JB Hi-Fi Limited and Standards Disclosures - Case Study Example

JB Hi-Fi Limited Analysis Name: Lecturer: Course name: Course code: Date: Executive summary Australia Accounting standard broad (AASB) and International Accounting Standards IAS are agencies used as tools of developing and maintaining financial reporting standards. Australian Accounting Standards Board stipulates the accounting policies that companies should followed in disclosing items in financial statements[Cam07]. AASB 101 and the AASB 139 provide reflective requirement that ensures disclosure of company’s current financial obligations from the long term obligation. The standards define current liability under; expectation of settlement i.e. one year, liability was primarily as a result of trading, and the company has no right in deferring liability for future settlements. This separate respective disclosure standards harmonizes the disclosure requirements on both accounting jurisdictions. AASB 101 incorporating with IAS 1 provides the mode of adoption of the international presentation of financial statement in financial reporting.   Initiative of the Australian Accounting Standards Board (AASB) allows none publicly accountable reporting entities in preparation of non complex financial statements by giving essential exemptions from the disclosure that are stipulated AASB standards[Aus09]. JB Hi-Fi Limited applies these strategic guidelines in enhancing reflections of the company’s fair view of the financial conditions. The principal disclosure ensures that the items in financial statement such as assets and liabilities are presented according to requirement of AASB. The standards disclosure of accounting strategies is principally of handy to JB Hi-Fi Limited users when vindicating on desired company’s performances. Table of contents Executive summary 1 Table of contents 2 Introduction 3 JB Hi-Fi Limited and Standards disclosures 3 JB Hi-Fi Limited and Standards requirements 10 conclusions 10 Reference List 12 Appendix I 14 Appendix II 15 Appendix III 16 Introduction JB Hi-Fi Limited is an Australian based company eestablished in 1974 by Mr. John Barbuto (JB). Its headquarters is located in Chadstone. The company primarily engages in consumer and electronics products such as cooking products, musical instruments computers, and consulting services[JBH13]. The company offers its products in different destination located in Australia and New Zealand and it has online stores distributed in over Australia and New Zealand providing efficiency in serving the customers. The JB Hi-Fi Limited is the parent company with subsidiaries that are operating under policies provided by International financial reporting and Australian Accounting standards. The company’s 2012 and 2013 annual reports shows an improving state of financial position where the company’s increases in assets worth from $811,149 to $ 843,304 million dollars with insignificant decrease in current liabilities $626,648 in 2012 to $599,476 in 2013. JB Hi-Fi Limited and Standards disclosures JB Hi-Fi Limited management facilitates the use of AASB 131 in disclosing its consolidated financial statements. AASB defines the presentation of company’s liquidity state in meeting financial obligations[Ear09]. International Accounting standards board provides JB Hi-Fi limited accounting disclosure on the company’s current liabilities. According to the 30 June 2013 financial year the company discloses an insignificant increase in the current obligation from 2012 financial year. JB Hi-Fi Limited report gives undemanding disclosures on its statement of financial position reflecting an increase in the company’s current owing from $ 439,481 in 2012 to $ 442,379 million dollars in 2013. Decline of $ 2,898 million dollars in current liabilities of the company is as a result of increase in the bills payable, increase in the provisions, rise in outstanding company obligation and creditors. JB Hi-Fi Limited recognizes the short term obligations payable within one year a disclosed according to requirement of IAS 37 and IASB. The company classifies the current financial obligation under; i) Trade and other payables- The Limited reveal main constituent in current liabilities with $400,803 in 2012 and $387,020 million dollars in 2013[JBH13]. AASB 137 identifies the payables as current liability since the company has confirmed its obligation within the financial year. The decrease of $ 13,783 million dollars is a major item of present obligation which reduces difference in the current year total current liabilities with preceding years. JB Hi-Fi Limited grouped trade payables, Goods and Service tax (GST) payable accruals and deferred income as under trade and other payables, ii) Current Tax – is revealed as the second item which causes difference in the JB Hi-Fi current obligations. Current tax payable is $14,932 as compared to preceding year with $4,374 million dollars. Interest rate swap is the only item disclosed by the company as other financial liabilities. iii) Provisions – Australian Accounting Standard Board (AASB 137) defines Provisions from other liabilities such as trade payables and accruals since provisions is regarded as uncertainty to the business that is about timing or future business expenditure which call for payment[Aus09]. AASB 137 recognizes trade payables as obligations resulting from the goods and services received but invoiced while Accruals are business obligations such as amount due to employees. AASB 137 requires that provision should be separated in the statement of financial position. JB Hi-Fi Limited discloses provisions in compliance with AASB 137. The company reported differently the provisions with accruals and payable. Provisions as revealed in the in JB Hi-Fi Limited 2013 annual report entails leave provision and employee benefits. The company reported current provision for the employee benefits included $3,595 annual leave which is yet to be taken. This leave was allocated $3,271 in preceding year 2012. AASB 119 stipulates how employee privileges are recognized and measured in the financial statements[Deb06]. The company’s shows a raise of $7,309 employee benefits from $ 27,802 in 2012 to $35,111 in the year 2013. The lease provision includes Group based estimates that is required to reinstate the leases premises. AASB 117 defines accounting for leases of assets, JB Hi-Fi Limited reveal decrease in provisions for leases from $2,872 in 2012 and $1,280 in 2013. JB Hi-Fi Limited does not fully present their accounting disclosures with regard measures stipulated by AASB 137 and IAS37. Particulars FY2013 FY2012 Loan Repayment 26,210 84,174 Interest Paid 8,896 12,765 Borrowings 124,331 149,,775 JB Hi-Fi Limited 2013 annual report reflects $124,331borrowing in the current year used in financing the business. The amount borrowed during the year is recorded as 124,331 in 2013 and 149,775in the preceding year. This reflects a decline in the amount borrowed in previous year and the current year by 25,444. AASB 128 disclosures in paragraph 125 stipulate the treatment of the obligation and the provision of uncertainties due to changing nature of their carrying amounts. (JB Hi-Fi Limited, 2013). These elemental accounting treatments include judgments on whether a company obligation is appropriately for in the financial year. Company obligation is measured at its fair values which they do change in subsequent years and hence give rise to the assumption of estimation uncertainties at the end of the accounting period. The companies obligation paid in 2013 is lower as compared to the previous year. This shows the fundamental requirement of the repaying the outstanding liability is provided for in 2012 as compared in 2013. JB Hi-Fi Limited repaid 26,210 out of the borrowed loan of 124,331 in 2013 as compared to amount repaid in 2012 of 84,174 out of the total liability of 149,775. The current year’s repayment represents 21% of the total loan borrowed as compared to 56% paid as at the end of 2012. JB Hi-Fi Limited annual report does not reflect any securities in regard to the liabilities of the firm. The company statement of financial position describes the matters of financial affairs according to AASB presentation of company’s liquidity state in meeting financial obligations. Conversely, the recognizing measures on securities of noncurrent liabilities[Bel08]. The company has outstanding borrowing which is repaid within a period of two years, and two to five years. In 2013 financial year borrowed loan amounts to 124,331 where 21% of the amount was paid in the current year. Therefore the outstanding loan of 79% is due and payable as follows; 42% of 124331 amounting to 52420 is payable within two years while remaining 72911 is payable for a period within two to five years. AASB 101 defines the disclosure of the measures used for different classes of revenues, assets financial and the company’s going concern measures. JB Hi-Fi Limited management facilitates the use of AASB 131 in disclosing its group financial statements and the subsidiaries. AASB defines the presentation of company’s liquidity state in meeting financial obligations. Conversely, the recognizing measures and interpretation of the requirements of AASB determines the company’s comprehensive income statement and statement of financial position[Dou06]. The JB Hi-Fi Limited management has well established policies in compliance with IFRS and AASB standard to ensure that subsidiaries financial reporting are considered valuable on dispensation of International Accounting standards. According to JB Hi-Fi Limited, preparation, and presentation fair values of financial instruments such as revenue income, goodwill, company’s off-balance sheet arrangements and the going concern principles. Regarding disclosure different accounting policies, estimates some of the substantially uncertain and material accounting policies which may attributively cause impact on reliance of the financial statements. The Australian Accounting Standard Board endows conciliating provisions that require the company to establish firm measures to be followed in accounting for the business transactions and reporting. AASB 119 issued new policies in compliance with IASB which is used to in accounting the employee benefits. The significant accounting policy of disclosure presents the bearing information that develops apparent review of company financial condition (JB Hi-Fi Limited, 2012). The JB Hi-Fi Limited management is structured to limit financial estimation that will inhibit its risk of exploitation of disclosure rules in financial statement since of following outdated regulation provided by the standards[Dou06]. The material aspects of financial statement are fairly attributed to increase rate of user’s reliability of the company’s financial statements. Disclosures of matters in financial statement are considered as the elementary component interpreting the adopted accounting policies (JB Hi-Fi Limited, 2012). ASIC financial position is used by potential investors in making viability of company investment decision. This will be reflecting the significant in adopting all the requirement of the accounting standards. The state of the company’s financial performances identifies the effectiveness of measures set by Australian Accounting Standards gives the users reliable evidence on the accounting information. The significant accounting strategies instituted by both IFRS and ISA present a wide range of general description which contrast with the pervasive management strategies basing on the principle estimation. JB Hi-Fi Limited management present the financial statement in accordance’s with the supports of the user’s comprehensive understanding to achieve acquaintance in the statement and promote practicable financial solutions[Deb06]. AASB and IAS provide corrective consideration in disclosing the accounting policies which JB Hi-Fi Limited need to embark on their requirement to enhance consistency in application of accounting disclosure policies. The management accounting has established clear understanding of the accounting estimates that has enhanced JB Hi-Fi Limited reporting. The important policies of disclosure are the fundamental components in note of JB Hi-Fi Limited management's analysis. JB Hi-Fi Limited financial impairs policies interpreted by the AASB 101 Financial position should imply to the precisions, and certainties that can is caused by rapid changes in the company’s financial condition[Ear09]. JB Hi-Fi Limited management reporting techniques on the risk of changes in materiality of the accounting statements due to fair value based on the estimation disclosures of accounting statements. JB Hi-Fi Limited and Standards requirements The JB Hi-Fi Limited current accounting outline describes a well based observes accounting policies and procedures according to the requirement of AASB 101. The company reflected an increasing trend of company’s financial performances this denotes that the company’s management disclosures are presented according to the requirement of AASB. The company management accounting department perilously complies with the requirement of Australian Accounting Standard Board and IAS. The current accounting policies are compliably used in valuing the company’s assets, financial obligations, liquidity and providing for provision on the anticipated amount to be consumed as part amortization of goodwill depreciation and doubtful debtors[Bel08]. The company accounts for treasury shares according to the requirement of IFRS where the shares are held differently from the life business returns and the results of the holdings are to be recognized as income in the disclosed financial information. This transaction was not accounted for since JB Hi-Fi Limited includes the held amount in the cash earning. conclusions JB Hi-Fi Limited discloses their financial issues according to the requirement of AASB and IAS standards. The management accounting expertise should control the company’s financial transaction by following the stipulation laid down under the Corporation Act 2001 which exhaustively gives need of disclosures in judging the going concern of the company. The company’s provision regarding to the principle of going concern is impaired, this call for the management to abide by the AASB and IFRSs in disclosing their companies financial details. Furthermore, the accounting department should show the sequence of accounting transactions and indicates how the resultant estimates were achieved. JB Hi-Fi Limited accounts for the company investment according to the requirement of IAS and IFRS presentation disclosures (Doug, 2007). The company provides a basis of identifying the returns from investment where the dividends earned for the subsidiaries are mutually recognized in the JB Hi-Fi Limited financial statement. According to AASB 101 the subsidiaries are consolidated and charged in the parent entity. The provisions provided by the act regarding to the future company’s subsidiaries performances under the balanced sheet adjustments s should comply with disclosures of the JB Hi-Fi Limited. Reference List Cam07: , (Camfferman, 2007), Aus09: , (Board, 2009), JBH13: , (JB Hi-Fi Limited, 2013), Ear09: , (Earl K., 2009), Deb06: , (Blythe, 2011), Bel08: , (Needles, 2008), Dou06: , (Galbraith, 2006), Appendix I Appendix II Appendix III Read More