GMG case study

Topics: Balance sheet, Financial statements, Generally Accepted Accounting Principles Pages: 10 (2321 words) Published: April 4, 2014

CONTENTS

Executive Summary ……………………………………………………... 3

1.

Profile and Strategies ……………………………………………………. 4

2.

Key Accounting Policies ………………………………………………... 4

2.1.
Revenue Recognition [AASB 118] ……………………………………... 4

2.2.
Impairment of Asset (AASB 116) ………………………………………. 4

2.3.
Foreign Currency Transactions (AASB 121) …………………………… 5

2.4.
Employee Benefits (AASB 119) ………………………………………... 5

3.

Degree of flexibility ……………………………………………………... 5

3.1.
Revenue Recognition – Moderate ………………………………………. 5

3.2.
Foreign currency Transactions –Low …………………………………… 5

3.3.
Employee Benefits – Moderate …………………………………………. 6

3.4.
Impairment of assets – high ……………………………………………... 6

4.

Accounting strategies and incentives ……………………………………. 6

5.

Quality of Disclosure ……………………………………………………. 7

6.

Potential questionable accounting numbers ……………………………... 8

7

Undo Distortion …………………………………………………………. 9

8.

Financial Press Discussion ……………………………………………… 9

Reference ………………………………………………………………... 10

Appendixes ……………………………………………………………… 11

Executive Summary
Goodman Group Ltd. is an industrial property and management company in Australia with 36 offices in 18 countries around Europe, UK, North America, Brazil and the Asia-Pacific region. This report utilises the 2013 financial Report of Goodman Group Ltd, and analyses some details of these statements combined with accounting policies, while outlining the various activities and business strategies of the company. By evaluating the flexibility allowed in reporting requirements, the company’s accounting strategies and incentives, as well as the quality of disclosure, and issues surrounding questionable accounting figures, this report attempts to provide a broad understanding into the Financial reporting practices of Goodman Group Ltd. This evaluation has found that the quality of disclosure in the report is accurate, comprehensive and consistent. Where values have not been given, reasons for its non-disclosure have been provided. Any estimation practices and new accounting standards have been disclosed so as allow shareholders to make informed decisions on how these may affect shareholder wealth and business performance. Questionable numbers include the large change in cash receivables between the year 2012 and 2013. Almost doubling in size to $645.4 million and $338.7 respectively. This increase has been judged to be largely as a result of increased e-business in Asia. Possible distortions can arise from values related to the impairment of assets. As moderately high flexibility is allowed in choosing how to report on assets impairment, this has allowed for possible distortions to be achieved. This report has concluded that the information recorded by Goodman Group is accurate, substantial, and free from misstatement, a conclusion supplemented by KPMG - the independent auditor, in their report. While there are some questionable numbers and possible distortions, this report has concluded that on a whole the reporting practices of the company are sound. 1.0 Profile and Strategies

Goodman Group Ltd. (GMG) is a multi-national organisation, whose activities include the development of buildings and the management of industrial plants, office spaces, warehouses and logistics centers. Recently, GMG has expanded its operating activities to include e-commerce and investments in the automotive industry, achieving an operating profit of $544 million for the year ended 30 June 2013. GMG aims to be the largest provider of business space and industrial property in the global market (Goodman 2013), and have adopted certain business strategies to achieve this goal. These strategies revolve around the “own+develop+manage” business model, expanding the business in selected new markets and achieving profit improvement (Goodman 2013). Furthermore, the business strategies of risk management and effective oversight have...


References: Cummins, C. 2013, Goodman Group to focus on development in US, Brazil, The Sydney Morning Herald, viewed 1 October 2013, .
Goodman Group, 2013, Goodman Group Annual Report 2013, .
Sydney Morning Herald, 2013, Goodman Group profit jumps, viewed 1 October .
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