1: BHP Billiton is in compliance with the meaning of qualifying company under the “Financial Reporting Statements 100” which is delivered by the financial reporting council. BHP monetary reports are equipped in agreement with the provision of UK Companies Act 2006. The monetary reports of BHP Billiton is in agreement with the International Financial Reporting Standards as disclosed under section 5.1. The monetary reports are presented in accord with the financial reporting standard 101 under Reduced Disclosure Framework of FRS 101. The financial statements are prepared on a going basis.
BHP Billiton prepares the financial statements by using the historical cost principles as altered by the revision of definite monetary assets and liabilities in agreement with the UK Companies Act (Fullerton et al., 2014). The preparation of monetary reports is in agreement with the Financial Reporting Standard of 101 that necessitates making the use of critical bookkeeping estimations and necessitates the application of rulings in presentation of the company’s bookkeeping policies (Bodie, 2013). The bookkeeping procedures is consistent with the group’s policy that is applied by all the firms, which is included in the monetary reports and are in agreement with those that is applied all through the years.
2: The preparation of the consolidated monetary reports necessitates the management to make the decisions and approximations and make assumptions that creates an impacts on the amounts of assets, liabilities, contingent liabilities, revenue and expenditure reported in the financial statement. Based on ongoing basis, management assesses its judgements and estimations based on the relations of assets, liabilities, contingent liabilities, revenue and expenditure (Otley, 2016). The accounting policies of these items are in agreement with the Australian Corporations Act 2001 and UK Companies Act 2006. In accordance with the IFRS, BHP Billiton contains the material in agreement with the nature of the decisions and estimations having probable impacts on the monetary reports. The assets and liabilities represents the net assets and net liabilities from operations together with the carrying value of equity. BHP Billiton recognises the carrying value of investment by making the use of equity method which is represented in the investments accounted.
Property, plant and equipment is recorded at cost after subtracting the accumulated depreciation and impairment changes. BHP Billiton represents the fair value of considerations that is given at the time of acquiring the assets. As stated under section 5.1 of the “Basis of Preparation” of BHP financial statements, the business in compliance with the lawful obligations of applying the IFRS adopted by the EU and has also implemented the IFRS issued under the IASB. Revenue is accounted at the fair value of the considerations (Cooper et al., 2017). Taxes is identified in the monetary reports with exclusion to the extent that it is associated to the items that are identified directly in equity.
Trade receivables of BHP Billiton are accounted originally at their fair value and are later amortized at cost by making the use efficient method for impairment. Current assets such as inventories irrespective of their types and stage of production are identified at value of lower cost and net realisable value. Financial assets and liabilities are offset and the net amount is stated in the balance sheet on net basis or realise the assets and settle the liability concurrently. The exploration of the expenditure represents the portion of the exploration expenditure that is not exploited in agreement with the accounting policies.
3: From the financial year 2011, there was a change in the policy of accounting for DEP from the monies settled to equity. Qualified financial information for the year ended 2015 and 2016 have been restated because of the effects of variations in the reporting related to Potash (Messner, 2016). The bookkeeping policies have been continuously applied by the company included in the Group consolidated financial report excluding the impact of the adopting the AASB 2007-4 amendments to the Australian accounting standards that has arose from ED 151 and other amendments. AASB 2007-4 reinstated the optional accounting treatment that is permitted by the IFRS which were primarily not available under the Australian Accounting Standards. The accounting policies and changes when BHP Billiton has not implemented changes in the bookkeeping estimations and errors because the disclosure of information has not been applied in a new IFRS, which has been issued but yet to be effective.
The group has recognized a number of critical accounting policies, which is under the significant judgements, estimations and assumptions that is made by the company (Liu & Kuang, 2014). The preparation of the monetary reports is in compliance with the FRS 101 that necessitates the usage of critical bookkeeping approximations along with the solicitation of judgements of company’s bookkeeping policies. Changes in the bookkeeping policies contains the making significant decisions and estimates that is implemented in the preparation of monetary reports that is identified and disclosed by the company throughout the financial year.
4: The accounting policies have been consistent with the application of financial statements that has been applied throughout the year. Furthermore, the business policies of BHP for taxation includes the royalty associated with taxation and requires the management judgement to the types of arrangement considered to be the tax on income in contrast with the operating cost. The revenue of the company provides expressive indication of the assets along with the equity accounted investments of each reportable segments (Andon et al., 2015). The management evaluates the performance of its business by aligning the business strategies in allocation of resources.
The underlying earnings before tax at the segment or legal level is at the net of the company’s finance cost and taxation of equity accounted investment. Predominantly, BHP Billiton aligns its business strategies on a proportionate consolidation basis. The remuneration committee aligns the business strategies by identifying the market forces necessarily that influence the remuneration practices. BHP Billiton strongly asserts that fundamental driver of remuneration results should be aligned with its business performance (Adhariani et al., 2017). The company generates sustained shareholder value from the relative outperformance to commensurate with the expectations of the shareholders.
Reference:
Adhariani, D., Sciulli, N., & Clift, R. (2017). Quantitative Optimisation Model, Results and Discussion. In Financial Management and Corporate Governance from the Feminist Ethics of Care Perspective (pp. 209-284). Springer International Publishing.
Andon, P., Baxter, J., & Chua, W. F. (2015). Accounting for stakeholders and making accounting useful. Journal of Management Studies, 52(7), 986-1002.
Bodie, Z. (2013). Investments. McGraw-Hill.
Cooper, D. J., Ezzamel, M., & Qu, S. Q. (2017). Popularizing a management accounting idea: The case of the balanced scorecard. Contemporary Accounting Research.
Fullerton, R. R., Kennedy, F. A., & Widener, S. K. (2014). Lean manufacturing and firm performance: The incremental contribution of lean management accounting practices. Journal of Operations Management, 32(7), 414-428.
Liu, Y., & Kuang, Y. (2014). The Establishment of Management Accounting System in Administrative Institutions. Journal of Accounting and Economics, 2, 003.
Messner, M. (2016). Does industry matter? How industry context shapes management accounting practice. Management Accounting Research, 31, 103-111.
Otley, D., (2016). The contingency theory of management accounting and control: 1980–2014. Management accounting research, 31, pp.45-62.
