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Alex Malley contract - disclosure?

Are minimum disclosures appropriate for an organisation that is supposed be setting the standard. What disclosures should be happening.
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Stomper
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Alex Malley contract - disclosure?

Post by Stomper » Sun Jun 25, 2017 6:40 pm

Given the materiality ($4.9m) of the contingent liability associated with the CEOs contract is there any financial statement guru amongst us that can look at the disclosure requirements under the standards?

Heisenberg
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Re: Alex Malley contract - disclosure?

Post by Heisenberg » Sun Jun 25, 2017 9:55 pm

Stomper wrote:
Sun Jun 25, 2017 6:40 pm
Given the materiality ($4.9m) of the contingent liability associated with the CEOs contract is there any financial statement guru amongst us that can look at the disclosure requirements under the standards?
I doubt it would need to be need to be disclosed, at least when the last set of accounts were prepared, as the probability of a termination payment would have been low (until very recently).

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Re: Alex Malley contract - disclosure?

Post by nakedadmin » Sun Jun 25, 2017 10:47 pm

If the termination payment was a payout of an existing contract. E.g. he was contracted for 4 years into the future with no notice period agreed then I would think it is a commitment. Is it material? Who knows. But materiality is not supposed to be used as a way of hiding things. It's something for the auditor to determine, not the organisation to assess what they do and don't disclose.
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chuck_meister
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Re: Alex Malley contract - disclosure?

Post by chuck_meister » Mon Jun 26, 2017 9:07 am

CPA issues it own fact sheets such as IAS37 "Contingenty liabitilies and contingent assets:.
Here is a screen shot:
IAS37.png
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From this is clear that they should have disclosed it as a provision in the annual report which they did not
as you can see from the revlevent section of the 2016 annual report:
CPA2016 provisions.png
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Re: Alex Malley contract - disclosure?

Post by nakedadmin » Tue Jun 27, 2017 5:25 pm

No that's for expenditure that has been booked. There should be another note for expenditure committed to but not booked yet. E.g. long term rentals and CEO contracts.
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Re: Alex Malley contract - disclosure?

Post by nakedadmin » Tue Jun 27, 2017 5:36 pm

It should be disclosed in this note on commitments. Note that the heading is lease commitments but I believe the disclosure requirement is for committed expenditure. They are saying they only have lease commitments not other committed expenditure.
CPAA_commitment_1.png
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CPAA_commitment_2.png
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Re: Alex Malley contract - disclosure?

Post by Red_Ferrari » Tue Jun 27, 2017 6:20 pm

.
[alternatively, or as well] it should've been disclosed as an Onerous Contract by applying AASB137:
.
Onerous Contracts

66   If an entity has a contract that is onerous, the present obligation under the contract shall be recognised and measured as a provision.

67   Many contracts (for example, some routine purchase orders) can be cancelled without paying compensation to the other party, and therefore there is no obligation. Other contracts establish both rights and obligations for each of the contracting parties. Where events make such a contract onerous, the contract falls within the scope of this Standard and a liability exists which is recognised. Executory contracts that are not onerous fall outside the scope of this Standard.

68   This Standard defines an onerous contract as a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The unavoidable costs under a contract reflect the least net cost of exiting from the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfil it.

69   Before a separate provision for an onerous contract is established, an entity recognises any impairment loss that has occurred on assets dedicated to that contract (see AASB 136).
AASB137 Provisions, Contingent Liabilities and Contingent Assets:
http://www.aasb.gov.au/admin/file/conte ... _01-11.pdf

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