Impairment Report Origin Energy PDF

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This assignment is for the accg224 and is for impairment topic and for origin energy...

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AB ST RA CT The larg est num ber of our findi ngs con tinu e to

Table of Contents Cover Page 1

Contents

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Part A & B

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Part B & C

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Part C & D

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References

The Australian Securities and Investment Commission (ASIC) is independent Commonwealth Government body, which has been created in accordance to Australian Securities and Investments Commission Act 2001 (ASIC Act) as a consolidated corporate, markets, financial services and consumer credit governor (ASIC, 2018). Within their responsibilities ASIC is responsible to sustain, simplify and ameliorate the performance of the financial system and the institutions within it, endorse poised and knowledgeable contribution by stakeholders, administer the law efficiently and with the least practical requirements, make information regarding organisations readily available to the public (ASIC, 2018). Further, within ASIC’s review of the 30 June 2017 financial reports of 220 listed and other public interest entities, it highlighted risk-based observation of the financial reports of public interest organisation for reporting periods ended 30 June 2010 to 31 December 2016 which resulted to material variations of up to 4% of the financial reports of public interest organisation studied by ASIC (ASIC, 2017). The central fluctuations connected to impairment of assets, revenue recognition and expense deferral (ASIC, 2017). Firstly, Origin recorded a statutory loss of $(2,226) million for the financial year ended 30th June 2017, including $3,064 million in impairments (Origin, 2017). Included within those impairments is a $1,846 million impairment from Origin’s noncurrent assets share of Australia Pacific LNG, of which Origin reflects 37.5%. Within Australia Pacific LNG’s assessments, the book value of its assets, an array of considerations is made including oil price, currency exchange rates, discount rates and expenses (Origin, 2017). Since the previous valuation at 31 December 2016, though there have been changes in the number of relevant assumptions, the primary variation is the drop-in oil price assumptions to US$67/bbl (Origin, 2017). Further, a majority of the remaining asset impairments charge is from Origin’s Browse Basin and Investment in Energia Austral SpA projects, with the combined value of the impairment being $939 million (Origin, 2017). The impairment assessment of the Browse Basin and Investment in Energia Austral SpA has been made by examining the probable timing and potential profit-orientation of the resources, compared to other assets (Origin, 2017). Additionally, a further impairment charge of $753 million has been reported in Assets held for sale, which has risen from Lattice Energy, its conventional gas resources presently seized for sale (Origin, 2017). The sale course is continuing well nearing accomplishment by the close of the 2017 calendar year

(Origin, 2017). The impairment charge ascends due to the assessment of the current book worth of Lattice Energy compared to the projected incomes from divestment net of the estimated cost of disposal and partly reflects the termination of depreciation and amortisation from 7 December 2016 (Origin, 2017). Lastly, the aggregate and final impairment charge are subject to tax etc, with no impact on cash flow or Underlying EBITDA (Origin, 2017).

Furthermore, Chapter 3 of the Conceptual Framework for Financial Reporting defines financial information as useful to existing and potential investors, creditors and other stakeholders if it has the ability to impact their decision making about the reporting entity on the basis of information in its financial report (AASB, 2016). The fundamental aspects of financial reports to achieve usefulness include relevance and faithful representation (AASB, 2016). Relevance refers to its capability to impact a decision made by users of the financial report, similarly, faithful representation is necessary for relevance, as it is required that all information in provided within a financial report is complete and free from errors and bias, as that may have an adverse impact on relevance (AASB, 2016). Within Origin’s financial report it can be seen that they have sufficiently satisfied the fundamental aspects as per the Conceptual Framework’s expectations (Origin, 2017). Through origin’s itemised account of all its impairments within its full financial statement exemplifies it’s compliance of paragraph 126 of the (AASB) Australian Accounting Standards Board’s Disclosure guidelines (Origin, 2017). Similarly, Origin is also in compliance of paragraph 130 and 131 by explaining the individual’s events that led to the impairment of each asset (Origin, 2017). Hence, highlighting the increasing extent to which Origin complied with the AASB guidelines, thus also achieving the fundamental aspects of faithfulness and relevance through their financial reporting (Origin, 2017).

Moreover, the Conceptual Framework also highlights aspects within financial reporting which may increase the useability of financial reports, known as enhancing characteristics (AASB, 2016). Comparability is a vital enhancing quality within financial reports, as its utilisation allows users to compare the information with similar information about other entities, or the same organisation across different periods (AASB, 2016). Origin has displayed proficient acquiescence to many enhancing qualities of the conceptual frameworks financial reporting guidelines,

including comparability by creating their financial in a standardized manner, coupled with the direct insertion of previous year’s results of each individual item within the financial report, allows users to immediately compare the organisations performance over time and also extract information from the report to compare with other organisation through its homogenous format of reporting (Origin, 2017). Additionally, the aim of general purpose financial reporting is to deliver financial information regarding the reporting entity that is useful to current and future stakeholders, creditors and other investors in making decisions about providing resources to the organisation (AASB, 2016). Those decisions involve purchasing, selling or holding equity and debt tools, and giving or settling loans and other forms of credit (AASB, 2016). Through Origin’s effective use and compliance of the fundamentals financial reporting coupled with the enhancing qualities, allows their financial reports to be very effective in the usefulness as a general purpose financial report, as it provides a very detailed analysis and insight of the organisation and its financial situation and future financial outcomes (Origin, 2017).

References: Origin Energy 2017, 2017 Full Year Results Announcement, accessed 20 April 2018,

Austrlian Securities & Investments Commission 2017, 17-437MR Findings from 30 June 2017 financial reports, accessed 20 April 2018, Austrlian Securities & Investments Commission 2018, Our role, accessed 20 April 2018, Ernst & Young 2010, Conceptual Framework: Objectives and qualitative characteristics, accessed 20 April 2018,

Australian Accounting Standards Board 2016, Framework for the Preparation and Presentation of Financial Statements,...