Professional Documents
Culture Documents
2014
the rules, values, guidelines and processes, it is not up to date. The code of conduct has been
reviewed and updated in 2012. The company also does not have a proper policy in place
with regard to the time line of its review and update (Elisa 2006).
Absence of board succession planning and alternate directorship– The reports does not
reflect the company’s strategy and action plan with regard to its board of directors in case of
their death, injury or any other incidents which cause the absence of contribution and
participation of such directors. The charter of nomination committee in the corporate
governance section is silent on this.
ACC5502 Accounting and Financial Management: Assignment 1 2016
Insert your name: Shazni Mohamed Naji Page 3
Insert your student number: 0061089135
a) Triple Bottom Line accounting derived from the concept of sustainability which has been a
buzzword in the current corporate arena and an often mentioned goal of businesses, non-profits and
governments in the past decade. Measuring the degree to which an organization is being sustainable
or pursuing sustainable growth can be difficult task and question mark. John Elkington strove to
measure such a complex task by encompassing a new accounting frame work called “Triple Bottom
Line Accounting”. The phrase “Triple Bottom Line” includes environmental and social dimensions
in addition to the traditional measures of profit, return on capital or investment and shareholder
value (Timothy FS & Hall TJ).
b)
In review of the annual report 2014 of Santos Limited in light of the above concept, the following
examples were noted in regard to the fulfilment of the Company’s accountability to be in
compliance with the TBL accounting framework.
Despite the drop in the price of Brent crude oil, the company’s performance has improved. During
the year the company shows a negative result of $935mn (2013: profit $ 516mn). The major key
ratios such Earning per share, return on revenue, return on equity and return on capital employed
have deteriorated when compared to the last year. Further, during the year, the company’s equity has
reduced to $9.4bn from $10.2bn in 2013. These also show a negative indication of the drop in the
performance of the company. These negative indication arose purely due to the impairment of assets
which is accounting adjustments rather business or operational adjustments. Further, such unusual
adjustment is not included in the comparative results. Accordingly, when disregarding such
adjustments in the current results, it could be seen a growth in the profit which gives a result of
$628mn (Loss for the year $-935mn+ impairment losses after tax benefit $1563mn) whereas the
same result for 2013 in such a situation is $544mn ($516mn + $28mn). This is further proved when
underlying profit has grown to $533mn (2013: 504) which shows a growth of 6%. Further, increase
in oil production to 54.1 mmobe (2013: 51mmobe) resulted in the increase in top line revenue by
9% amounting to $ 63.7mn (2013: 58.5) which is a remarkable growth when considering the 50%
drop in Brent crude oil one of the major product of the company. The total asset value has grown to
$22bn (2013: 20.6bn) despite the impairment of $ 2.3bn. The cash position has improved from
$644mn in 2013 to $775mn in 2014. Moreover, with a negative net result of $935 the operating
cash flow indicates an improvement $ 215mn when compared to the year 2013. Hence, considering
the above facts, it could be justified that the company’s operational/business result has improved
rather accounting result.
Price volatility of energy products – The drop in the prices of energy product will result in
the lower generation of revenue and the decrease in the profit or increase the loss. It
evidenced through the drop in Brent crude oil.
Growth in world population - The world is expecting population to grow the by 1.1 billion
over the next 15 years. Such growth will result in the increase of the demand for energy by
50%. Hence, this might bring a favourable result to Santos in the ensuing years.
Fluctuations of foreign currency – Santos Limited has its significant operations outside its
home country (Australia). The major operation is Asia which involves the higher level of
ACC5502 Accounting and Financial Management: Assignment 1 2016
Insert your name: Shazni Mohamed Naji Page 6
Insert your student number: 0061089135
foreign currency transaction. Due to the instability in world economy and the resultant
foreign currency fluctuation, the business of the Santos limited will get affected.
Change in the regulation – Santos Limited’s business is highly exposed to law and
regulatory requirements in multiple countries. Enforcement new laws and regulations in
these countries which apply to the way Santos Limited operates its business will have
adverse effects to the business, operation and the financial result at the end. Ex: new tax
laws.
Changes in surroundings and environment – Number of factors exist which relates to
environment, health and safety effects arising from the operation of Santos. Events or
incidents which are harm and threat to the environment and local facilities of local
communities might cause a loss of the license of Santos Limited. This in turn will result in
delay or shut down of the operation with financial burdens.
ACC5502 Accounting and Financial Management: Assignment 1 2016
Insert your name: Shazni Mohamed Naji Page 7
Insert your student number: 0061089135
considered morally ethical (Tanner et al, 2007). In applying such theory of Kantianism to the above
case analysis, it is the duty of the company/Instagram to act in an ethical as well as moral manner.
The users do the posting of photos with a trust on the social media operator. When it deprived the
rights of the users over their contents posted through the manipulation of terms and condition or
policies with regard to the privacy with a view of transacting with adverting firms to generate
revenue and make profits, the users perceived it as dishonest and lose the trust on the media and its
operators. The motivation to the profit forced the company to modify the policies where it
recognised such changes for the best interest of the company while disregarding the best interest of
the user in large. This act raised a question on company’s practices in maintaining and safeguarding
the privacy, dignity and respect of the users of Instagram. It proved that the act was biased and
partial as the Instagram failed to consider the best interest of the users. This resulted in the sharp
drop in the users accounts which ultimately brought a financially a detrimental to the company. In
the revised or updated terms of use, the company was using high level complex legal jargons or
wording for the ordinary users of Instagram. It revealed that the company was trying to exploit the
lack of understanding of users where the act itself was an immoral or unethical. Depend on the
circumstances, the owners of Instagram were showing manipulative behaviours where the terms and
condition were changed in such a way benefitting to the company. The company was adopting
immoral and unethical ways to fulfil its duty and obligation towards the users of the accounts.
the client itself where the company would earning income for each click or views of those
advertisements.
3. Act as intermediary in sale of the content
The company could notify its users regarding the options available to sale or give the exclusive
right to use their contents to third parties thereby earn commission or any other income from the
users while making sure that the users paid for it. The company should also make sure that such
activity does not promote sexuality, gender inequality, religious ethnicity or any other social
disruptive activities.
ACC5502 Accounting and Financial Management: Assignment 1 2016
Insert your name: Shazni Mohamed Naji Page 11
Insert your student number: 0061089135
3 – RATIONALIZATION OF TRANSACTIONS.
iii No effect to the balance sheet Since the resources (delivery van and
due to this transaction. cash) were exchanged on a later date, the
transaction was deemed to be at the
negotiation stage on the reporting date
x Increase in accrued taxes (CL) The service has already been consumed
by $120 and decrease in equity as a result the obligation has arisen.
(OEQ) by $120
Remarks
- NCA – Non-current assets
- NCL – Non-current liabilities
- CA – Current assets
- CL – Current liabilities
- OEQ - Owner’s equity
-
ACC5502 Accounting and Financial Management: Assignment 1 2016
Insert your name: Shazni Mohamed Naji Page 13
Insert your student number: 0061089135
List of References
Birt, J, Chalmers, K, Maloney, S, Brook, A & Olive, J 2014, Accounting: Business reporting for
Decision Making, 5th edn, Wiley, Australia.
ASX Corporate Governance Council 2013, Corporate Governance principles and recommendation,
3 edn. Australia.
Elisa, A 2006, Code of conduct and corporate governance, Symphonya: Emerging issues in
Management, n.1, p.93-109.
Lin YT & Chang YM 2014, Impact of an independent director system on board of directors and the
system’s relation to corporate performance. Case study of listed companies in Taiwan, Investment
management and financial innovations, v. 111, no.1.
Paul JS 2011, Internal auditing’s role in risk management, The institute of internal auditors
research foundation.
Rodgers, E & Chris, D, Ethics of Social Media Behaviour: Act versus Rule Utilitarianism.
Subramanian, G 2015, Corporate Governance 2.0, Harvard Business Review, Viewed on 2 April
2016, <https://hbr.org/2015/03/corporate-governance-2-0>
Tanner, C, Medin, DL, Iliev, R 2007, Influence of deontological versus consequentialist orientations
on act choices and framing effects: When principles are more important than consequences,
European journal of social psychology.
Timothy, FS & Hall, TJ, The Triple Bottom Line: What is it and How does it work?, Indiana
Business Review, Viewed on 2 April 2016,
<http://www.ibrc.indiana.edu/ibr/2011/spring/article2.html>