Analysis of Annual report of Southwest Airlines and Delta Airlines Inc

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Executive Summary - In this research report we will analyzed the annual report of two Australian company name as Alumina Ltd and CSR Ltd to understand the convergence of annual report with AASB and also we provides the extract of the annual report for analysis of annual report. Our topic for the analysis of report is related to the executive’s compensation and employee benefit in the corporate culture of the organization. For the proper analysis and research we compared the annual report of both the organization which provides support and evidence about the AASB requirement for the disclosure of annual report and preparation of the annual report by the organization.

Table of Contents
Executive Summary. 1
Introduction. 2
Compliance of annual report with AASB. 2
Alumina Limited. 2
Non Compliance of AASB. 3
CSR Limited. 4
Accounting Standard which is not followed in preparation of annual report of the CSR Limited. 5
Prudence to the corporate reporting by revision of framework. 5
Difference in disclosure of both the organization. 5
Recommendation. 6
Conclusion. 7


Introduction – For the analysis of annual report compliance with the accounting standard issued by the AASB we have selected two Australian companies i.e. CSR Limited and Alumina Limited. For the analysis of both the company we have used the annual reports director’s notes for better understanding of the follow up of AASB in the annual report. Both the companies are in the business of production of Aluminum.
Compliance of annual report with AASB - AASB 101 is related to presentation of financial statement and annual report of the organization hence every financial statement should be in convergence with the AASB 101. (AASB 101) For understand the convergence of Accounting standard in the annual report we have analyze the notes to account of report –
Alumina Limited - 
In the notes of consolidated financial statement of annual report company declare that annual report of the company is prepared according to the Accounting Standard issued by the AASB. For the preparation of annual report Alumina follow the accounting standard issued before 1st January 2014 by AASB.  Also accounting standard which is declared before date mentioned but ineffective are not followed in preparation of annual report of the organization. Employee benefit for retirement benefit of the of the organization are valued by following the AASB 119. (AASB 119) As per the AASB 119 this plan required to measure by following the actuarial valuation hence Alumina valued by Actuarial valuation. Financial statement and annual report of Alumina Limited cover all the part which is required in the framework of the AASB hence we can say that annual report of the Alumina is with compliance of AASB. (Alumina Limited Annual report, 2015)
As per AASB 1053 there is two tier of reporting requirement for the organization in Australia and Alumina fall in the reporting requirement of Tier 1 where organizations need to follow the entire accounting standard issued by the AASB. Hence Alumina also follows the entire accounting standard Issued by the AASB. Therefore financial statement considered in convergence with the AASB. (AASB 1053)
Alumina follows the Corporation Act 2001 with AASB for preparation of annual report.  Alumina Complied with the IFRS which is adopted by the AASB for preparation of annual report of the organization. (Corporation Act) Organization not provides the name of executive according to the requirement of AASB 124. (Alumina Limited, 2014)
Non Compliance of AASB - Alumina not complied with the AASB which is not effective on the beginning of the year. As per the requirement of AASB1053 and AASB 101 organization need to follow the standard which is effective on the beginning of the financial year hence standards which will be effective after beginning of the financial year need not followed by the organization. Some of the accounting standard which is issued by the AASB after 1st January 2014 is as below –
AASB 9 Financial instrument - This standard will be effective from the year 2018 hence organization need not to follow during the reporting of 2014. This standard is for the liability which is designated at fair value but Alumina does not have such kind of liability hence they will adopt any time before year 2018 for reporting of the financial statement. (AASB 9)
Amendment in AASB 2, ASSB 3, AASB 13, AASB 116 and AASB 138, and AASB 124 – This all are the amended accounting standard and Alumina not follow the amendment in preparation of financial statement of the year 2014 but they will follow from the year 2015. All this amendment not complied due to non determination of potential effects of the amendment in the financial statement of the organization. (Alumina Limited Annual Report, 2014)
AASB 1, AASB 13 and AASB 140 – This all the accounting standard also amended in the previous year but not follow up by the organization for preparation of financial statement of the organization. Organization does not have an idea about the impact of changes in the accounting standard hence it will also be followed from the year 2015 onwards.
IFRS 15 – IASB issued IFRS 15 by elimination of IFRS 18 but it is not adopted by the Alumina as it is not adopted by the AASB in annual reporting.
CSR Limited – CSR Limited is Australian aluminum producing company.  Financial Statement of the company is audited by the words big 4 auditing firm name as delloitte. Up to the year 2013 CSR limited not follow the AASB 119 for preparation of annual report but from the year 2014 onwards CSR limited adopted the AASB 119 for preparation of annual report of the organization. Organization uses the AASB 119 for measurement of retirement benefit of employee in the year 2014. (AASB 119)  Initiating follow up of AASB 119 is considered as change in accounting policy for the CSR Ltd. As per the AASB 124 of Australian Accounting standard Organization provides the list of executive of organization and their period of job with the organization. AASB 124 is for the related party disclosure hence executive of the organization are considered as related party of the organization hence any transaction and deal with the executive are mentioned in the report according to the AASB 124. (AASB 124)   AASB require mentioning the list of executive who is key managerial personnel of the organization and who is not key managerial personnel of the organization. CSR limited mentioned both the list in their annual report hence AASB have been followed by the CSR limited. (CSR Limited Annual Report)
As per the requirement of AASB 2 of standard, CSR Limited valued their share based payment through third party.   Grant of share based payment of the CSR Limited is valued by the E & Y for the organization.  CSR followed the AASB 9 even though it will be effective from the year 2018. AASB 9 is for simplifying the financial instrument hence it will affect to hedge transaction for financial reporting purpose which is incorporated in the annual report of the organization. CSR also mentioned the effect from follow up of the AASB 9. As per AASB 101 for preparation and presentation of financial statement all the accounting standard which is necessary for the financial statement are followed by the company. Notes of the financial statement are maintained according to the AASB requirement. All the accounting standard which is relevant for the company business are followed for preparation of annual report of CSR Limited. (AASB 2, AASB 9)
Accounting Standard which is not followed in preparation of annual report of the CSR Limited – CSR followed the entire accounting standard from 2014 onwards which is applicable to the organization. As per AASB 1053 Private organization need to follow all the AASB for preparation of annual report of the organization. Hence for compliance with the AASB requirement CSR followed all AASB issued by Australian accounting standard board.
Prudence to the corporate reporting by revision of framework – CSR limited not mentioned that they are preparing financial statement according to the corporation Act of the Australian government. Corporation Act should be followed by all the company which is registered in the Australian stock exchange or registered with the company Act. If any company is not following the any provision and rules of the government policies that organization have to mentioned in the financial statement about the non following of any rules, hence non mentioning of information about the non following of rules is considered as organization is following the corporation Act in preparation of annual report of the organization.
As per AASB 101 of Accounting standard organization should mentioned in the notes to account about the change in policies. Hence CSR limited have mentioned about the acceptance of new policy in preparation of financial statement and their effect on the financial statement.
Difference in disclosure of both the organization –
Alumina and CSR are producer of the aluminum.  As both the company is in same line of business hence disclosure requirement of both organization are also same but both the organization are not following in terms of disclosure of annual report. CSR believed in timely adoption of all the accounting standard and amendment in accounting standard for preparation of financial statement. Hence CSR adopted all the accounting standard and amendment in accounting standard for preparation of financial statement for the year 2014. As CSR is promoting timely and balanced disclosure of all material concerning to the company as per the corporation Act. Auditor report of Delloitte is also pronounced that company complied with all the requirement of AASB. But if we look at the annual report of Alumina Limited then it is very clear that Alumina not following some of the AASB and amendment in AASB for preparation of annual report of the organization. Other side CSR discloses the related party and their key management role in the organization but Alumina not disclosing the related party disclosure according to the AASB 124. Notes to account of CSR disclose all the notes related to financial statement in annual report but Alumina not disclosing all the notes related to financial statement. Looking to the annual report of both the company it is very clears that disclosure part of annual report of CSR is very clear in all aspect of AASB and corporation act requirement. Corporate social responsibility is also one of the disclosure parts of the financial statement. In case of the CSR they are disclosing the requirement of the CSR disclosure according to the corporation Act 2001. But in case of Alumina they are not disclosing each and every requirement which ought to be disclosing in the financial statement.
Recommendation –
Every organization tries to satisfy their stakeholders by using some different available strategies for the organization. AASB issued by Australian accounting standard board are issued to standardize and harmonies financial statement of all the organization within the countries. But if some companies follow the AASB and some not followed for preparation of annual report then objective of issuance of AASB could not be achieved. In order to achieve the objective of harmonization of financial statement every organization need to follow the AASB issued by accounting standard board with other statutory requirement of the country.  From the whole analysis of financial statement of both the organization we identified that due to non following of AASB by one company in some aspect financial statement of the company is not standardize.  Standardize financial statement make financial comparable which helps to the investor for understand the financial aspect of the organization. Other side comparable financial statement make understandable and simplification for the common user of financial statement. With the use of AASB organization need to follow conceptual framework of financial statement for preparation of financial statement.
We have analyzed the financial statement of both the organization and we recommended that organization need to follow all the AASB and complied with AASB for proper presentation and preparation of financial statement.
Financial statement considered as true and fair view only if it disclose all the things required by the organization.
Conclusion – Organization are increasingly suing the AASB for make financial statement as comparable. Other side AASB also issued AASB 1053 organization need to follow AASB according to the applicability of AASB to the organization. Applicability of AASB are decided based on the tier of firm, Tier 2 organization need to follow every AASB which is applicable for their financial reporting. This initiative of AASB is also considered as road map for comparable financial statement of the organization.  In this case Alumina not following some of the AASB hence financial statement of both the company is not comparable. 
References –
CSR, N.D., “Annual Report of CSR” Reviewed on 4th December, 2015 <http://www.csr.com.au/Investor-Centre-and-News/Annual-Meetings-and Reports/Annual%20Report%202012/sites/default/files/Annual_Report_2015.pdf>
Alumina Limited, N.D., “Annual Report of Alumina Limited” Reviewed on 4th December, 2015 <http://www.aluminalimited.com/latest-annual-report/>
AASB, N.D., “AASB 1053” Reviewed on 4th December, 2015 <http://www.aasb.gov.au/admin/file/content105/c9/AASB1053_06-10.pdf>
AASB, N.D., “AASB Compliance Requirement for organization” Reviewed on 4th December, 2015 <http://www.aasb.gov.au/About-the-AASB/Frequently-asked-questions.aspx>
AASB, N.D., “AASB Compliance Requirement for organization” Reviewed on 4th December, 2015 <http://www.aasb.gov.au/admin/file/content102/c3/AASB_RR-1_06-14_Reporting_Entities_and_SPFSs.pdf>
AASB, N.D., “AASB 101” Reviewed on 4th December, 2015 <http://www.aasb.gov.au/admin/file/content105/c9/AASB101_09-07_COMPsep11_07-12.pdf>
AASB, N.D., “AASB 124” Reviewed on 4th December, 2015 <http://www.aasb.gov.au/admin/file/content105/c9/AASB124_12-09.pdf>
AASB, N.D., “AASB 124” Reviewed on 4th December, 2015 <http://www.charteredaccountants.com.au/Industry-Topics/Reporting/Publications-and-tools/FAQs-Reporting/FAQs-on-Analysis-of-AASB-standards/AASB124>
Iasplus, N.D., “AASB” Reviewed on 4th December, 2015 http://www.iasplus.com/en/jurisdictions/oceania/australia
AASB, N.D., “AASB 9” Reviewed on 4th December, 2015 <http://www.aasb.gov.au/admin/file/content105/c9/AASB9_12-14.pdf>








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