ESG reporting trendsA detailed assessment of ESG reporting
in ASX200 companies
June 2022
ESG reporting trends in the ASX200: June 2022
About ACSI
Established in 2001, ACSI exists to
provide a strong, collective voice on
environmental, social and
governance (ESG) issues on behalf of
our members.
Our members include 29 Australian and
international asset owners and institutional
investors. Collectively, they manage more
than $1 trillion in assets.
Our members believe that ESG risks and
opportunities have a material impact on
investment outcomes. As fiduciary investors,
they have a responsibility to act to enhance
the long-term value of the savings entrusted
to them.
29 Australian &
international investors
Through ACSI, our members collaborate to
achieve genuine, measurable and
permanent improvements in the ESG
practices and performance of the
companies they invest in.
ACSI staff undertake a year-round program
of research, engagement, advocacy and
voting advice. These activities provide a
solid basis for our members to exercise their
ownership rights.
Leading voice on ESG issues
and advocacy
ACSI members manage more
than $1 trillion
ESG reporting trends in the ASX200: June 2022
2
Table of contents
Introduction …………………………………………………………………………………………………………………… 4
Key findings ……………………………………………………………………………………………………………………. 5
Methodology …………………………………………………………………………………………………………………. 6
Levels of reporting……………………………………………………………………………………………………… 7
Research findings …………………………………………………………………………………………………………… 8
ASX200 trends ………………………………………………………………………………………………………………… 8
Long-term trends ……………………………………………………………………………………………………………. 9
Sector level reporting …………………………………………………………………………………………………… 10
Reporting frameworks ………………………………………………………………………………………………….. 11
Appendix……………………………………………………………………………………………………………………… 13
ESG reporting trends in the ASX200: June 2022
Introduction
When ACSI began this annual ESG reporting
project in 2008, knowledge about
environmental, social and governance
(ESG) risks and opportunities was in its
infancy in Australia, and that was reflected
in our early results.
Back then, just 31 Australian listed
companies provided investors with ESG
disclosures rated ‘Detailed’ or
‘Comprehensive’. In 2021, 140 ASX200
companies were rated in those same
categories. It is a remarkable rise, in which
ACSI is proud to have played its part.
This year’s results demonstrate the fact that
ESG issues are increasingly being recognised
as core business for Australia’s largest
companies.
In recent years, different issues across the
ESG spectrum have acted as examples of
both best and worst practice. We have seen
instances of poor workplace culture and
management of sexual harassment cause
significant reputational damage for
companies; companies have had to
manage workforce disruptions arising from
the pandemic, and there has been
increasing awareness (and acceptance) of
the financial risks tied to climate change.
Given ACSI members’ diverse investment
portfolios and long-term outlook, and the
breadth of critical ESG issues the economy
faces, integration of ESG issues has never
been more important.
Since the beginning of this project 14 years
ago, the quality and detail of reporting on
material ESG issues has progressively risen.
Now, providing investors with ESG disclosures
is the norm rather than the exception.
ACSI engages with listed companies to
improve their ESG performance and
disclosure. Where reporting is lacking, it is
difficult for investors to assess how a
company is managing ESG risks. It is very
pleasing that the majority of companies
now understand the importance of
transparent disclosure to the market.
While reporting has improved substantially,
continued focus on performance is
required. We are also seeing an emergence
of new reporting standards and efforts to
harmonise corporate reporting on ESG
issues, with the work of the International
Sustainability Standards Board proceeding
at a pace. As this initiative progresses, we
expect to see further progress and maturity
develop in reporting on material ESG issues.
One of the important parts of our annual
ESG research program is the resulting
communication and engagement with
companies on their ESG reporting rating and
sector comparison. As we move closer to
harmonisation of reporting standards
globally, this year, for the first time, each
company’s rating has been included in the
Appendix of this report. ACSI will continue to
engage with companies on improving their
ESG reporting and performance.
Looking forward, ACSI will evaluate how the
methodology for this project can continue
to support progress, even among the higher
‘Comprehensive’ rated companies.
ESG reporting trends in the ASX200: June 2022
Key findings
•
•
The majority of ASX200 companies are
now providing detailed information to
their investors on a range of
environmental, social and governance
factors – 2021 saw a pleasing jump in
‘Comprehensive’ reporters, with 104
companies now in that category, up from
86 in 2020. This means the majority – more
than 50% – of the ASX200 is now a
‘Comprehensive’ reporter – a
considerable improvement from 2008,
when just 10% of companies were
‘Comprehensive’ (then known as ‘Best
Practice’) reporters.
The acceptance of ESG as materially
financial drives uplift in ESG reporting
– 140 ASX200 companies provide the
two highest levels of disclosure,
‘Detailed’ and ‘Comprehensive’. This is
an increase of more than 10% on 2020,
demonstrating that reporting on ESG
issues is now the norm and that
companies realise the necessity of
demonstrating their ESG performance to
investors.
•
Most report against the Sustainable
Development Goals (SDGs) – 64% of the
ASX200 now map their risks against
individual SDG goals or use the SDG
framework to guide their reporting.
Unsurprisingly Climate Action (Goal 13) is
the most cited priority SDG. Five years
ago, just 10% of the ASX200 reported
against SDGs.
•
The number of companies who have not
yet provided ESG performance data to
investors is falling– only 5% of ASX200
companies provide no ESG disclosure at
all and are now classified as ‘No
reporting’. This percentage is decreasing
every year.
•
Smaller companies, growing ESG
ambition – 57% of small caps ASX101-200
are now rated either ‘Detailed’ or
‘Comprehensive’ reporters, a 12%
increase on 2020 and a 50% increase on
2008.
ESG reporting trends in the ASX200: June 2022
Methodology
This is the 14th year in which ACSI has assessed the Environmental, Social and Governance (ESG)
reporting of Australia’s largest listed companies. We began evaluating ESG reporting in the
ASX100 in 2008 and have since expanded our research to include ASX101-200. Historical graphs
have been reconciled to reflect the year of reporting1.
0
Research objectives
Methodology
We began this research to encourage
companies to improve their ESG reporting.
Over the years, there has been a clear and
observable impact, with the number of
companies providing comprehensive ESG
reports increasing annually. In previous
years we would write to the chairs (or lead
independent directors) of the companies
assessed, to inform them of their rating,
provide a peer comparison, and
encourage improvement where necessary.
This year company ratings are for the first
time published in the Appendix of this
report. Where companies have been
either downgraded or classified as ‘No
reporting’, we ask the company to explain
how they plan to improve. We also use the
data we collect to inform our company
engagements of emerging issues and focal
points, such as this year’s work on climate,
safety and workforce reporting.
The research and conclusions in this report
are based on a desktop analysis by ACSI
analysts. ACSI uses all publicly available
sources for ESG disclosures, including annual
reports, ASX announcements, and
sustainability and other standalone
corporate reports, to identify ESG reporting
leaders and laggards. This year’s
benchmarking is based on information
publicly disclosed in the 12 months up to
31 March 2022.
ESG disclosure not performance
The ESG rating each company receives is
not based on the company’s management
of and performance on ESG risks, but rather
the extent to which the company reports
those risks. We assess reporting of
governance and management practices,
performance data and target-setting for
material ESG risks.
1 Because of this change, 2007 reporting which only covered the ASX100 has been removed from graphs to homogenize trends. In previous
reporting, this inaugural year was referred to as 2008 data based on the year of publication, not the year of reporting.
ESG reporting trends in the ASX200: June 2022
Levels of reporting
‘No reporting’
‘Detailed’
There is no meaningful reporting on ESG
management or performance. To move
beyond ‘No reporting’, a company must do
more than discuss ESG risks or commit to ESG
management. It must report on ESG risk
management processes and performance.
The company identifies and provides
detailed reporting of a range of material
ESG risks, supported by performance data
for multiple risks and including at least one
quantitative or qualitative target for a
material risk. This could include diversity, zero
harm, Green House Gas (GHG) emissions
reduction or other climate-related activities.
‘Basic’
The company reports on material ESG risks
to a limited extent. For example, the
company might provide basic information
and statistics on safety and diversity, but not
on other ESG risks. Alternatively, the
company may identify a range of ESG risks,
but provides superficial information without
qualitative or quantitative performance
metrics.
‘Moderate’
The company identifies and provides a
moderate level of meaningful reporting of its
ESG management. This is supported by
performance data which goes beyond one
or two material risk areas.
‘Comprehensive’
The company provides comprehensive
reporting of its material ESG risks and
mitigation strategies. It demonstrates
performance against a substantive number
of material risks areas and discloses the
process for identifying and explaining why
the ESG risks are important for its business. To
be ‘Comprehensive’, we must see reporting
of targets and performance data across a
range of different risk areas, with a
discussion of the materiality of those issues
and how they are incorporated into the
company’s overall strategy. This category
was previously called ‘Leading’, but due to
the substantial increase in the number of
companies which publish detailed and
thorough ESG disclosures, ACSI has, this
year, labelled it ‘Comprehensive’. This
reflects the quality of ESG reporting rather
than the performance of the company.
ESG reporting trends in the ASX200: June 2022
Research findings
ASX200 trends
The COVID-19 pandemic caused significant
business disruption throughout 2021 but ESG
reporting continued unabated. ACSI’s analysis
shows the majority of the ASX200 (104
companies) are now considered
‘Comprehensive’ disclosers – up 9% from 2020.
The number of ‘Comprehensive’ reporters
continues to accelerate, and now
represent 52% of the ASX200. 65% of these
companies sit in the ASX100.
ASX200
‘No reporters’
2019
20
2020
13
2021
‘Basic’
34
27
26
‘Moderate’
37
40
‘Detailed’
30
34
22
38
‘Comprehensive’
79
86
104
9
The race to the top of ESG reporting has
continued at scale. In the ASX200, the
biggest jump has been in the
‘Comprehensive’ category, followed by
‘Detailed’ reporters. In company
engagements, ACSI will continue to focus
on the high correlation between ESG
reporting and ESG performance. As the
number of ‘No reporters’ and ‘Basic’
reporters dwindle, ACSI will encourage the
remaining laggards to improve their
reporting of the material ESG risks and
opportunities particular to their companies.
The focus on ESG by businesses and
investors has meant consistent
improvements in reporting, with just two
companies downgraded in 2021.
Graph 1: ASX200 ratings composition
100%
100%
90%
90%
80%
80%
70%
70%
60%
60%
50%
50%
40%
40%
30%
30%
20%
20%
10%
10%
0%
0%
0
1
1
1
17
0
1
3
3
1
5
4
19
10
13
8
23
23
28
36
ASX20
ASX20
Comprehensive
Comprehensive
ASX50
ASX50
Detailed
Detailed
ASX100
ASX200
ASX100
ASX200
Moderate
Basic
No reporting
Moderate
Basic
No reporting
As in previous years, mid-capitalisation companies (those in the ASX101-200) showed more
variability in reporting than the larger companies (Graph 1). With significant new entrants to the
ASX200, particularly in the ASX101-200, there is scope for further improvement to lift the overall
index’s reporting standards.
ESG reporting trends in the ASX200: June 2022
Long-term trends
Since this reporting project began in 2008,
the aim has been to improve the disclosure
of material ESG areas by companies. Back
then, a very modest 31 companies were
rated ‘Detailed’ or ‘Comprehensive’. As the
upward curve of Graph 2 (below)
demonstrates, the standard of ESG reporting
has grown significantly – in 2021 a total of
140 ASX200 companies are in those
categories. Conversely, companies
providing no ESG disclosure now represent
just 5% of ASX200 companies.
ACSI engages collaboratively with ASX-listed
boards on a broad spectrum of financially
material ESG risks. Through this engagement, we
observe that most companies now understand
the importance of comprehensive ESG reporting
across their own financially material risks, as the
graph below demonstrates. With positive
engagement from ASX200 companies over
many years, we are pleased that ACSI’s ESG
reporting research has contributed to the
improvement in the adoption of best practice
ESG disclosure standards.
These year-on-year improvements highlight
the increasing company recognition that
ESG risks are material to their overall, longterm performance – and the need to
disclose to investors how they manage
these risks. This trend has been strengthened
by the growing awareness of ESG issues as
an important mainstream investment
strategy. ASX200 companies are increasingly
acknowledging ESG performance as a
value driver within their businesses.
As ACSI has recorded more and more
companies entering and staying in the leading
‘Detailed’ or ‘Comprehensive’ brackets with
minimal downgrades or stagnation, going
forward we will re-evaluate the methodology
for assessing companies. The next chapter of
this project will seek to further accelerate ESG
performance, continue to rachet up the
quality of ESG reporting, increase the
proportion of the index that are providing
transparent ESG disclosures and provide a
useful comparison between companies based
on their respective financially material and
targeted ESG disclosures. We will also reflect
developments in global approaches and
standards such as the work of the International
Sustainability Standards Board.
Graph 2: ASX200 long-term ESG reporting trends
160
140
130
142
120
126
121
120
100
80
60
40
39
31
40
44
30
45
34
98
96
72
74
90
84
96
93
101
83
104
107
76
77
109
71
120
67
48
30
30
26
9
20
16
20
16
20
2016
2017
2018
2019
13
9
2020
2021
0
2008
2009
2010
2011
No reporters
2012
2013
2014
2015
Detailed/Comprehensive
ESG reporting trends in the ASX200: June 2022
Basic/Moderate
Sector level reporting
ESG reporting by different sectors continues
to vary in quality. The Utilities, Consumer
Staples, Materials and Real Estate sectors
lead the way. These sectors have clearly
identifiable environmental and social risks,
which tie into regulatory requirements as
well as investor and broader stakeholder
expectations. Some of them also benefit
from ESG opportunities – such as green
premiums for products or real estate – which,
when taken, can become a competitive
advantage between peers and further drive
ESG performance. This, in turn, further
accelerates transparency and reporting on
ESG activities at each sector.
Sectors with over 70% of companies with a
‘Detailed’ and ‘Comprehensive’ rating
Utilities, Consumer Staples, Materials,
Real Estate, Energy, Financials
The Health Care sector has no
‘Comprehensive’-rated companies at all,
highlighting a sector-wide gap. These
sectors have many mid-cap and smaller
companies, often more pre-revenue
companies than other sectors and can
have different ESG risk profiles. Nonetheless,
it can be expected that these companies
will have ESG risks, for example particularly
given the pandemic, workforce related risks,
or modern slavery risks that can be
associated with healthcare supplies.
However, despite being laggards, some
progress demonstrates company awareness
of investor expectations on ESG risks.
Despite the broad improvement across
sectors, the Health Care and Information
Technology sectors continue to be laggards
– both have fewer than 40% of companies
with a ‘Detailed’ or ‘Comprehensive’ rating.
Com
Graph 3: ASX200 ESG reporting by sector
Utilities
Real Estate
Materials
Information Technology
Industrials
Health Care
Financials
Energy
Consumer Staples
Consumer Discretionary
Communication Services
No reporting
5
Basic
10
15
Moderate
20
25
Detailed
ESG reporting trends in the ASX200: June 2022
30
35
40
Comprehensive
45
Reporting frameworks
SDGs and Integrated Reporting
The Sustainable Development Goals (SDG)
framework remains the dominant reporting
framework used by companies to map their
risks and opportunities against specific SDG
goals. 64% of the ASX200 now reports
against the SDG goals – five years ago, just
10% reported against SDG goals. The
Integrated Reporting Framework, however,
still has a small take-up, being used by just
5% of the ASX200.
Consistent with the accelerating focus by
business and society more broadly on the
risks of climate change, Climate Action
(Goal 13) continues as the top priority,
followed by Decent Work & Economic
Growth (Goal 8). This is consistent with
previous years and reflects the critical ESG
issues of our time: increasing action on
climate change, as well as the importance
of prioritising workforce and business growth
in the COVID-19 pandemic recovery.
International Sustainability
Standards Board (ISSB) exposure
drafts have been released for
proposed standards for company
sustainability and climate related
disclosures.
Looking forward, the International
Sustainability Standards Board (ISSB) aims to
develop a consistent sustainability reporting
framework, setting a global baseline for
disclosures. Exposure drafts on general
requirements for sustainability-related
financial information and climate-related
disclosures have been released for
comment and further draft standards are
expected. While currently in draft form, for
investors and companies, a consolidated
and integrated reporting regime for
sustainability disclosures would be a
welcome development.
The top five SDGs referenced by companies
are (in order); Goal 13: Climate Action, Goal
8: Decent Work & Economic Growth, Goal
12: Responsible Consumption & Production,
Goal 5: Gender Equality and Goal 3: Good
Health & Well-being. These have been the
top 5 SDGs since its inception, with Climate
Action always the most frequently
referenced SDG across the ASX200.
ESG reporting trends in the ASX200: June 2022
Graph 5: SDG targets disclosure by ASX200 companies
140
120
100
80
60
40
20
0
2021
2020
2019
ESG reporting trends in the ASX200: June 2022
Appendix
As outlined above, each year we capture data from public disclosures by companies and rate them based on their ESG reporting. The following table outlines the rating for each
company in the ASX200, organised by sectors. As this report has outlined, the number of ‘Comprehensive’ and ‘Detailed’ companies has significantly increased since the start of this
project. Whilst 9 ‘No Reporting’ companies remain, of these 9, just under half are new to the ASX200 index and therefore have not been previously been considered for this project,
or engagement with ACSI. All companies new to the index below are identified with an asterisk. ACSI will engage with these companies to encourage better ESG reporting.
The table below represents companies that were in the ASX200 index as of December 2021 with data collected on these companies until 31 March 2022, totalling 199 companies as
one company (Sydney Airport) delisted during data collection period.
Sectors
Communication Services
No Reporter
Basic
Nine Entertainment Co.
Holdings Limited
Uniti Group Limited*
Event Hospitality and
Entertainment Ltd*
Consumer Staples
ESG reporting trends in the ASX200: June 2022
Moderate
Domain Holdings
Australia Limited
Detailed
News Corporation
TPG Telecom Limited
REA Group Ltd
SEEK Limited
Comprehensive
Carsales.com Limited
Chorus Limited
Spark New Zealand Limited
Telstra Corporation Limited
Endeavour Group
Limited*
Graincorp Limited
United Malt Group Limited
The a2 Milk Company Limited
Bega Cheese Limited
Blackmores Limited
Costa Group Holdings Limited
Elders Limited
Inghams Group Limited
Coles Group Limited
Metcash Limited
Woolworths Group Limited
Treasury Wine Estates Limited
13
Sectors
Consumer Discretionary
No Reporter
Eagers Automotive Limited
Pointsbet Holdings Limited*
IDP Education Limited
Basic
ARB Corporation Limited
Corporate Travel Management
Limited
Harvey Norman Holdings Ltd
Kelsian Group Limited*
Premier Investments Limited
Webjet Limited
Flight Centre Travel Group
Limited
Moderate
Collins Foods Limited
Crown Resorts Limited
GUD Holdings Limited
Detailed
Aristocrat Leisure Limited
Bapcor Limited
Breville Group Limited
Domino’s Pizza Enterprises
Limited
JB Hi-Fi Limited
Comprehensive
InvoCare
SkyCity Entertainment Group Limited
Super Retail Group Limited
The Star Entertainment Group Limited
Tabcorp Holdings Limited
Wesfarmers Limited
Whitehaven Coal Limited
Ampol Limited
Beach Energy Limited
Santos Limited
Viva Energy Group Limited
Worley Limited
Woodside Petroleum Limited
AMP Limited
Australia & New Zealand Banking Group
Ltd
Bendigo and Adelaide Bank Limited
Bank of Queensland Limited
Commonwealth Bank of Australia
Challenger Limited
Insurance Australia Group Limited
Janus Henderson Group PLC
Medibank Private Limited
Macquarie Group Limited
National Australia Bank Limited
QBE Insurance Group Limited
Suncorp Group Limited
Virgin Money UK PLC
Westpac Banking Corporation
Energy
Washington H. Soul Pattinson
and Co. Limited
Paladin Energy Ltd*
Financials
AUB Group Limited
Zip Co Limited
HUB24 Limited*
Credit Corp Group
Limited
Netwealth Group
Limited
Magellan Financial
Group Limited
ASX Limited
Insignia Financial Ltd
NIB Holdings Limited
Pendal Group Limited
Perpetual Limited
Platinum Asset
Management Limited
Steadfast Group Limited
Pinnacle Investment
Management Group
Limited*
Clinuvel Pharmaceuticals
Limited
Healius Limited
ResMed Inc.
Pro Medicus Limited
Cochlear Limited
CSL Limited
Ansell Limited
Fisher & Paykel
Healthcare Corporation
Limited
Nanosonics Limited
Ramsay Health Care
Limited
Sonic Healthcare Limited
Health Care
Imugene Limited*
Mesoblast Limited
Polynovo Limited
ESG reporting trends in the ASX200: June 2022
14
Sectors
Industrials
Information Technology
No Reporter
Basic
Reece Limited
Moderate
IPH Limited
Reliance Worldwide
Corporation Limited
Detailed
Cleanaway Waste
Management Limited
Qube Holdings Limited
Seven Group Holdings
Limited
Comprehensive
Auckland International Airport Limited
ALS Limited
Atlas Arteria
Aurizon Holdings Limited
Brambles Limited
CIMIC Group Limited
Downer EDI Limited
Qantas Airways Limited
Transurban Group
NOVONIX Limited*
Computershare Limited
EML Payments Limited
Megaport Limited
Block Inc*
Life360 Inc*
Codan Limited*
Technology One Limited
Wisetech Global Limited
Xero Limited
Altium Limited
Appen Limited
IRESS Limited
Tyro Payments Limited*
Link Administration Holdings Limited
NEXTDC Limited
ESG reporting trends in the ASX200: June 2022
15
Sectors
Materials
No Reporter
Nickel Mines Limited*
Silver Lake Resources Limited
Real Estate
ESG reporting trends in the ASX200: June 2022
Basic
Moderate
Deterra Royalties Limited
Pilbara Minerals Limited*
Ramelius Resources
Limited
Detailed
Champion Iron Limited*
Gold Road Resources
Limited
Perseus Mining Limited
Regis Resources Limited
OZ Minerals Limited
Comprehensive
ADBRI Limited
Allkem Limited
Amcor Plc
Alumina Limited
BHP Group Limited
Brickworks Limited
Boral Limited
BlueScope Steel Limited
Chalice Mining Limited*
CSR Limited
Evolution Mining Limited
Fletcher Building Limited
Fortescue Metals Group Ltd
IGO Limited
Iluka Resources Limited
Incitec Pivot Limited
James Hardie Industries Plc
Liontown Resources Limited*
Lynas Rare Earths Limited
Mineral Resources Limited
Newcrest Mining Limited
Northern Star Resources Ltd
Nufarm Limited
Orora Limited
Orica Limited
Rio Tinto Limited
South32 Limited
St Barbara Limited
Sandfire Resources Limited
Sims Limited
BWP Trust
Lifestyle Communities
Limited*
National Storage REIT
Waypoint REIT Limited
Arena REIT*
Abacus Property Group
Charter Hall Group
Centuria Industrial REIT
Charter Hall Long Wale REIT
Cromwell Property Group
Centuria Capital Group*
16
Sectors
No Reporter
Utilities
ESG reporting trends in the ASX200: June 2022
Basic
Moderate
Detailed
Comprehensive
Charter Hall Retail REIT
Dexus
Goodman Group
Growthpoint Properties Australia
GPT Group
Ingenia Communities Group
Lendlease Group
Mirvac Group
Scentre Group
Shopping Centres Australasia Property
Group
Stockland
Unibail-Rodamco-Westfield
Vicinity Centres
AGL Energy Limited
APA Group
Origin Energy Limited
17
Australian Council of Superannuation Investors
Level 23
150 Lonsdale Street
Melbourne VIC 3000
Australia
P: +61 8677 3890
E: info@acsi.org.au
W: www.acsi.org.au
ESG reporting trends in the ASX200: June 2022
18
Student ID
Input your 9-digit student ID here
Number of digits
Threshold
219395246
1
4
Background information
The profit before tax, reported in the statement of comprehensive income of Blue Ltd for the year ended 30 June
amounted to:
Subscription revenue
Government award income
Doubtful debts expense
Depreciation (Equipment)
Depreciation (Buildings)
Maintenance expense
Employee benefits expense
Rent expense
Entertainment expense
The draft statements of financial position of the company at 30 June 2023 and 2022 showed the following assets and liabilitie
Assets
Cash
Inventory
Accounts receivable
Allowance for doubtful debts
Prepaid rent
Equipment
Accumulated depreciation – Equipment
Buildings
Accumulated depreciation – Buildings
Land
Goodwill (net)
Deferred tax asset
Liabilities
Accounts payable
Provision for maintenance
Provision for employee benefits
Subscription received in advance
Deferred tax liability
Additional Information:
Subscription revenue is tax assessable when it is received in cash
Government award income is not tax assessable
Doubtful debts are tax deductible when the company actually incurs bad debts/write off
For accounting purpose, the equipment is depreciated using the annual straight line method at a rate of:
For tax purpose, however, the equipment is depreciated using the annual straight line method at a rate of:
Depreciation of buildings is not allowed as tax deductions and goodwill is not tax assessable
Employee benefits are tax deductible when they are paid in cash to the employees
Rent expense and maintenance expense are tax deductible when paid in cash
Entertainment expense is not allowed as tax deduction
Assume a tax rate for the financial years ending 30 June 2022 and 2023 to be:
Required:
Calculate the taxable income/tax loss and the current tax liability (if any) for the financial year ended 30 June 2023.
Prepare a journal entry to recognise the current tax liability/tax loss.
Calculate deferred tax asset and deferred tax liability balances as at 30 June 2023.
Prepare the deferred tax journal entries for the year ended 30 June 2023.
Note that you are NOT required to prepare journals to offset the deferred tax asset and deferred tax liability balances.
Show your calculation using deferred tax worksheets by creating separate columns for:
carrying amount, tax base, taxable temporary differences and deductible temporary differences.
Assume that by 1 December 2023 there was a change in tax rate to:
With reference to AASB 112 / IAS 12 Income Taxes, discuss the accounting treatment of the deferred tax asset and
deferred tax liability balances as at 1 December 2023 following a new tax threshold for the 2023-2024 financial year.
Prepare the journal entries to record the effect of change in tax rate.
(18 + 23 + 9 =
the year ended 30 June
9,790,000
2023
305,000
550,000
61,000
994,250
97,000
275,000
183,000
91,000
152,900
ed the following assets and liabilities:
2023 ($)
2022 ($)
642,000
1,376,000
3,977,000
(318,000)
171,000
3,977,000
(1,988,500)
2,447,000
(979,000)
1,529,000
611,000
?
703,000
1,254,000
3,793,000
(293,000)
159,000
3,977,000
(994,250)
2,447,000
(881,000)
1,529,000
611,000
328,755
2,325,000
489,000
336,000
214,000
?
2,080,000
367,000
244,000
152,000
0
od at a rate of:
thod at a rate of:
le
25%
20%
30%
year ended 30 June 2023.
eferred tax liability balances.
ences.
32.50%
he deferred tax asset and
e 2023-2024 financial year.
(18 + 23 + 9 = 50 marks)
Calculate the taxable income/tax loss and the current tax liability (if any) for
the financial year ended 30th June 2023. Prepare a journal entry to recognise
the current tax liability/tax loss.
$
Journal entry:
Dr
Cr
18 marks
Workings:
Additional space for workings (if required):
Calculate deferred tax asset and deferred tax liability balances as at 30th June 2023. Prepare the deferred tax
journal entries for the year ended 30th June 2023.
Journal entry:
Dr
Cr
23 marks
Prepare the deferred tax
Assume that by 1 December 2023 there was a change in tax rate to:
With reference to AASB112 Income Taxes, discuss the accounting treatment of the deferred tax asset and
deferred tax liability balances as at 1 December 2023 following a lower tax threshold for the financial year
2023-2024.Prepare the journal entries to record the effect of change in tax rate.
Journal entry:
Dr
Cr
9 marks
32.50%
of the deferred tax asset and
reshold for the financial year
te.
Assignment Requirements
1. For Part A,
Write the answer in a word document.
You also have to submit at least one ESG/Sustainability report(s) for the
selected company in the question.
2. For Question 1 in Part B,
Write the answer in a new word document.
3. For Question 2 in Part B,
You must use the excel spreadsheet provided.
Part A – CSR and Theories of Accounting
Background Information:
BankGreen Inc. is a hypothetical mid-sized financial institution listed on the ASX. The bank has a
diversified portfolio of services, including retail banking, investment banking, and wealth management.
Over the past few years, BankGreen has experienced significant growth and has increasingly faced public
scrutiny regarding its environmental, social, and governance (ESG) practices. The bank has a notable
presence in financing projects in the energy, agriculture, and real estate sectors, which have been
subject to environmental and social concerns.
In response to the growing interest in ESG performance and the financial industry’s role in promoting
sustainable development, many companies in the financial sector have started to issue ESG reports to
showcase their commitment to sustainable business practices. These reports typically include
information on the bank’s environmental impact, social responsibility initiatives, and governance
structures that promote transparency and accountability. Furthermore, there has been a push for
responsible lending practices, ensuring that financial institutions consider the ESG risks and
opportunities when providing loans and making investment decisions.
BankGreen’s senior management remuneration is tied to the bank’s financial performance, with bonuses
based on achieving certain profitability and growth targets. Some stakeholders have raised concerns that
this remuneration structure may create a short-term focus on financial results, potentially hindering the
bank’s commitment to long-term sustainability objectives and responsible lending practices.
While the bank has considered issuing its first ESG report, the senior management team is unsure
whether the benefits of ESG reporting will outweigh the costs and whether implementing ESG reporting
would have an impact on the financial performance incentives. The bank is also concerned about the
potential challenges of implementing ESG reporting, given its limited experience in this.
Requirements: Compose an essay between 1000 and 1500 words to address the specified
requirements and should also include an introduction and a conclusion.
Q1. Discuss the potential challenges BankGreen Inc. might face while implementing ESG reporting for the
first time. (250 ~350 words)
Q2. Analyze the implications of normative and positive accounting theories on BankGreen Inc.’s ESG
reporting practices and discuss how these theories can shape ESG reporting in general. (300 ~450 words)
Q3. Analyze the impact of senior management remuneration and incentives policies on the decision to
issue ESG reporting at BankGreen Inc. and discuss potential misalignments. (250 ~ 350 words)
Q4. Select a company in the financial sector from Australian Council of Superannuation Investors (ACSI)’s
2022 list of ASX 200 companies that have comprehensive reporting on ESG issues. Download their
ESG/Sustainability report and provide an overview of how the selected company has performed in ESG
reporting. (250 ~ 350 words) Submit the downloaded report to the assignment as well.
Part B Question 1. – Accounting for Leases IFRS 16/ AASB 16
1(a)
Previous leasing standards have been criticized about the lack of information they required to be
disclosed on leasing transactions. These concerns were usually expressed by investors and so AASB 16/
IFRS 16 Leases were issued in response to these criticisms.
Required: Discuss some of the key changes to financial statements with investors will see when
companies apply the lease accounting requirements in AASB 16 / IFRS 16.
For a company with significant off-balance sheet leases, discuss the likely impact that AASB 16 / IFRS 16
will have generally on accounting ratios and particularly on:
i. Earnings before interest and tax to interest expense (interest cover).
ii. Earnings before interest and tax to capital employed (Return on capital employed).
iii. Debt to earnings before interest, tax, depreciation, and amortization (EBITDA)
(200 ~ 250 words)
_____________________________________________________________________________________
1(b)
ClearStar, a public limited company supplying oil products globally, has debt covenants attached to some
of the loan balances included within liabilities on its statement of financial position. The covenants
create a legal obligation to repay the debt in full if ClearStar fails to maintain a liquidity ratio and
operating profit margin above a specified minimum. The directors are considering entering into a new
five-year leasing arrangement but are concerned about the negative impact which any potential lease
obligations may have on these covenants. If they proceed, they are proposing to construct the lease
agreement in such a way that it is a series of six ten-month leases rather than a single five-year lease in
order to utilize the short-term term lease exemption under IFRS 16 / AASB 16 Leases. It would then
account for the leases in accordance with their legal form. The directors believe that this will meet the
requirements of the debt covenant, though they are aware that the proposed treatment may be
contrary to accounting standards.
Required
Discuss the ethical issues which arise from the proposal by ClearStar
(200 ~ 250 words)
Part B Question 2. – Accounting for Income Tax IAS 12 / AASB 112
This question relates to IAS12/ AASB112 Income Tax and requires the following to be submitted: An
excel workbook with the following four (4) sheets:
a. Sheet 1: Background Information
b. Sheet 2: Calculating Taxable Income
c. Sheet 3: Calculating DTA/DTL
d. Sheet 4: Change in tax rate
Requirements
a) Calculate the taxable income / tax loss and the current tax liability (if any) for the financial year
ended 30th June 2023. Prepare a journal entry to recognize the current tax liability / tax loss.
(In Sheet 2: Calculating Taxable Income)
b) Calculate deferred tax asset and deferred tax liability balances as of 30th June 2023. Prepare the
deferred tax journal entries for the year ending 30th June 2023. Note that you are NOT required
to prepare journals to offset the deferred tax asset and deferred tax liability balances.
(In Sheet 3: Calculating DTA/DTL 2023)
c) Assume that by 1 December 2023 there was a change in tax rate. With reference to AASB112
Income Taxes, discuss the accounting treatment of the deferred tax asset and deferred tax
liability balances as of 1 December 2023 following a lower tax threshold for the 2023-2024
financial year. Prepare the journal entries to record the effect of the change in tax rate.
(In Sheet4: Change in Tax Rate)
Computation of taxable income / Tax loss for the year needed
30.6.2020
Particulars
Value($)
Profit as per BOA
16340000
Add back :
Doubtful debt expense
102000
Depreciation(equipment)
663800
Depreciation(Buildings)
163000
Maintainance expense
459000
Employee benefit expense
306000
Rent expense
153000
Entertainment expenses
255300
Subscription received in advance
357000
18799100
Less: Deductible expenses/Incomes
Subscription revenue
510000
Government award income
919000
Maintainance expense
254000
Employee benefit expense
153000
Depreciation on equipment
995700
Rent expense
133000
Taxable income
15834400
Current tax liability is 30% of $15834400 = 4750320
Defferedtax laibility / DTA
computation worksheet
Depreciation on equipment
Carrying amount
Tax base
3319000
Subscription received in
advance
1659500
CA
TB
357000
Goodwill
0
CA
TB
1021000
TB = CA + FDA – FAA
1021000+0-0 = $1021000
Depreciation on building
1021000
CA
TB
2451000
Provision for mtce
4085000
CA
TB
817000
0
Temporary
difference
1659500
Temporary
difference
357000
Temporary
difference
0
Temporary
difference
-1634000
Temporary
difference
817000
DTL
497850
DTA
107100
DTL
0
DTA
490200
DTA
245100
TB= CA- Future deductible
amount
Prov for employe benfits
CA
TB
561000
Prepaid rent
0
CA
TB
285000
TB=CA+FDA-FAA
285000
285000
Temporary
difference
561000
Temporary
difference
0
DTA
168300
DTL
0
So closing balance of DTL as on 30.6.2020 is $497850 and DTA as on 30.6.2020 is
$1010700. Opening bal of DTA and DTL is $51720 and zero respectively. So there is
increase in DTA to the tune of $958980.
Journal entries for DTA and DTL
Date :
30.6.2020
Particulars
Debit ($)
Deferred tax
497850
expense
Deferred tax liability
(To record DTL)
Date:
30.6.2020
Deferred tax asset
Deferred tax
expense
(To record DTA)
Credit ($)
497850
958980
958980
If there is change in tax rates, DTA and DTL shall be measured at the new tax rates
and current tax at existing tax rates. Hence in the said case DTL and DTA will be as
follows.
DTL at revised tax rates is $456363 and DTL at existing rate=497850. So there is
reduction of DTL to the tune of $41487. So JE will be
Date
Particulars
Debit ($)
Credit ($)
Deferred tax liability
41487
Deferred tax expense
41487
(To record DTL due to
change in tax rates)
Date
Particulars
Debit ($) Credit ($)
Deferred tax expense
84225
Deferred tax asset
84225
(To record DTA due to change in tax
rates)
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