https://www.aasb.gov.au/admin/file/content105/c9/AASB16_02-16.pdf

Requirements:

AASB 16 was released in February 2016 and is applicable to annual reporting periods beginning on or after 1 January 2019. Assume that the Chief Executive Officer (CEO) of an investment company from United Kingdom (UK) had approached you at KPMG seeking advice on the effects of AASB16 on Woolworths Group Limited and Wesfarmers Limited financial statements for the period 2017/2018 if these firms adopt the new leasing standard early. You are to assume that all aspects of the financial statement will be same as 2016/2017 except the effect of the AASB 16.

KPMG is the Auditors for Woolworths Group Limited for the financial year 2017/2018. You are required to take the role of business advisor/Analyst for the purpose of providing a detailed report based on the following specific questions relating to AASB 16 that the investing company is seeking a report for. As an advisor/Analyst at KPMG, write a report addressing the following questions that the CEO of the investment company has asked your firm for advice;

1. As an Auditor for Woolworths Group Limited financial year are there regulation, restrictions or disclosure requirements etc. that has implications for your firm if you provide the requested advice. If so, please discuss the requirement and how you would resolve it.

2. Why has the leasing standard been changed? What will change? What does it mean for Woolworths Group and Wesfarmers? And how AASB 16 would benefit and/or disadvantage both?

3. What effect does AASB 16 has on Woolworth Group and Wesfarmer's income statement, balance sheet and cash flow statement? What does it mean for users of both corporations Australia's financial statements?

(Note: Compare and discuss relevant ratios where applicable. Use 2018 Annual Report for both Woolworths Group and Wesfarmers for comparison. Attach as Appendix 1 extract from the financial statements that you have used. Compare and discuss ratios in the body of your discussion and attach your ratio calculations including any formula for both companies in appendix 2.

4. How have these two companies reported their environmental and social aspects such energy use and efficiency, carbon emissions, etc.? Is there any regulatory requirement for such reporting? If so, summarise the requirements and discuss what they have reported? If there is no regulatory requirement, is there any evidence that these mining companies have reported/disclosed any environments and social information, if so, summarise how and what is reported/disclosed?

5. Evaluate whether overall, AASB 16 would result in reporting that would be more useful to users of Woolworths Group Limited and Wesfarmers Limited financial statements?

6. Summarise your discussion for the Chief Executive Officer (CEO) of the investment company who is from a non-accounting background.

In your report make sure you consider the relevant specific technical and theoretical issues relating to AASB 16 from your nominated stakeholder perspective. You are also required to consider the theoretical implication of accounting information produced from the perspective of your nominated stakeholder.

Attach as Appendix 1 extracts of financial statements used in your report.

Attach as Appendix 2 your ratio calculations including any formula used.

The submission should be approximately 1500 words in length