Corporate Governance Policies at Telstra
Discuss about the Presentation of Accounting Information of Telstra.
We are hereby writing to provide you with an overview of the 2017 audited financial statements. All of you can agree with us that 2017 was a very challenging year for the company due to the numerous financial and operational challenges that we faced. Nevertheless, we are happy that we were able to attain a number of financial set targets by the year-end. This memo intends to highlight a few issues regarding the manner in which the company is reporting the corporate governance policies, sustainability solvency, the role of the audit committee, the disclosure of information about the non-controlling interest, issues to do with goodwill and foreign currency transactions.
Adherence to the established set of corporate governance policies is very important. Telstra has been showing commitment towards providing excellent communication to all the relevant stakeholders. This has been done through timely, transparent and accountable reporting of the all the pertinent issues relating to how the management is making use of the established corporate governance issues. When you look at the 2017 annual reports, you can realize that the company disclosed all the corporate governance policies that are currently in place. (Telstra Annual Report 2017, pp. 20). This is intended to provide long-term leadership as well as sustainability for the company. The management has also placed a lot of importance on corporate governance policies as a way of enhancing the interest of the shareholders and other stakeholders. This is because governance framework plays a very important role of providing a structure in which corporate strategies and objectives are set, monitored and the related risks managed in time (Choudhury and Petrin, 2018, np.). It also provides a clearer framework for accountability in decision making across all the business sections by giving a guidance on the behavioural standards that are expected.
Because there are constant changes in the market concerning corporate governance practices, the company leadership is taking a key role in reviewing the current policies to ensure that they align with prevailing marketplace practices, regulations and expectations (Telstra.com.au, 2018, np.). For instance, the company has disclosed in its 2017 annual report Corporate Governance Statement about its compliance with the third edition of Australia’s Securities Exchange ASX corporate Governance Councils Corporate Governance Principles and Recommendation popularly known as the ASX Recommendations. The reporting of the company’s corporate governance framework is taken to be an important matter because it plays a very integral role in supporting the business affairs and also in delivering the company’s financial strategies.
Sustainability Solvency Reporting by Telstra
Tesla being one of the large telecommunication and technology companies in Australia places a lot of importance on sustainability reporting. Apart from helping the community and customers to adapt to the technological opportunities and changes, the company has also disclosed its intention to enable everyone to thrive in a digital world (Telstra Exchange, 2018, np.).
Through its 2017 annual reports, Telstra has reported its purpose of creating a brilliant technology connected future for all the stakeholders of the company (Telstra Annual Report 2017, pp. 16-17). The purpose is indented to be achieved through a set of strategies that reflects the material issues of the company. To attain the requirements of world sustainability solvency, Telstra is also aiming at making use of the areas in which it has expertise in making a significant impact to the all the stakeholders of the organization (Burger et al., 2014, pp.8345). In situations where opportunities arise, the company has shown commitment to use innovation and technology-based solutions to help address a diverse array of major societal opportunities and challenges.
As per the constitution of Telstra rule 26.6, the Audit and Risk Committee is a committee of the Board that is tasked with a number of roles. They Include:
- To assist the Board of Directors in discharging responsibilities on matters pertaining to financial reporting, risk management, compliance, internal and external audit, corporate governance developments and Telstra’s Structural Separation Undertaking (SSU) (AUDIT & RISK COMMITTEE CHARTER, 2018, pp.2).
- The committee provides a forum for communication between the management and the Board on internal and external audit assignments (AUDIT & RISK COMMITTEE CHARTER, 2018, pp 4).
- Provides a conduit to the Board for external advice on audit, compliance matters and risk management (AUDIT & RISK COMMITTEE CHARTER, 2018, pp.5).
For the 2017 financial reports, we are confident that the financial reports being presented to you have been adequately scrutinized by the audit and risk Committee to ensure that there are no material misstatements. The published set of group financial statements that were released in 2017, therefore, reflects the company’s accounting and finance policy.
Telstra’s information regarding non-controlling interest is disclosed in the Telstra Corporation Limited financial statement report and controlled entities section of the annual report. In this section, information involving shareholding companies that have non-controlling interest at Telstra are disclosed. On page 100 of the 2017 annual report, the annual reports show the companies that Telstra has a minority interest (Non-controlling interest). Non-controlling interest means those entities that Telstra has invested shares in them which is not more than 50%. Some of the companies include Telstra Inc. (US), Telstra Ltd India, Telstra New Zealand Ltd and Telstra Clear Ltd in New Zealand (Telstra Corporation Limited and controlled entities, 2017, 97-105).
As most of you are aware, goodwill for the company is being categorized separately from the other assets of the company. This is because IAS recommends that since goodwill is both an unidentifiable and indefinite asset, it should be categorized differently from the other intangible assets. Information about goodwill and other intangible assets is found on page 94 of the 2017 annual report. For the year, goodwill worth $ 22 million was recognized after the acquisition of the controlled entities in 2016. There was also an impairment of assets loss amounting to $ 64 million which was recognized against goodwill(Foye and Foye, 2018, np.). Remember that the value used in the calculations of the impairment and the goodwill is based on assumptions such as discount rates, cash flow forecasts and terminal cash flow growth rates. Finer details about the specifics of the goodwill and intangible assets are found on page 94-98 of the annual report (Telstra Annual Report 2017, pp. 94-98).
Telstra Sustainability Strategies
Since Telstra has many subsidiary companies, it is greatly affected by foreign currency transactions. At the end of the entities financial period, the foreign currency transactions are usually translated into the parent company’s functional currency which is done at the spot exchange rate as at the date of the transaction. It would therefore important to bring to your attention that the company’s financial and business performance is very sensitive to movements in foreign exchange rates at countries in which Telstra has subsidiaries or joint control in. In the 2017 annual report, foreign currency transactions are disclosed on page 114. (Telstra Annual Report 2017, pp. 114-115).
Foreign currency disclosure is important because, through it, the company is able to reveal the foreign currency risks that the company faces from both operating and transactional activities in foreign countries. For instance, the amounts receivable and payable have to be translated from each of the functional currencies to the currency of the parent country. Any losses and gains are included in the income statement. Through such disclosure, appropriate measures to manage risks are instituted.
Lastly, we consider it important to update you on the introduction of new accounting standards that are going to be applied for future financial reporting periods. The new accounting standards may not have been adopted in the financial year 2017 because they were still at the formulation stage, this will, however, be applicable in future reporting periods. Some of the items that are likely to be affected include the accounting treatment of impairment of assets, accounting treatment for revenue earned from contracts with customers and accounting for leases. (Telstra Annual Report 2017, pp. 141-143). This information is found on page 141- 143 of the annual report.
References
AUDIT & RISK COMMITTEE CHARTER. (2018). [ebook] Telstra, pp.2-5. Available at: https://www.telstra.com.au/content/…us/…/telstra-audit-and-risk-committee-charter.pdf [Accessed 12 May 2018].
Burger, P., Frecè, J., Scherrer, Y. and Daub, C. (2014). Strategies for Sustainability: Institutional and Organisational Challenges. Sustainability, 6(11), pp.8342-8347.
Choudhury, B. and Petrin, M. (2018). Corporate Governance that Works for Everyonee: Promoting Public Policies Through Corporate Governance Mechanisms. SSRN Electronic Journal.
Foye, B. and Foye, B. (2018). Telstra writes off $273 million in goodwill from Ooyala, exits ad tech business. [online] CRN Australia. Available at: https://www.crn.com.au/news/telstra-writes-off-273-million-in-goodwill-from-ooyala-exits-ad-tech-business-484279 [Accessed 12 May 2018].
Telstra Annual Report 2017. (2017). [ebook] p.20. Available at: https://www.telstra.com.au/content/dam/tcom/about-us/investors/pdf-e/Annual-Report-2017.PDF [Accessed 12 May 2018].
Telstra.com.au. (2018). Telstra – Corporate Governance – Investors. [online] Available at: https://www.telstra.com.au/aboutus/investors/governance-at-telstra [Accessed 12 May 2018].
Telstra Exchange. (2018). Sustainability Report 2017 | What’s important | Telstra Exchange. [online] Available at: https://exchange.telstra.com.au/sustainability-report-2017-whats-important/ [Accessed 12 May 2018].
Telstra Corporation Limited and controlled entities. (2017). [ebook] Telstra, pp.97-105. Available at: https://www.telstra.com.au/content/dam/tcom/…/170817-Group-Structure-2017.pdf [Accessed 12 May 2018].
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
