Relevance of parent entity financial reports

Discussion paper


Cotter, Julie. 2004. Relevance of parent entity financial reports. Melbourne, Australia. Australian Accounting Standards Board.
Title

Relevance of parent entity financial reports

Report TypeDiscussion paper
Authors
AuthorCotter, Julie
Institution of OriginUniversity of Southern Queensland
Page Range1-48
Number of Pages48
Year2004
PublisherAustralian Accounting Standards Board
Place of PublicationMelbourne, Australia
Abstract

Executive Summary: This research addresses the issue of the extent to which parent entity financial information is needed by users of general purpose financial reports (GPFRs). It provides objective evidence aimed at assisting the Australian Accounting Standards Board (AASB) to determine whether it should recommend legislative changes in respect of the form, content and presentation of parent entity information. The broad research problem investigated in this paper is: For Australian entities that provide consolidated GPFRs, what form, content and presentation of separate parent entity financial information is needed by GPFR users? To address this issue, survey data were collected via both an internet questionnaire and personal interviews. The sample comprises users of GPFRs from across a diverse range of financial report user groups.

The results indicate that many financial report users, predominantly those working in roles involving credit risk assessment, use information from the parent entity financial reports. However, the frequency of use and particular components of the financial reports used varies across financial report user groups. There is no particular sub-set of information that would satisfy the parent entity information needs of all GPFR users. Therefore, there is limited potential to reduce parent entity reporting requirements to less than a full set of financial reports (financial statements and notes). However, an examination of financial report users’ needs for parent entity financial reports to be audited, lodged with the Australian Securities and Investments Commission (ASIC) and published in the annual report, as well as their information needs in relation to particular types of parent entities, reveals some potential for a reduction in reporting requirements.

In particular, the reductions in parent entity reporting requirements that could be achieved without compromising the information needs of GPFR users include:
o removal of the requirement for parent entity financial reports to be published in the annual report; and
o exemptions from the requirement to lodge audited general purpose parent entity financial reports with ASIC for parent entities that:
(a) do not conduct substantive operations, including treasury operations;
(b) are not borrowing entities;
(c) are not single guarantors for the debt of one or more subsidiaries .

Further, the research results indicate that a reduction in parent entity reporting requirements would need to be supplemented by additional disclosures in the annual report. These disclosures would provide details of:
o whether audited parent entity reports have been lodged with ASIC and, if not, a statement indicating that each of the exception criteria outlined above are satisfied;
o parent entity shareholders’ funds, including dividends and franking credits, if different from the consolidated amounts;
o how the group is structured, including which entities within the group conduct the major trading and treasury operations;
o in which entities the group’s borrowings and contingent liabilities reside;
o class orders, guarantees and indemnities in place, including which entities are party to the guarantee(s).

Keywordscompany annual reports, financial disclosure
ANZSRC Field of Research 2020350799. Strategy, management and organisational behaviour not elsewhere classified
350102. Auditing and accountability
Public Notes

This is an unpublished discussion paper.

Byline AffiliationsSchool of Accounting, Economics and Finance
Journal TitleAustralian Accounting Standards Board
Permalink -

https://research.usq.edu.au/item/9y2zx/relevance-of-parent-entity-financial-reports

Download files

  • 3567
    total views
  • 1481
    total downloads
  • 0
    views this month
  • 0
    downloads this month

Export as

Related outputs

Australian Centre for Sustainable Business and Development Collaborative Data Space
Cotter, Julie. Australian Centre for Sustainable Business and Development Collaborative Data Space. Toowoomba. https://doi.org/10.26192/9x42-6x23
Brisbane West Wellcamp Airport Perishable Goods Facility: preliminary feasibility study
Dunne, Tony and Cotter, Julie. 2015. Brisbane West Wellcamp Airport Perishable Goods Facility: preliminary feasibility study. Unpublished.
A marginal abatement cost analysis of practice options related to the NLMP program
Cotter, Julie, Glass, Roderick, Black, John, Madden, Patrick and Davison, Tom. 2015. A marginal abatement cost analysis of practice options related to the NLMP program. Australia. Meat & Livestock Australia.
Murray Darling Basin Regional Economic Diversification Program: a review of equity capital investment in the development of high value horticulture
Cotter, Julie, Rochecouste, John and Mohsin, Mohd. 2016. Murray Darling Basin Regional Economic Diversification Program: a review of equity capital investment in the development of high value horticulture .
Does the market price the nature and extent of earnings management for firms that beat their earnings benchmark?
Lento, Camillo, Cotter, Julie and Tutticci, Irene. 2016. "Does the market price the nature and extent of earnings management for firms that beat their earnings benchmark?" Australian Journal of Management. 41 (4), pp. 633-655. https://doi.org/10.1177/0312896216641600
The Influence of Non-State Actors on Corporate Climate Change Disclosure
Cotter, Julie. 2013. "The Influence of Non-State Actors on Corporate Climate Change Disclosure ." Cadman, Timothy (ed.) Climate Change and Global Policy Regimes:Towards Institutional Legitimacy. United Kingdom. Palgrave Macmillan. pp. 232-247
Big data based intelligent decision support system for sustainable regional development
Zhou, Hong, Noble, Christopher and Cotter, Julie. 2015. "Big data based intelligent decision support system for sustainable regional development ." 2015 International Conference on Big Data Intelligence and Computing (DataCom 2015). Chengdu, China 19 - 21 Dec 2015
Queensland Watt Savers final report
Wiesner, Retha and Cotter, Julie. 2015. Queensland Watt Savers final report. Brisbane, Australia. CitySmart.
Corporate climate change disclosure practices and regulation: the influence of institutional investors
Cotter, Julie and Najah, Muftah. 2013. "Corporate climate change disclosure practices and regulation: the influence of institutional investors." Young, Suzanne and Gates, Stephen (ed.) Institutional investors’ power to change corporate behaviour: international perspectives. Bingley, United Kingdom. Emerald. pp. 81-97
Modelling greenhouse gas emissions abatement options for beef and sheep farm businesses
Tomlinson, Adam, Keogh, Mick, Glass, Roderick and Cotter, Julie. 2013. Modelling greenhouse gas emissions abatement options for beef and sheep farm businesses . Sydney, Australia. Australian Farm Institute.
Sustainability reporting and assurance: a historical analysis on a world-wide phenomenon
Mori Junior, Renzo, Best, Peter J. and Cotter, Julie. 2014. "Sustainability reporting and assurance: a historical analysis on a world-wide phenomenon." Journal of Business Ethics. 120 (1), pp. 1-11. https://doi.org/10.1007/s10551-013-1637-y
GRI guidelines for assurance of sustainability reports: Fortune global 500 list 2010 analyses
Mori Junior, Renzo, Cotter, Julie and Best, Peter. 2012. "GRI guidelines for assurance of sustainability reports: Fortune global 500 list 2010 analyses." 2012 Australian GRI Conference on Sustainability and Integrated Reporting: Innovate, Integrate, Collaborate (GRI 2012) . Melbourne, Australia 26 - 28 Mar 2012 Sydney, Australia.
Sustainable investment: a tool for decision makers
Byrne, Nick and Cotter, Julie. 2012. Sustainable investment: a tool for decision makers. Brisbane, Australia. University of Southern Queensland.
Corporate governance quality, incentive factors and voluntary corporate governance disclosures in annual reports of Malaysian publicly listed companies
Lokman, Norziana, Cotter, Julie and Mula, Joseph. 2012. "Corporate governance quality, incentive factors and voluntary corporate governance disclosures in annual reports of Malaysian publicly listed companies." Corporate Ownership and Control. 10 (1), pp. 329-352.
Institutional investor influence on global climate change disclosure practices
Cotter, Julie and Najah, Muftah M.. 2012. "Institutional investor influence on global climate change disclosure practices." Australian Journal of Management. 37 (2), pp. 169-187. https://doi.org/10.1177/0312896211423945
Institutional investor influence on global climate change disclosure practices
Cotter, Julie and Najah, Muftah M.. 2011. "Institutional investor influence on global climate change disclosure practices." Dynamics of Investing Responsibly: From Screening to Mainstreaming (2011). Sydney, Australia 24 - 25 Nov 2011 Sydney, Australia.
IFRS adoption and analysts' earnings forecasts: Australian evidence
Cotter, Julie, Tarca, Ann and Wee, Marvin. 2012. "IFRS adoption and analysts' earnings forecasts: Australian evidence." Accounting and Finance. 52 (2), pp. 395-419. https://doi.org/10.1111/j.1467-629X.2010.00392.x
Corporate governance quality and voluntary disclosures of corporate governance information: practices of listed Malaysian family controlled businesses
Lokman, Norziana, Mula, Joseph M. and Cotter, Julie. 2011. "Corporate governance quality and voluntary disclosures of corporate governance information: practices of listed Malaysian family controlled businesses." Doyle, Karen (ed.) FBA 2011: Family Business Research, Practice and Policy: Interpretation and Integration . Perth, Australia 31 Aug 2011 Sydney, Australia.
Standardized reporting of climate change information in Australia
Cotter, Julie, Najah, Muftah and Wang, Shihui Sophie. 2011. "Standardized reporting of climate change information in Australia." Sustainability Accounting, Management and Policy Journal. 2 (2), pp. 294-321. https://doi.org/10.1108/20408021111185420
Asset revaluations and assessment of borrowing capacity
Cotter, Julie and Zimmer, Ian. 1995. "Asset revaluations and assessment of borrowing capacity." Abacus: a journal of accounting, finance and business studies. 31 (2), pp. 136-151.
Board and monitoring committee independence
Cotter, Julie and Silvester, Mark. 2003. "Board and monitoring committee independence." Abacus: a journal of accounting, finance and business studies. 39 (2), pp. 211-232. https://doi.org/10.1111/1467-6281.00127
Asset revaluations and debt contracting
Cotter, Julie. 1999. "Asset revaluations and debt contracting." Abacus: a journal of accounting, finance and business studies. 35 (3), pp. 268-285. https://doi.org/10.1111/1467-6281.00046
The whole of university experience: retention, attrition, learning and personal support interventions during undergraduate business studies
Willcoxson, Lesley, Manning, Mark, Wynder, Monte, Hibbins, Ray, Joy, Sally, Thomas, Jan, Leask, Betty, Girardi, Antonia, Sidoryn, Tristana, Cotter, Julie, Kavanagh, Marie, Troedson, David and Lynch, Bernadette. 2011. The whole of university experience: retention, attrition, learning and personal support interventions during undergraduate business studies. Sydney, Australia. Australian Learning and Teaching Council Limited.
Accrual and cash flow accounting models: a comparison of the value relevance and timeliness of their components
Cotter, Julie. 1996. "Accrual and cash flow accounting models: a comparison of the value relevance and timeliness of their components." Accounting and Finance. 36 (2), pp. 127-150. https://doi.org/10.1111/j.1467-629X.1996.tb00303.x
Beyond the first-year experience: the impact on attrition of student experiences throughout undergraduate degree studies in six diverse universities
Willcoxson, Lesley, Cotter, Julie and Joy, Sally. 2011. "Beyond the first-year experience: the impact on attrition of student experiences throughout undergraduate degree studies in six diverse universities." Studies in Higher Education. 36 (3), pp. 331-352. https://doi.org/10.1080/03075070903581533
An analysis of factors influencing asset writedowns
Cotter, Julie, Stokes, Donald and Wyatt, Anne-Marie. 1998. "An analysis of factors influencing asset writedowns." Accounting and Finance. 38 (2), pp. 157-179. https://doi.org/10.1111/1467-629X.00008
Voluntary disclosure research: which theory is relevant?
Cotter, Julie, Lokman, Norziana and Najah, Muftah M.. 2011. "Voluntary disclosure research: which theory is relevant?" The Journal of Theoretical Accounting Research. 6 (2), pp. 77-95.
Sustainable investment: a tool for decision makers
Byrne, Nick and Cotter, Julie. 2010. "Sustainable investment: a tool for decision makers." Peyvandi, Ali and Eide, Molly (ed.) APC 2010: 22nd Asian-Pacific Conference on International Accounting Issues. Gold Coast, Australia 07 - 09 Nov 2010 Fresno, CA, United States .
The technostructure gap: the educational qualifications of executive and non-executive directors
Phillips, Peter J. and Cotter, Julie. 2010. "The technostructure gap: the educational qualifications of executive and non-executive directors." Corporate Ownership and Control. 7 (4), pp. 102-113.
Audit committees and earnings quality
Baxter, Peter and Cotter, Julie. 2009. "Audit committees and earnings quality." Accounting and Finance. 49 (2), pp. 267-290. https://doi.org/10.1111/j.1467-629X.2008.00290.x
Corporate governance, sustainability and the assessment of default risk
James-Overheu, Christina and Cotter, Julie. 2009. "Corporate governance, sustainability and the assessment of default risk." Asian Journal of Finance and Accounting. 1 (1), pp. 34-53.
Disclosure versus recognition: The case of asset revaluations
Cotter, Julie and Zimmer, Ian. 2003. "Disclosure versus recognition: The case of asset revaluations." Asia-Pacific Journal of Accounting and Economics. 10 (1), pp. 81-99.
Corporate governance disclosure and the assessment of default risk
James, Christina and Cotter, Julie. 2007. "Corporate governance disclosure and the assessment of default risk." OBEC 2007: Oxford Business and Economics Conference. Oxford, United Kingdom 24 - 26 Jun 2007 Oxford, United Kingdom.
Utilisation and restrictiveness of covenants in Australian private debt contracts
Cotter, Julie. 1998. "Utilisation and restrictiveness of covenants in Australian private debt contracts." Accounting and Finance. 38 (2), pp. 181-196. https://doi.org/10.1111/1467-629X.00009
Reliability of asset revaluations: the impact of appraiser independence
Cotter, Julie and Richardson, Scott. 2002. "Reliability of asset revaluations: the impact of appraiser independence." Review of Accounting Studies. 7 (4), pp. 435-457. https://doi.org/10.1023/A:1020763612369
Expectations management and beatable targets: how do analysts react to explicit earnings guidance?
Cotter, Julie, Tuna, Irem and Wysocki, Peter D.. 2006. "Expectations management and beatable targets: how do analysts react to explicit earnings guidance? " Contemporary Accounting Research. 23 (3), pp. 593-624. https://doi.org/10.1506/FJ4D-04UN-68T7-R8CA
Offer pricing of Australian industrial initial public offers
Cotter, Julie, Goyen, Michelle and Hegarty, Sherryl. 2005. "Offer pricing of Australian industrial initial public offers." Accounting and Finance. 45 (1), pp. 95-125. https://doi.org/10.1111/j.l467-629x.2004.00137.x