Contemporary Issues In Accounting Regulation - A Study Of Wesfarmers Sustainability Essay.

Current State of Sustainability Reporting

Discuss about the Contemporary Issues in Accounting Regulation.

This study covenants with analyzing the sustainability reporting activities for the Australian-listed company named as Wesfarmers Limited (Wesfarmers.com.au, 2017). In this particular project, emphasis has been given on considerate the existing state of sustainability reporting as well as various approaches undertaken by Wesfarmers Limited. Wesfarmers Limited is listed in Australian Stock Exchange and occupies the topmost position in terms of revenue. The current segment elucidates bringing out the issues that is faced by Wesfarmers Limited at the time of operating activities. Practices in sustainability reporting has been explained in the segment that will bring out the difference between actual sustainability practices in Australia and the practices adopted by Wesfarmers Limited. In the last segment, focus has been given on understanding the implications of sustainability reporting for the stakeholders at the time of decision-making process. Therefore, the study highlights that the above-mentioned company has made ways for creating value for its potential stakeholders and providing high returns at the same time (Scott, 2015).

At Wesfarmers Limited, they are committed towards generating value for its stockholders, communities and employees for more than a decade now (Rankin et al. 2012). Long-term value creation is the most viable option that plays important role in the communities served by Wesfarmers Limited. Sustainability, in real terms reveals understanding as well as managing ways that impact community and environment that ensure generating value in the future. It is known that world is changing at a faster pace aligning with climatic change as well. Some of the attributes such as augmented weather instability, recurrent weather events as well as higher regular temperature and drier climates widely affect the operational aspects and supply chain for the company, Wesfarmers Limited (McLeay and Riccaboni, 2012). This company had been making ways so that they can manage the risk and deliver significant social as well as environmental as well as economic benefits. Wesfarmers Limited is committed towards minimizing own footprint as well as delivering solutions that guide clienteles and public at the same time (Anton and Firmin, 2013). This company endeavor for continuously improving level of performance as well as public report on progress as mentioned in the annual sustainability report

Wesfarmers Limited has noted an 11% point growth in the DJSI (Dow Jones Sustainability Index) for scoring 82 out of 100 (highest score received by Wesfarmers Limited) (Horngren et al. 2013). The DJSI annual review is based upon the analysis for understanding the level of presentation in terms of economic, environmental and social. Wesfarmers Limited is a global leader in attaining sustainability with toughest presentation in areas of health as well as diet. This takes into consideration environment policy, cyber security as well as labor practice and human rights (Garrison et al. 2014).

In the year 2016, Wesfarmers Limited are proud in progressing in the given areas that are listed below:

• Wesfarmers Limited entire recordable injury incidence rate was 33.4 that was 15.2% lower as compared to previous year (Feltham and Ohlson, 2015)
• Wesfarmers Limited worked hard in promoting diversity at workplace with more than 3300 employees considering as indigenous (Evans, 2013)
• Wesfarmers Limited believes in improving the clearness of supply chain in more than 3200 factories at the time of conducting audit program (Drever et al. 2014)
• Wesfarmers Limited directly gets support from the clienteles and team members as the public donations exceeds amounting to $ 110 Million (Deegan, 2013)
• Wesfarmers Limited made ways for reducing the greenhouse gas emissions by more than 2% as it reduced the releases intensity of commercial by 30% by the year 2016 (Cohen et al. 2016)

• Wesfarmers Limited workforce will be made up of 55% as viewed for the year 2016. This will remain as a key occasion for the Group for increasing the fraction of management position occupied by women (Bryant, Kahle and Schafer, 2015)
• Despite their efforts, Wesfarmers Limited faced continuing reduction in waste as disposed from water use as it is hard in maintaining business activities. This company is trying its best in seeking opportunities for performing the activities in the most appropriate way (Bonner, 2013).
• Wesfarmers Limited continues in focusing in ethical sourcing that leads to supply chain transparency. This will strengthen the relationships with the suppliers as it will contribute positively in the affected areas (Bhimani, 2015).

With a diverse range of autonomous business, it is difficult for Wesfarmers Limited in setting targets for the Group level as it is impractical as well as consistent by using financial metrics for assessing the performance at divisional level (Beaver, 2014). This business sets majorly sets their own internal targets aligning with the operational aspects.

Wesfarmers Limited Performance in 2016

The primary complexity of sustainability reporting is to generate sustainability reports that can create the kind of information that augments the overall performance of a business concern (Deegan, 2013). This again directs towards improved commercial outcomes as well as satisfaction of social concerns. However, the board of a corporation as well as investor related issue such as change of climate in addition to reputational concerns can increasingly elevate the significance of sustainability reporting within different corporation (Bonner, 2013). The sustainability report of Wesfarmers reveals the fact that, In spite of immense efforts on generation of sustainability reporting and persistent work for reduction of waste disposal and use of water, the company finds it difficult to maintain and attain growth in business (Bhimani, 2015).

In case of Wesfarmers, the organization of Wesfarmers is committed to pre-emptively achieve the entire society in addition to impact of the environment. The business concern Wesfarmers essentially adheres to ten different principles that can be associated to the sustainability problems that can be recognized as the most material facets to the entire group (Beaver, 2014). However, the management relentlessly thrives to deliver a safe workplace for the members of the staff of the organization by enhancement of the dimensions of safety presentation and assume creativities for reduction of injuries. Nevertheless, the evaluation of sustainability reporting of the business concern divulges the fact that further improvements are required for safety performance as well as safety initiative (Deegan, 2013).

Sustainability reporting practices in Australia are generally designed with input from boardroom and are essentially perused by different mainstream investment researchers. The researchers increasingly identify with the potential influence on long term investment value of a business concern, potent liabilities in addition to common risk profile on environmental, social as well as governance issues (Evans, 2013). The management of Wesfarmers maintains ten important principles that can be linked to the sustainability issues and each segment of the business implements the principles to the business after taking into account particular circumstances of the functional environment.

The sustainability report declared by the corporation clearly defines the works for the people, sourcing practices, community, environment, principles of corporate governance (Wesfarmers.com.au., 2017). Therefore, the report helps in gaining a clear overview of the activities undertaken by the corporation for betterment of the corporate governance, protection of environment and reduction of emissions and waste to landfill as well as use of water. In addition to this, the sustainability reporting prepares and presents a formal declaration regarding the steps undertaken by the corporation for positive contribution to the community and deliverance of safe products, safety initiatives (Feltham and Ohlson, 2015). The sustainability reporting practices refer to proper presentation and announcements of the ways of execution and tracking the service of “nurse on call”, applications for hazard detection, assessment of the execution as well as performance of specific “safety Activity Book” and Voluntary program of “Injury Care 1300 among many other (Wesfarmers.com.au., 2017). The report also reflects the fact that the corporation Wesfarmers distributes approximately 59% of the overall wealth for paying-out wages as well as salaries together with different other employee benefits and perks to members of the staff. Furthermore, the corporation Wesfarmers also works for resolving different issues of the workplace and reportage under combined agreements as mentioned in the sustainability reporting. Further, the sustainability reports sheds light on activities undertaken by the company for resolving workplace conflicts along with cultural disagreements for generation of all-encompassing workplace surroundings (Bhimani, 2015). This section of the report therefore stresses on gender diversity, presence of Aboriginals with Torres Strait Islander (Wesfarmers.com.au. 2017). Evaluation of sustainability reporting of the company Wesfarmers also clearly illustrates the optimistic contribution of the corporation towards the society where company functions and compliance with the Australian Consumer Law (Wesfarmers.com.au. 2017).

Dow Jones Sustainability Indices

The widespread practice of sustainability reporting help in creation of transparency and assist in efficient functioning of the market. The sustainability reporting indicates towards the soundness of the health of the budget and help in driving the development of the business concern towards a horizontal, maintainable as well as comprehensive rate of growth (Feltham and Ohlson, 2015). Therefore, the sustainability reporting for stakeholders adds value in a number of ways. The sustainability report helps the by generation of trust through creation of transparency as regards non-financial performance. Again, this trust help in reduction of the reputational risk and aids in opening up a free dialogue with the stakeholders namely, the customers, investors along with other members of the community (Deegan, 2013). The company also observes sustainability reporting as a means of driving greater innovation by means of businesses as well as products to generate a competitive edge in the target market (McLeay and Riccaboni, 2012). The report leads to augmented processes as well as systems as internal management and processes of decision making can be assessed. This report leads to reductions of cost by computing and monitoring issues related to consumption of energy, use of materials as well as waste. Sustainability reporting also helps in progressing vision as well as strategy that in turn leads to comprehensive evaluation of strengths as well as weaknesses together with engagement with specific stakeholders that is obligatory for sustainability reporting (Bonner, 2013). Thus, this report also lead to robust and wide-ranging visions of the corporation as well as strategies.

Essentially, the corporation Wesfarmers also make sustainability a vital part of the organizational policies. In addition to this, the sustainability reporting also helps the stakeholders in providing a suitable measure of sustainability performance that in turn can assist the corporation in meeting the regulatory requirements efficiently (Rankin et al. 2012). Consequently, this helps in averting costly breaches and gathering essential data in a cost effective manner. Again, sustainability reporting helps businesses in gaining competitive edge as this can posit the leaders as well as innovators in a stronger bargaining position at the time of attracting investment, initiation of new actions, penetrating into new markets and negotiating agreements (Scott, 2015). Moreover, the accessibility of sustainability evidence can be utilized by governments to evaluate the impact in addition to role and involvement of businesses to the entire economy. Accordingly, business concerns can make use of sustainability reporting to notify their risk analysis approaches and improve their business. Sustainability reporting is primarily oriented towards communication of different credible and at the same time pertinent information to a wide range of stakeholders that in turn enables the corporation to build the right potential to present timely as well as reliable information.

Conclusion:

At the end of the study, it is concluded that Wesfarmers Limited has the potential in meeting the needs that best suits their stakeholders for long period. They believe in committing with the stakeholder needs and maintaining long-term value creation at the same time. They are making ways for reducing carbon gas emissions that adversely affect community and environment. It is the responsibility of the management of Wesfarmers Limited in maintaining its current state of sustainability and bringing some improvements in their activities. The above analysis clearly justifies the approaches that are undertaken by Wesfarmers Limited and measured in terms of financial metrics in the most appropriate way. It is recommended to Wesfarmers Limited in meeting the needs of the customers that best suits them in the long-run.

Reference List

Anton, H.R. and Firmin, P.A.., 2013. Contemporary issues in cost accounting: a discipline in transition. Houghton Mifflin.

Beaver, W.H., 2014. Financial reporting: an accounting revolution. Prentice Hall.

Bhimani, A., 2015. Contemporary issues in management accounting. Oxford university press.

Bonner, S.E., 2013. Judgment and decision making in accounting. Prentice Hall.

Bryant, S.M., Kahle, J.B. and Schafer, B.A., 2015. Distance education: A review of the contemporary literature. Issues in accounting education, 20(3), pp.255-272.

Cohen, M.D., Burkhart, R., Dosi, G., Egidi, M., Marengo, L., Warglien, M. and Winter, S., 2016. Routines and other recurring action patterns of organizations: contemporary research issues. Industrial and corporate change, 5(3), pp.653-698.

Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.

Drever, M., Stanton, P.A., McGowan, S.C., Raar, J., Sofocleous, S. and Ravlic, T., 2014. Contemporary issues in accounting. John Wiley & Sons Australia.

Evans, T.G., 2013. Accounting theory: contemporary accounting issues. South-Western Pub.

Feltham, G.A. and Ohlson, J.A., 2015. Valuation and clean surplus accounting for operating and financial activities. Contemporary accounting research, 11(2), pp.689-731.

Garrison, R.H., Noreen, E.W., Brewer, P.C. and McGowan, A., 2014. Managerial accounting. Issues in Accounting Education, 25(4), pp.792-793.

Horngren, C.T., Sundem, G.L., Schatzberg, J.O. and Burgstahler, D., 2013. Introduction to management accounting. Pearson Higher Ed.

McLeay, S. and Riccaboni, A., 2012. Contemporary issues in accounting regulation. Springer Science & Business Media.

Rankin, M., Rankin, M., Stanton, P.A., McGowan, S.C., Ferlauto, K. and Tilling, M., 2012. Contemporary issues in accounting. Milton, Australia: Wiley.

Scott, W.R., 2015. Financial accounting theory (Vol. 2, No. 0, p. 0). Upper Saddle River, NJ: Prentice hall.

Wesfarmers.com.au. (2017). Wesfarmers.com.au. [online] Available at: https://www.wesfarmers.com.au/ [Accessed 16 Jan. 2017].