Accounting Standards Board - Case Study Example

KIBET COMPANY LIMITED ANNUAL REPORT OF THE FINANCIAL PERFORMANCE OF THE COMPANY FOR THE FINANCIAL YEAR ENDED 30TH JUNE 2013 Table of Contents Table of Contents 2 The Statement of Profit or Loss and Other Income 2 The Statement of Financial Position 4 Statement of Changes in Equity 5 Notes to the Financial Statement 6 Preparation of the financial statements 6 Accounting policies and estimates 7 Dividends 7 After balance date events 8 The Directors’ Declaration 8 Annual Directors report 9 Annual auditor’s report 10 To the shareholders of kibet company limited 11 Our opinion 12 References 13 Annual Financial Report For Kibet Company Limited For The Year Ended 30th June 2013 The Statement of Profit or Loss and Other Income Kibet Company Limited Profit or loss account For the year ended 30 June 2013 Income: $’s $’s Sales and services revenue 184,500,000 Commission revenue 24,200,300 Sale of non-current assets 29,750,000 Total income 238,450,300 238,450,300 Less cost of sales 67,400,200 Gross income 171,050,100 171,050,100 Expenses: Staff wages 37,600,000 Staff salaries 14,900,000 Annual Leave expense 4,900,000 General operating costs 18,900,200 Delivery expenses 2,300,000 Auditors fees 1,230,000 Interest expenses 720,000 Bank overdraft expenses 94,300 Retirement expense 400 Warranties 2,540,000 Depreciation - furniture 520,000 Depreciation – building 1,600,000 Depreciation – machinery 3,860,000 Depreciation – delivery vehicles 210,250 Doubtful debt expense 1,280,000 Legal expenses 13,700,000 Office supplies 1,710,000 Total expenses 121,455,150 (121,455,150) Profit for the year 49,594,950 Income tax 14,878,485 Net profit 34,716,465 The Statement of Financial Position Kibet Company Limited Statement of financial position For the year ended 30 June 2013 Assets: $’s $’s Non - Current assets Machinery 32,800,200 Land 9,600,400 Buildings 24,700,900 Delivery vehicles 1,690,000 Furniture and office equipments 4,380,000 Trademark 7,200,300 Current assets Accounts receivable 34,500,200 Inventory 25,600,800 Accrued revenue 4,350,000 Total assets 144,822,800 Liabilities: Current liabilities; Provision for doubtful debts 1,400,500 Bank overdraft 980,000 Provisions 8,500,000 Provision for legal case 4,800,000 Unearned revenue 7,430,000 Accounts payable 22,700,800 Long term liabilities: Loan (big bank) 12,000,000 Net assets 87,011,500 Equity; Share capital 18,760,000 General reserve 8,000,000 Retained earnings 28,411,400 Net profit for the year 34,716,465 Total of equity 89,887,865 Statement of Changes in Equity Kibet Company Limited Statement of changes in equity For the year ended 30th June 2013 Share capital General reserve Retained earnings Balance as at 1st July 2012 $18,760,000 $8,000,000 $28,411,400 Transfer of reserve - ($4,000,000) $4,000,000 Dividends declared - - ($1,876,000) Profit for the year - - $34,716,465 Balance as at 30th june 2013 $18,760,000 $4,000,000 $65,251,865 Notes to the Financial Statement Preparation of the financial statements These financial statements have been prepared according to ASX rules. They reflect the performance of the company for the last, twelve months of trade from 1st July 2012 to 30 June 2013. They are in concurrence with accounting standards adopted by the Australian accounting standards board and also the Companies Act which was adopted in the year 2001.this results have not yet been approved by the board of directors. The board of directors will meet in august 2013 to review the financial statements and approve them. the assets and liabilities have been prepared using the historical amounts in accordance with the relevant policies on accounting. The assets of the company exceed the liabilities. This is sign of good asset management by the company’s management. The financial statements have been prepared on a going concern basis that is the company will continue in operation for the next foreseeable future. This is evidenced by the profitability of the company. It is making good profits which will make good returns to the shareholders. These financial statements comply with the international accounting standard (IASs), international financial reporting standards (IFRSs) and the Australian accounting standards (AASBs) Accounting policies and estimates AASB 137 requires that contingent assets, provisions and contingent liabilities be discounted to their present value to effect the time value of money where it is material. The provisions of this company has been prepared at their present value at the reporting time using a rate before tax that reflects the current market condition of time value of money and also all the risks to the specific liabilities. Dividends The management declared and paid dividends to the shareholders. These dividends were declared on 3rd July 2012 which is in the current accounting period under which these financial statements are prepared. These dividends were paid on 1st September 2012 following the annual general meeting. These dividends were of amount of $1,430,000. Further the company declared interim dividends on 1st march 2013 of $480,000. They were paid from retained earnings from the previous years. On 29th June 2013 went further and declared a final dividend of $1,876,000 which was not subject to approval. This was on the basis of 10 cents for every share held. After balance date events The company directors issued a prospectus for a new issue of shares for three million ordinary shares at an issue price of $3.00 to be payable in full on application. This was on 10th august 2013. The directors also decided to outsource to contractors some of the company’s activities and processes which were overseas in a move to reduce costs. This was done especially to the countries where labor costs were significantly low. They outsourced payroll processing which was anticipated to occur in December of 2013. It would reduce costs by 4% in the next accounting period and 7% the following years after that. The Directors’ Declaration In view of the directors of kibet company limited: The financial statements and the notes to them in this financial statements are in accordance to companies Act of 2001, this include; Providing a true and fair view of the financial statements and the financial position of the company performance as at 30th june 2013. This is represented by the results of the operations provided in this report That the financial statements comply with accounting standards provided by AASB and the company’s regulation of year 2001. That there are reasonable reasons that the company will be able to meet all its obligations as and when they fall due to be paid. Annual Directors report This company has shown a tremendous growth this reporting period that has ended. This is evidenced by the company profitability which is attractive to the shareholders. The retained earnings show that the company is progressing well in terms of liquidity perspective. It is our responsibility to ensure that the financial statements of Kibet Company limited have been compiled and prepared according to the relevant regulatory bodies. These financial statements have been prepared according to the requirements of the international accounting standards and the Australian accounting standards. They represent a true performance of the company for the financial year ended 30th June 2013. Annual auditor’s report To the shareholders of kibet company limited We the auditors of these financial statements have audited all the financial statements in this report of Kibet Company limited which includes the income statement, the statement of financial position as at 30th June 2013, the statement of changes in equity and the accompanying notes for the year ended 30th June 2013. The directors of kibet limited are responsible for the preparation of the financial statements reflect a true and fair view according to the AASB and the companies Act of 2001. Directors are also responsible for the internal control as they determine it necessary to prepare the financial statements that are free from material misstatements due to error or fraud. The directors have disclosed that these financial statements comply with international financial reporting standards. Comply with the relevant ethical requirements Auditor’s responsibility As the auditors of Kibet Company limited our responsibility is to express an opinion on the financial statements base on our audit of the same. We conducted our audit according to Australian auditing standards. This requires that we comply with the relevant ethical requirements relating to conducting the audit engagements, the audit plan and the audit performance in order to obtain a reasonable assurance of whether the financial statements are free from material misstatements. We conducted our audit performing procedures to obtain audit evidence of the disclosures and the amounts. This depends on our judgment. Our opinion In our opinion; Financial statements of kibet company limited are in accordance with the companies Act of 2001.this includes’ Giving a true and fair view of the kibet company limited as at 30th June 2013 and of its performance for the year ended 30th june 2013. Complying with Australian accounting interpretation, the Australian accounting standards and the company’s regulations of 2001. The financial statements comply with international financial reporting standards as is requires in note 1(a). References AASB (Australian Accounting Standards Board), 2004. Framework for the Preparation and Presentation of Financial Statements. Melbourne: Australian Accounting Standards Board. Aktaş, R., 2011. Timeliness of Reporting and the Quality of Financial Information. Finance and Economics, 63(63), p.71-77. CCH Editors, 2008. Australian Master Accountants Guide. Sydney: CCH Australia Limited IASB (International Accounting Standard board) 1 “Presentation of Financial Statements” International Monetary Fund 2010. The Uses and Abuses of Sovereign Ratings. Global Financial Stability Review, October, p.85-122. Valletta, R.M., 2005. Clear as glass: transparent financial reporting. Healthcare financial management journal of the Healthcare Financial Management Association, 59(8), p.58-64, 66. Read More