General purpose consolidated financial statements

Read through the 2020 general purpose consolidated financial statements including notes (to the financial statements) of BHP Group (BHP) and African Rainbow Minerals (ARM).

Based on your reading and independent research, answer the following questions:

(a) Which accounting standards did BHP and ARM apply in preparing the consolidated financial statements? (100 words, 2 marks)

(b) Who sets the accounting standards in Australia? In South Africa? Discuss with references. (200 words, 4 marks)

(c) What similarities and differences do you observe between the two sets of financial statements? Your focus should be on the application of accounting standards and nature of accounts rather than the reported amounts or financial performance. (400 words, 9 marks)

(d) Using Hofstede’s societal dimensions, how would you describe Australia and South Africa as two different societies? (300 words, 6 marks)

(e) Do you think financial reporting in Australian and South African companies will converge one day? Why or why not? (200 words, 4 marks)

Part 2: 25 marks (PLO 7.1)

(a) Refer to the Integrated Annual Report of ARM and the 2019 Sustainability Report of BHP. Compare and contrast between the key features of sustainability reporting of BHP and ARM. (300 marks, 6 marks)

(b) Comment on the earnings persistence and the accrual component in earnings of BHP vis-à-vis ARM in 2020. (200 words, 4 marks)

(c) Between BHP and ARM, which company has greater debt-based incentives to manage reporting earnings? Why? (200 words, 4 marks)

(d) Compare and contrast between the key features of executive compensation structures of BHP and ARM. (300 words, 6 marks)

(e) Do you think BHP or ARM is exposed to high political costs? Why or why not? (300 words, 5 marks)

Sample Solution