Financial Report Analysis
Table of Contents
Executive Summary 2 1. Summary of IPL’s activities and strategies 3 2. Key accounting policies and Accounting Standards 3 2.1 Revenue Recognition – AASB 118 3 2.2 Foreign Currency Translation – AASB 121 3 2.3 Income Taxes – AASB 112 4 2.4 Consolidation – AASB 127 4 2.5 Impairment of Assets – AASB 136 4 3. Management’s flexibility in selecting key accounting policies 4 3.1 Interest Bearing Liabilities 4 3.2 Derivative Financial instruments 5 3.3 Interest Bearing Liabilities 5 3.4 Intangible Assets - Goodwill 5 4. Accounting strategy employed by management and incentivesl 5 4.1Evaluation of accounting strategy employed by management 5 4.2Evaluation of incentives strategy employed by management 6 5. The quality of the disclosure made in the accounts 6 6. Potential questionable numbers 7 6.1 Deferred Tax Assets & Liabilities 7 6.2 Cash and cash equivalents 7 7. Undoing distortions in the numbers 7 8. Summary of financial press discussion of IPL’s performance and accounting numbers 8 Bibliography 9 Appendices 10
Executive Summary
Incitec Pivot Limited (IPL), is leading global chemical manufacturer supplying agricultural fertilisers and industrial chemicals to the Australian and overseas markets. The objective of this report was to analyse and understand how the accounting policies and strategies implemented by IPL impacted their financial performance. The analysis is based on IPL’s annual report which outlines the selected accounting policies, business strategy and performance.
Firstly, the report summarises IPL’s activities and strategies during the financial years ending 30th September 2009 and 2010. Secondly, the report identifies the key accounting policies and assesses management’s flexibility in selecting them. Also, the report evaluates the quality of disclosure in IPL’s annual report, identifies potential questionable numbers and attempts to undo any possible distortions
Executive Summary 2 1. Summary of IPL’s activities and strategies 3 2. Key accounting policies and Accounting Standards 3 2.1 Revenue Recognition – AASB 118 3 2.2 Foreign Currency Translation – AASB 121 3 2.3 Income Taxes – AASB 112 4 2.4 Consolidation – AASB 127 4 2.5 Impairment of Assets – AASB 136 4 3. Management’s flexibility in selecting key accounting policies 4 3.1 Interest Bearing Liabilities 4 3.2 Derivative Financial instruments 5 3.3 Interest Bearing Liabilities 5 3.4 Intangible Assets - Goodwill 5 4. Accounting strategy employed by management and incentivesl 5 4.1Evaluation of accounting strategy employed by management 5 4.2Evaluation of incentives strategy employed by management 6 5. The quality of the disclosure made in the accounts 6 6. Potential questionable numbers 7 6.1 Deferred Tax Assets & Liabilities 7 6.2 Cash and cash equivalents 7 7. Undoing distortions in the numbers 7 8. Summary of financial press discussion of IPL’s performance and accounting numbers 8 Bibliography 9 Appendices 10
Executive Summary
Incitec Pivot Limited (IPL), is leading global chemical manufacturer supplying agricultural fertilisers and industrial chemicals to the Australian and overseas markets. The objective of this report was to analyse and understand how the accounting policies and strategies implemented by IPL impacted their financial performance. The analysis is based on IPL’s annual report which outlines the selected accounting policies, business strategy and performance.
Firstly, the report summarises IPL’s activities and strategies during the financial years ending 30th September 2009 and 2010. Secondly, the report identifies the key accounting policies and assesses management’s flexibility in selecting them. Also, the report evaluates the quality of disclosure in IPL’s annual report, identifies potential questionable numbers and attempts to undo any possible distortions