whether the continuity enables comparability of the progress appraisals against the standards set as well as whether the information given in the report is relevant in term of material to the financial statement’s reader. The report starts by giving a detailed report on the company’s focus on the issue of sustainability whereby it seeks to create a good relationship with the community where it operates. As the leading retailer in the United Kingdom, Tesco serves a very large number of communities all through the nation and region. The interaction of the company with the communities reminds them of their roles as a good neighbor, as an employer as well as a business. Whereas value, price together with the delivery of good services will forever be essential for numerous individuals who visit the stores daily, we find that there are some other several issues that are also becoming more and more important. The clients would want to see increased local products. In addition, they want to ensure that they are eating in a healthy way, they expect the company to take into consideration how they are impacting the neighborhood, and take the leading role on the challenges to the environment that affect both the company and them. This is particularly important to the reader of the financial statements as they are able to see how the company intends use its resources in ensuring a peaceful co-existence between herself and the neighboring community. It is the responsibility of everyone to ensure that the communities are made better places for everybody to work and live (Nash, 2006, p.96). The company understands that their clients want them to offer a good shopping trip. However, they are also aware of the fact that the clients value some other things. They expect that businesses, which include supermarkets, be good neighbors in the particular community that they are in or serve. In addition, they want to be given assurance that businesses are reliable, responsible and rational. That is why the company has put the sustainability and community matters at the center of her Community Plan, and they hope to ensure that the Community Plan is put at the core of the business strategy of the company. Another focus of the company according to the 2012 Corporate Responsibility report is on the issue of environmental friendliness. There have been set some structures of the reduction of energy in all of her stores, as well as introduction of the possible technologies that are energy efficient. The organization has a commitment to the recycling of one hundred percent of her store waste together with tertiary packaging. The company is working hand in hand with her partners for the purposes of achieving this by establishing programs like the recycling of office paper, nutrafeed and composting across its networks. In addition, the company is commitment to decreasing her individual-label packaging. This is also important to the reader of the report as they are also in a position of seeing clearly and understanding the efforts put by the company in ensuring that the environment is preserved by allocating adequate amount of money for the particular project. Offering support to the industries of agriculture and food on a local and national basis is a fundamental part of how the company does business. The overall value of the company to the country’s economy is approximated to be two and a half billion pounds. Fifty percent of the company’s food range is locally produced. According to the report, there has been an increase in the sales of the local food products by twenty six percent since the year 2004. The total number of individuals employed by the organization has risen by fifty five percent since the year 1998, to more than thirteen thousand. In addition the reports states that even in the year 2002, the company regarded the community as a very critical or integral part of their activities of corporate social responsibilities.The particular areas on community are found in the section of ‘social practice and policy’ and are given the title ‘community development.’ The program of computer for schools is the only initiative that they have set up in relation to matters regarding education. The reports of Tesco have always changed during every release, as this can be seen in the ever increasing number or size of the reports. There are also some related pages in the company’s reports that talk about their capabilities of local sourcing and the relationship with farmers and suppliers. However, just from the qualitative point of view we find that it can be seen that the corporate responsibility has actually turned out to be a very critical or essential part of the business strategy of the company, and more time, individuals together with money are being used in the matters of corporate social responsibility. This shows that it has become an important part of the strategy of the company; however, it does not provide an indication for the reason or even as to why. The company’s corporate responsibility of the year 2012 appears to be much smaller as compared to the one of the year 2011. In addition, we find that it is also the second of their whole reports of corporate responsibilities. Therefore, it is expected that it not be of the same quality or even transparency as of today. In general, it is true that the corporate reporting of the year 2011is comprehensive or much more detailed than any other, as it provided specific details regarding where the efforts of the company were put and also in what manner it impacted various stakeholders. Corporate responsibility report and financial statements are closely related and the reader of the financial statements should also know the corporate responsibility reports of the particular company that they are reading or examining. The readers of the financial statements can always be potential investors, suppliers, financers or even lenders. Matters regarding finances usually require transparency and accountability and the Tesco Corporation is no exception. The corporate responsibility of the company involves the laying down of strategies that help in ensuring that the corporation makes the environment in which it is operation safe and favorable. However, this cannot be done without spending; that is pouring some money into ensuring that the programs are successful. All these are usually detailed in the financial statements of the company and help the readers in comprehending what has been presented. All those who are interested in the affairs of the company or how the company is run in matters concerning the expenditure must understand how the finances of the company are spent in things such as assisting communities or even making the environment where they are operation to be safe, which is a very important thing: thus the importance of integrating the corporate responsibilities with the financial statements. Appendix A Tesco PLC: Review of 2012 Corporate Responsibility Report The 2012 Corporate Responsibility Review Important Facts Donation of seventy four and half million pounds to good causes and charities Assisted about nine million individuals participate in activities involving sports across the Group More than seven hundred and fifty Community Champions. Five percent decrease in the carbon dioxide emissions from the company’s distribution centers and stores. Over five hundred thousand workers More than ten million pounds were raised via customer and staff fundraising. Staff time, direct donations together with gifts in kind. Yearly decrease in carbon dioxide emissions from distribution centers and stores established before the year 2006. Carbon dioxide emissions have been reduced by thirty one percent against a 2007/2007 baseline. Highlights Opened the first ever zero-carbon store in Asia in Bang Pra, Thailand Became the top retailer in the Project of Carbon Disclosure Global 500 index More than one hundred and fifty clients have agreed to give donations of their Green Clubcard points to assist in the protection of some of the most endangered rainforests in the world. In response to the Thailand floods, the company gave a donation of about five hundred thousand pounds to a total of forty provinces that were hit hard in the country and established kitchens to feed more than three thousand people. Seven and half million£7.5 million raised by staff and customers for the Alzheimer's Society, which smashed her five million pounds target for the year. Bibliographies De Kare-Silver, M2000, The Electronic Shopping Revolution: Strategies for Retailers and Manufacturers,London: MacMillan Press Ltd. MacLaurin, T, 1999,Tiger by the Tail: A Life in Business from Tesco to Test Cricket. London: Pan Books. Simms, A, 2007, Tescopoly: how one shop came out on top and why it matters. London: Constable. Humby, C, et al, 2006, Scoring points : how Tesco continues to win customer loyalty. London & Philadelphia: Kogan Page. Nash, B, 2006, Fair-Trade and the growth of ethical consumerism within the mainstream : an investigation into the Tesco consumer. Leeds: University of Leeds. Davis, K 2005, Business and Society: Environment and Responsibility, New York: McGraw-Hill. Visser, W2007, The A to Z of Corporate Social Responsibility. London, England; New York, NY: Wiley. Read More