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 States of America (USA) had approached you at KPMG seeking advice on the effects of AASB16 on BHP Billiton Limited and Rio Tinto Limited financial statements for the period 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 2017 except the effect of the AASB 16.

KPMG is the Auditor for BHP Billiton Limited for the financial year 2017. 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, A report should addressing the following questions that the CEO of the investment company has asked your firm for advice;

1. Why has the leasing standard been changed? What will change? What does it mean for BHP and Rio Tinto? And how AASB 16 would benefit and/or disadvantage the BHP and Rio Tinto?
2. What effect does AASB 16 has on BHP and Rio Tinto's income statement, balance sheet and cash flow statement? What does it mean for users of BHP and Rio Tinto's financial statements?

(Note: Compare and discuss relevant ratios where applicable. Use 2017 Annual Report for both BHP and Rio Tinto 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. Note generally financial reports gets released in September so 2018 report may become available).

3.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 companies have reported/disclosed any environments and social information, if so, summarise how and what is reported/disclosed?

4.Evaluate whether overall, AASB 16 would result in reporting that would be more useful to users of these companies' financial statements?

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