HA3011 Advanced Financial Accounting Assessment Help

Introduction

This report aims to analyze the assigned company “Abacus Property Group” annual financial reports on mentioned criteria of assignment. This report discusses reporting entity status, GPFRs, company’s GPFRs standards, annual report components, company assets and related notes, incentive contracts and users of financial statements.

Abacus Property Group is a leading Australian real estate investment trust. It was established in 1996 and has a diversified portfolio of investment in real estate opportunities across Australia and New Zealand. It is listed on ASX since 2002 and included in S&P/ASX 200 index.

Abacus Property Group’s strategy is to invest in capital property opportunities to drive a maximum long term value for share-holders. Its objective is to provide investors with increasing and reliable return rates. It is an integrated property businesses, with a strong track record of achieving returns, built on our core expertise in accessing properties and projects and actively managing them to realize their full value. It has a single office located in Sydney, Australia. It is a flat corporate structure entity.

Investment portfolio of Abacus Property Group is diversified which ranges from office, self-storage, and super convenience retail properties. Rental income from these assets is the largest contributor to the earnings of the Group. Abacus’ disciplined property selection process maintains a firm focus on fundamental real estate value.

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Discussion on assignment questions.

A. Discuss the factors to be considered in determining whether an entity is a reporting entity, using your subject company as an example.

An entity (company) is a reporting entity when the stakeholders of are dependent on GPFR (general purpose financial report) to make their important decisions. For example, listed companies, large private companies, educational institutions are reporting entities. For company to be a reporting entity, it has to follow all the Australian Accounting Standards to prepare a GPFR. Whereas a non-reporting entity’s users do not depend on the GPFR, it is permitted to prepare a special purpose financial report. For example, small private companies or not-for-profit associations. These have to apply the measurement and recognition of Australian Accounting Standards with limited disclosure.

Abacus Property Group is a reporting entity, where the GPFR is used by stakeholders to make important corporate decisions. The stakeholders of this company are employees, contractors, managing agents, security holders, investment community, customers and tenants, government, regulators and community. For all those Abacus Property group prepare their general purpose financial report.

 

B. Define, describe and critically discuss the objectives of general-purpose financial reporting (GPFR).

General purpose financial reporting is a system to prepare transparent financial reports to meet the information needs of stakeholders in a general way. These GPFRs include multiple reports, financial statements, events and activities. The prime objective of GPFRs is to provide useful information about entity to the users for accountability and decision making. Public sector entities raise resources from donors, lenders and taxpayers for use in the provision of services to citizens through GPFRs. Information present in the GPFRs is all about financial position of an entity that enable users to identify and claim the resources. It also represent whether the entity has acquired resources economically and used them efficiently and effectively to achieve its goals. Information regarding cash flows of an entity show its liquidity and solvency. It indicates how the entity has used the cash (borrowing or repayment). It also identify from where the cash is received (taxes or investments). GPFRs also provide non-financial information to assist users to better understand and interpret the information. Non-financial information includes matters related to government, compliance with approved budget, service delivery, achievements, reporting period and expectations for future periods.

 

C. Identify if your subject company’s report is a GPFR and if the objectives of GPFR are achieved by your company.

Abacus Property Group’s report is a GPFR. All the objectives of general purpose financial report are achieved. The information presented in the report includes financial, strategic, audit and declarations. This shows that the financial report is not specific to a single user but can be accessed and used by multiple stakeholders at a time. In the report there are total ten sections. Each section has some sub sections.

 

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D. In addition to the financial statements, what else is included in the annual report? Briefly summarize three of them and indicate their page in the annual report.

In the GPFR of Abacus Property Group, there are total ten sections.

  1. Director’s Report
  2. Auditors Independence Declaration
  3. Consolidated Income Statement
  4. Consolidated Statement of other Comprehensive Income
  5. Consolidated Statement of Financial Position
  6. Consolidated Statement of Cash Flow
  7. Consolidated Statement of Changes in Equity
  8. Notes to the Financial Statements
  9. Directors’ Declaration
  10. Independent Audit Report

Brief Description

  1. Director’s Report (Page in Annual Report 02)

In this section there are 3 sub sections. One is principal activities, second is operating and financial review and third is strategy.

In first section, the activities such as investment in self-storage and commercial properties and property developments are discussed.

In second section, there is discussion about listed structures or entities, Abacus Property Group Consolidation, Abacus Hospitality Fund (AHF), Abacus Wodonga Land Fund (AWLF) and financial overview of the company are discussed.

In third section, strategy of the Abacus Property Group is discussed. It states that Abacus is transitioning to a more consistent annuity style, strong asset backed business with key investment sectors of commercial office and self-storage.

  1. Auditors Independence Declaration (Page in Annual Report 32)

In this section of annual report, a lead auditor of Abacus Group Holdings Limited has made declaration about the following points.

  1. a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
  2. b) no contraventions of any applicable code of professional conduct in relation to the audit.
  3. Independent Audit Report (Page in Annual Report 97)

In this independent audit report, auditor’s opinion, basis of opinion, key audit matters, investment properties, property loans, inventories, equity accounted entities, responsibilities of the director’s financial report, auditor’s responsibilities for the audit of financial report and report on auditor’s remuneration are discussed in detail.

In the auditor’s opinion section, auditor has quoted “We have audited the financial report of Abacus Group Holdings Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the Directors’ Declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2019 and of its consolidated financial performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.”

 

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