Accounting Assignment Help


Accounting Assignment Help


Accounting Assignment HelpThe primary object of this report is to understand the accounting standard prescribed by the Australian Accounting Standard Board with respect to the accounting disclosures of the employee benefits reported by the entity. This report has employed the AASB 19 Employee Benefits to consider the required accounting principles for the reporting entity in its financial report. The application of respective accounting standard has been illustrated with the help of Major Mining Multinational BHP Billiton Annual Report for the last reporting period.

About the Organisation

The Australian multination corporation with engagements into the mining and petroleum sector.BHP Billiton is known as the largest mining organisation across the world based on the revenues and it is also the third largest organisation around the globe based on the market capitalization.

This dual listed organisation is a result of merger happened in the year of 2001 between two major multinational mining companies –

  • Australian Broken Hill Proprietary Company Limited (BHP)
  • Anglo–Dutch Billiton plc

The BHP Billiton which has a majority of stake is listed on the Australian exchange is known among the investors as a largest organisation in terms of market capitalization. Furthermore, the organisation has mining and processing operation around the world with a spread of 25 countries and availing the services of close to 41000 employees.

Employee Benefits

The employee benefits can be categorized as different types of compensations provided to the employees by the organisation beyond the regular payment of salaries and wages. It is significant to understand the employee benefits are generally considered as future benefits provided to the employee in exchange of their present services catered to the organisation. The primary purpose of these benefits is to ensure the economic security of all the employees performing their duties and providing financial security for post retirement period. The commonly known employee benefits as provided to employee are following –

  • Housing Benefits
  • Group Insurance
  • Retirement Benefits
  • Social Security
  • Educational allowances
  • Pension Benefits
  • Other Specialized Benefits

Accounting Standard AASB 119

The primary objective of this accounting standard is to recommend the accounting policies and required disclosure for the employee benefits. In accordance with this accounting standard, it is expected from an entity to recognize –

  • Liability of the firms with respect to the employee who is providing services to the firm in lieu of future benefits to be paid
  • Any type of expenditure incurred by the entity for the consumption of the economic benefit during the service period of employee

 Post Employment Benefits

The post-employment benefit category encompasses all the following items with respect to the future benefits of the employee –

  • Retirement Benefits; Payments at the retirement like pension or lump sum payment.
  • Life Insurance to be provided for post employment period
  • Medical Care to be provided for post employment period

Based on the arrangement the whereby firms provide all the post employment benefits as post employment plan s and the accounting standard is applicable to all such arrangements. Moreover, it depends on the economic substance whether the post employment benefit plan is to be considered one of the following –

  • Defined Contribution Plan
  • Defined Benefit Plan

Defined Contribution Plan

The accounting for the defined contribution plan is simple since the obligation of the entity is determined based on the contribution for the respective period. Moreover, it does not require any actuarial assumptions to determination of total obligation or expense since there is no probability of any type of actuarial gain or loss. All the obligations of reporting entity are to be measured based on undiscounted approach with an exception of obligations which are not expected to get settled completely within the period of 12 months after the period of annual reporting.

Disclosure Requirements

Based on the accounting standard (AASB 124) the entity is required to disclose the amount for defined contribution plan as an expense for all the key personnel within the organisation.

Defined Benefit Plan

Under defined benefit plan the future benefits of the employee are to be sorted out based on the total derived with the help of following factors

  • Salary History of the employee
  • Duration of Employment
  • Employee Turnover
  • Mortality rate of employees
  • Trends of Medical Expenses
  • Employee Contributions
  • Final Salaries

The above calculation makes the accounting difficult for the entity since it requires the consideration of actuarial assumptions to measure the total value of obligation, expense and the possibility to assess whether there is actuarial gain on loss.


It is significant for the reporting entity to disclose all the details and accounting items pertaining to defined benefits plans since the ultimate cost of employee benefits is highly uncertain and this uncertainty is expected to persist for long. Hence it is important for the reporting entity to provide the required disclosures for the stakeholders of the firm.

As prescribed by the Australian Accounting Standard Board – Employee Benefits, the reporting entity must provide following types of disclosures: –

  • Recognition of Net Defined Benefit Liability in the Balance Sheet for the reporting period
  • In case of any surplus with respect to defined benefit asset the details to be provided
  • Disclose the characteristics of the defined benefit plans and the associated risks
  • Dependences, if any, to be disclosed with respect to reporting entity cash flow for defined benefit plans.
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Course Syllabus

Finance Help

  • Economic System

    Economic System

    In mixed economic system, the Government is responsible to design the fiscal and monetary policies of the country. Fiscal policy is the policy set by the Government focusing on the taxation structure and public spending. It is the Government who decides the increase in the taxation or increase in the public spending depending upon the national and international economic conditions (Marshal, 2013). In UK, the increase in the public spending has rise from 756.1 billion to 761.9 billion in the period 2016. This increase will create direct positive impact in the development of the infrastructure and security system in the country. On the other hand the increase in the tax rate that is VAT up to 20% will help the Government to maximise the proportion of the revenue (Thomas, Hills and Dimsdale, 2010). This will be the negative impact on the organisations like Tesco, Morrisons etc. due to the increase in the operational cost. The Conservative Government in the year 2015 has given focus on the stable economic growth by restricting the fiscal policy with an objective to make a surplus in the public finances. The experts are claiming that current objective of the fiscal policy of the Government can negatively influence the GDP growth rate due to the Brexit vote. Restrictive fiscal policy has diminished due to the decrease in the interest rate. As per the market research the deficit will be around 4pc of GDP in the period 2020 (Bootle, 2016).

    Monetary policy is the policy set by the central bank of a country with a view to control the supply and demand of the money. The restrictions of the credit and changing the rates of the bank are approaches adopted by the concerned authority of the country in order to influence the money circulation. The rates are lower in the perspective of UK by the Bank of England in order to provoke the citizens to borrow in the terms of loan due to less interest. In this situation, the inflation rate has also decreased in UK from 0.5% to 0.2% which also influences the people to consider the purchase (Debortoli and Nunes, 2015). Thus the organisations like Tesco will observe a high sales turnover due to the favourable monetary policy of UK. The motivation towards the purchase will enhance the business opportunities of Tesco.

    The activities like increase in the public spending will increase the competency level in the workforce and the organisations like Tesco that operating in the retail sector can recruit efficient employees. As a result the value proposition of Tesco will enhance and it will attract more customers. Somehow the increase in the taxation will create a negative impact on the purchase consideration of the customers due to the increase in the price by the organisations. Investment will accelerate due to the reduction in the bank rate as a result the organisations can develop their infrastructure for the sake of customer’s satisfaction (Orphanides and Van Norden, 2012).

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