The concept of International Financial Reporting Standards (IFRS) is an effective accounting standard that provides a set of common rules which allows any organization working within a particular industry to maintain a consistent and transparent report which is computable globally. The IFRS helps in understanding the financial involvement necessary for maintaining a stable infrastructure along with the work base within SMEs. The following reports focus on Medibank attempting to understand the commercial benefits along with accessible intangible assets in FY 2019 as well as 2020. Extra attention has been provided to the trend of corporate social responsibility performed by Medibank.
Table of Contents
1. Country that has adopted IFRS
I. In what year did the country adopt IFRS
II. Introduction of IFRS
III. Discuss the benefits and challenges of IFRS
2. Comparison of the financial statement of Medibank
I. Identification and Discussion on two Financial aspects
II. Usefulness of new format of disclosure
1. Key Trends in Corporate Social Responsibility (CSR)
2. Comparison of the CSR reporting of Medibank
I. Evaluation of the extent of CSR reporting of Medibank
II. Reason for making the specific CSR disclosure
III. Scope for improvement in CSR reporting by the company
To bring transparency and consistency to the financial report IFRS has been introduced in different industry sectors to fix a set of common policies of business operation. IFRS offers an opportunity to compare the financial performance of the company from global perspectives. ISAB remains responsible for designing the policies of IFRS. Using a common language of accounting, IFRS aims to make the financial report accessible to all, irrespective of the sectors and countries. It has a plausible impact on the investment sector of the company as it is aware of the investors about the financial status of the company. Transparent relations between the investor and company can be constituted with the implications of IFRS, relying on trust, long-term stable financial state, and the stable growth of the financial status of the company. To judge the IFRS, Medibank is considered and the financial analysis of this organization declares the usefulness OF IFRS as well as the hardships concerned with the implementation of this policy.
In Australia, the IFRS was taken as an effective model of accounting from the year 2005, 1st January. But it was the first-time adoption of the financing standard in Australia after that AASB made several changes and in 2007 an amendment on IRFS policy. From 1 st July of the year 2007, the amendment of IFRS was taken into action(Loyeng et al., 2016).
IFRS Was adopted through several phases of updates and changes. In the chosen company Accounting standard was made consolidated based on the IFRS system. To make the accounting system accessible to all, IFRS was adopted but it comes with several issues. So the IFRS standard was adopted first in the local accounting system and then to the whole system of accounting. In the 2014 financial report of Medibank, it was mentioned that the company adopted the company made its accounting statement based on the Australian policy of accounting and co-ordinating with the IFRS standards. After the 2014 financial year ending, a consolidated method of accounting has been taken into account. Medibank is a private sector and none of its shares was available in 2013 for trading in the public market. AASB 8 was practised in accounting since 2013 and it was mandatory for the firms having instruments to be traded in the public market. But using IFRS, the company did not want to make changes to their business operation and accounting policies as they were practised consolidated value management in their business to manage their assets.
The adoption of this IFRS framework has outstanding facilities for the emerging countries under the process of transition from traditional accounting strategy from the IFRS system. Several benefits are enjoyed by Australia with the implementation of IFRS in its accounting system. Analyzing the financial statements of different companies and the financial state, this accounting strategy offers a higher level of comparability among the companies(Mardini et al., 2019). The quality of the report and the level of performance can also be enhanced with the implementation of IFRS. investors get the confidence to invest in a company by analyzing the transparent report of the company. From this perspective, the company can acquire a higher level of investment from the investors(Mardini et al., 2019).
Along with the possibilities and benefits, it also has several obstacles. Without practical knowledge and relevant information about IFRS policy disrupt the flow of business. The fair value concept is very much useful for the companies and most of the organizations take benefits of fair value policy and IFRS implementation made changes with the fair value concept. Above all the transition from the traditional method of accounting to the IFRS is costly and it may affect the day-to-day costing of the company. Impacting daily operations, it also impacted the measured profitability of a firm(Tuzarova and Mejzlik, 2018).
Studies on different firms indicated that the IFRS policy also makes increments to the annual accounting of a company and similarly the compliance cost also gets disrupted. Complexity in accounting, fair value issues, and lack of technical skills impacted the implementation. Above all, primary challenges occurred during implementation, cultural issues, political influence on the accounting, legal impedance, and mental models. Earning management is also impacted by the IFRS as it causes volatility of earnings, governmental tax policies are also impacted by the implementation. But as this accounting policy is more focussed on principle, hence the data represents through IFRS provides a better understanding of the economic transition(Tuzarova and Mejzlik, 2018).
As it was revealed on 30 th June of 2018, the non-current asset of the company was about $453 million and it decreased from $462.1 million in 2017. The non-current assets of the year 2020 was $112.2 million, hiked from $49.3 million. In 2018, Property, equipment, and planning cost was $53.6 million and which turned into $112.2 million in 2020. The value was $49.3 million in 2019. Deferred cost for acquisition is $43.6 million in the 2020 financial year and increased from $44.4 million in 2019 (Medibank,2020). Deferred tax assets are $84 million and no exposure is provided for the year 2019. Other non-current assets are $7.4 million and the value was $0.7 million in 2019. Nothing was mentioned about the deferred taxation cost in the financial exposure of 2018 but the cost for the deferred acquisition was $48.7 million.
(Source- Medi bank, 2020)
Intangible cost is very complex to calculate. The trademark and intellectual properties of Medibank have higher values compared to the rival companies and it offers a scope to achieve higher values for the intangible assets. Receivable amounts for trade and other policies also come under the intangible resources for the company and these intangible resources. As per the report of 30th June of 2020, the company has an asset related to the trade and other receivables is $207.1 million and decreased from the previous financial year, in which it was 283.9 million. Assets for other intangible sources have an amount to $386 million and for the previous financial year, it was $405.9 million(Medibank, 2020). Considering the situation of 2018, the value for trade and other receivables was $292.2 million and that time it was decreased from $ 317 million. Other intangible resources had a value of $350.1 million, raised from $321.1 million in 2017.
The analysis of the disclosure formats for the financial reporting presented by Medibank after the adaptation of IFRS indicated that the presentation of the financial report has become more specific and wider to the classification as well as projection. The latest account formatting presented by IFRS provides a more inclusive scope of financial information. Along with the inclusive scope, the commercial segment ranging from employee benefits to tangible assets, non-current assets, leases, and employee benefits is widely included in the financial report.
The systematic presentation financial report by focusing on the standard presented by IFRS covers a complete range of financial and commercial report which allows the organization to model a specific model throughout the business and easily recognized the financial position of the company (Mongrut and Winkelried, 2019). The financial report of 2020 of Medibank has been prepared by focusing on the standards presented by IFRS and the Australian Accounting Standards Board (AASB). The accounting report format provided by many Banks in FY 2020 provides a uniform structure while maintaining a unitary model of reporting. The evaluation of the financial report included a summary of leases along with personnel remuneration which allowed the company to inform the stakeholders including the employees about their benefits represent a detailed scope.
With the progression of the development of the industrial sector globally, the acceptance of responsibilities to the corporate and social sectors has become essential. The preparation for the approaches of CSR is important to maintain the sustainability of the resources to get benefited for the community and the shareholders (Chae and Park, 2018). The development of the technology sector and other business environments have been helped to realize the business organization that the importance of the fulfilment of the commercial aim will not increase the system of sustainable consumption and production. After the implementation, it has been noticed that the commercial organization effectively aims to establish a social bond with the community who are operating the organization.
The values for maintaining the organization worth is been assured by promoting essential customers as well as a social relationship that is the main trend of CSR. as stated by a report, the formulation of shared value into the operational sphere of the company and establishes a proper value that is healthy for the organization. The organization is been the key focus to make a balance in the commercial area within the business environment along with the society. According to the structure of legitimacy theory, an arising graph of necessary contracts within the community and the corporate individuals are been accomplished in recent times (Wójcik-Jurkiewicz, 2017). This accomplishment is used as a broad example of ethical and social value promotion within the culture of the corporate organization. The same system has been regulated within the shareholders by promoting and enlisting issues.
It has been seen in more cases that corporate organizations are utilizing their social license to conduct in the community and it is the main tool to operate the concerns of CSR along with the range of the market. Instead of assuring support to the self-legitimation of the fund in the organization, the company now pursue to administer the commercial rules that have been established by the state. The trend to increase the class of CSR is been aimed at the essential approach to resolve the resources, use it and proceed with the same within different sectors of the corporate operations (Miller, Fink and Proctor, 2017). It has been also referred to as the compatibility target within the financial concept as well as the social environment is a wide range of concerns to the aspect of CSR in the present time. In the conclusion, it is been contend that to reach the requirement of communal, ecological, and commercial prospects of the organization, legitimacy is the main deliberation.
It has been indicated in the studies that the commercial organization broadly prefers to change the focus to the core benefits among the financial aspect and included in the implementation of environmental and social approaches to reach the aim of sustainable development. The company assured its dilution or elimination for the activity related to the commercial aspect to reduce the damage environmentally. The contacts to the social awareness is been a computed strategy for essential CSR. some studies are stated to meet the social requirements, it is sometimes needed for the company to behave over the concern of the shareholders. In these cases, the organizations need to target on the awareness of the sustainable development for the objectives (Li, Khalili, and Cheng, 2019).
It has been considered by the present time; the awareness of sustainable targets is a major functional segment of the companies. The utilization of CSR strategies to the operational sectors is essential in the betterment of the all-over system of the work, employee relation, consumer relation, and human resource management. Suggesting to the commercial organization is also an important part of the trend of CSR. regrading to the process, the organization enforce the employees and staff to join in the activity of social, ecological causes along with assuring the improvement of the local community.
The following components have been considered for presenting a comparative understanding of the CSR activities reported by Medibank
While analysing the financial report of Medibank of FY 2020, it was observed that the organisation have been working for more than 9 years with the Wadeye community of the northern territory and actively spending more than $400,000 with the indigenous business. The company has understood the responsibility and its commitment towards the society and extended its principal regarding CSR beyond the service provided to the customers from the perspective of healthcare and included health factors in the workplace (Medibank, 2020). The activities performed by the Medibank focused on investing a good amount of community investment in upgrading mental health along with focusing on indigenous health equality. Financial report of FY 2020 implies a connection of the activities of Medibank with the environmental elements which attempted to reduce the carbon footprint as well as focusing on gender equality. The corporate responsibility motivated the company to control the gender pay gap as well as increase the engagement of male participation in the parental leave.
The financial year 2020 has been a tough time for every industry. Medibank understood its responsibility and engaged its employees in maintaining a sustainable growth of the company while focusing on providing this package to customers and helping them to survive the COVID-19 pandemic. The financial report of Medibank for FY 2020 presented the priorities for the next year on corporate social responsibility (CSR, 2020). Even though the reports provide information about the existing activities as well as planned policies for the next year regarding satisfying the CSR responsibility, the financial report of Medibank failed to provide a financial statement of the expenditure made on fulfilling its responsibility toward the corporate society and upgrade the existing COVID-19 scenario. Overall, the report considered a definite format and informed the employees about their benefit along with specifying the role and responsibilities which would help in meeting its objectives regarding gender equality.
According to the theory of legitimacy, it can be represented that Medibank understood its legitimate approach for commercially operating within society and making activity to express the responsibility towards the community along with the environment and society (IGI Global, 2020). Strategically speaking, the disclosure of the CSR performed by Medibank has helped it to meet the expectations of the customers as well as a society while fulfilling its duties to survive in the industry. The analysis of the financial report of Medibank expressed that the organisation has understood the CSR Trend and the necessity of engaging more activity based on the trend of corporate social responsibility to promote sustainability within the business and enhance the reputation (Burns, Houghton and Stewart, 2020).
From the perspective of legitimacy theory, the company has understood the importance of providing benefits to the employees along with the stakeholders who would practically follow the CSR activity and contribute to the up gradation of the brand image. However, the existing COVID-19 situation has ensured that the efforts used by Medi Bank towards fulfilling the CSR objectives aligned with the appropriateness of the operational area within the organisation. Overall, the motivation for the company has been to maintain a stable risk margin along with informing the stakeholders and employees about the impacts of certain liabilities observed due to the pandemic. Finally, linking with the legitimacy theory, the disclosure of the CSR activities used by Medibank focus on elevating sustainability mainly focusing on social as well as ecological jurisdiction.
After analysis of the CSR reporting of Medibank, it was observed that the major areas which promotes the sustainable activities are well explained in the report. The report presented financial understanding and informed its liability along with benefits as well as providing evidence of the activities undertaking to promote gender equality. However, the financial report and CSR report is failed to provide a proper financial statement and details of the investment made from the profit earned by the company to fulfil its CSR objectives. Although the financial report of FY 2020 has not performed to admit some sectors of the information such as the revenue included in the method of accomplishing the sustainable targets to the CSR.
The Medibank achieved its mission to balance gender equality within their job role. They have provided 40% of women in the manager ranked post and accelerate the depiction of the men workers in the workforce to maintain the post of non-managerial duties. Medibank has been promised to improve its employee balance by joining the Aboriginal and Torres Strait Islander people in their organization. It has been decided to employ at least 32 employees in the workforce along with the disabled persons. The organization set to announce its non-short term incentive awards for the ELT members of the company. By providing the service to their employees and the overall population of the country they will succeed to develop the fluent relationship with the shareholders and compete with the rival companies in the market.
The following recommendations can be considered for upgrading the CSR reporting in future under the Australian financial reporting regulation,
The use of four models of operation which support sustainability would help the organization working in Australia to upgrade the CSR activity. The adaption would help in implementing processes that control waste creation and monitor contamination of the environment.
The consideration of externalities of business factors such as engaging and assisting the shareholders about CSR objectives would help the companies to implement business activities that would create commercialize value of the organization.
The analysis of IFRS and its use by Medibank indicated the benefits observed by the company after using the standard for financial accounting. The financial report prepared after using the IFRS standards allowed the company to inform its employees about the benefits along with the motive of the company to engage shareholders for making severe decisions. On the other hand, corporate social responsibility is one of the important elements which needs to be understood by an organisation to survive commercially along with presenting this closure to upgrade the image in the market. The disclosure of CSR Bank has allowed it to identify its efficiency along with the stanzas which can be improved. Finally, the recommendation has been provided to inform the organisation about the best control system under the Australian reporting regulators.
Burns, C.J.M., Houghton, L. and Stewart, H., 2020. Sustainability–A key to Australian finance directors improving their organisation's CSR culture. Corporate Social Responsibility and Environmental Management, 27(2), pp.1164-1176.
Chae, B.K. and Park, E.O., 2018. Corporate social responsibility (CSR): A survey of topics and trends using Twitter data and topic modeling. Sustainability, 10(7), p.2231. doi:10.3390/su10072231
CSR (2020). CSR Building Products - a leading building products brand in Australia & New Zealand. Available at: https://www.csr.com.au/ (Accessed: 30 September 2020).
IGI Global (2020). What is Legitimacy Theory Available at: https://www.igi-global.com/dictionary/legitimacy-theory/55617 (Accessed: 30 September 2020).
Li, K., Khalili, N.R. and Cheng, W., 2019. Corporate social responsibility practices in China: trends, context, and impact on company performance. Sustainability, 11(2), p.354. doi:10.3390/su11020354
Loyeung, A., Matolcsy, Z., Weber, J. and Wells, P., 2016. The cost of implementing new accounting standards: The case of IFRS adoption in Australia. Australian Journal of Management, 41(4), pp.611-632.
Mardini, G.H., Wadi, R.S. and Mah’d, O.A., 2019. Empirical evidence of the suitability of IFRS in emerging markets. Accounting Research Journal.
Medibank (2020). Corporate responsibility. Available at: https://www.medibank.com.au/about/corporate-responsibility/ (Accessed: 30 September 2020). Medibank ,2020. [online] Available at: https://www.studocu.com/en-au/document/australian-catholic-university/property/summaries/summary-australian-property-law-cases-materials-and-analysis-lecture-week-1-12-tutorial-work-week-1-12-complete/809260/view [Accessed 29 September 2020].
Miller, K.C., Fink, L. and Proctor, T.Y., 2017. Current trends and future expectations in external assurance for integrated corporate sustainability reporting. Journal of Legal, Ethical and Regulatory Issues, 20(1), pp.1-17.
Mongrut, S. and Winkelried, D., 2019. Unintended effects of IFRS adoption on earnings management: The case of Latin America. Emerging Markets Review, 38, pp.377-388. https://www.sciencedirect.com/science/article/pii/S1566014118301328
Tuzarová, S. and Mejzlík, L., 2018. The IFRS assessment by publicly traded companies. In The impact of globalization on international finance and accounting (pp. 341-346). Springer, Cham.
Wójcik-Jurkiewicz, M., 2017. Role of CSR reporting. Evidence from Poland. ZeszytyTeoretyczneRachunkowości, (94), pp.173-188. DOI: 10.5604/01.3001.0010.5001
Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Accounting Assignment Help
5 Stars to their Experts for my Assignment Assistance.
There experts have good understanding and knowledge of university guidelines. So, its better if you take their Assistance rather than doing the assignments on your own.
What you will benefit from their service -
I saved my Time (which I utilized for my exam studies) & Money, and my grades were HD (better than my last assignments done by me)
What you will lose using this service -
Unfortunately, i had only 36 hours to complete my assignment when I realized that it's better to focus on exams and pass this to some experts, and then I came across this website.
Kudos Guys!Jacob "
Proofreading and Editing$9.00Per Page
Consultation with Expert$35.00Per Hour
Live Session 1-on-1$40.00Per 30 min.
Doing your Assignment with our resources is simple, take Expert assistance to ensure HD Grades. Here you Go....