Stakeholder Analysis Of Soselo Mello s Stakeholder Analysis

Stakeholder analysis of Soselo Mello 1. The Primary Social Stakeholders a. Shareholders and investors. Because they are in the initial state of their business, they do not have shareholders and investors right now. However, they are looking for an investors, and the future investors and shareholders will be the most important stakeholders for Soselo Mello. To develop and sell much better fuel items in the market they need more investment, but there is not enough information who an investor can invest his money in their business on the official website. To communicate the future investors, they have to improve the website. b. Employees. When they start to produce and sell their fuel in earnest, they have to hire more employees. They will want to hire employees who can share same vision to make much safe and clean environment by using Soselo Mello’s fuels. Of course, they will hire a lot of local laborer as their employees, and the stable job can change the laborer’s life. The wage of African laborers is much cheaper than other development countries, so they will be able to hire more employees. c. Manufacturers. To make a contract with local manufactures to produce their goods is can be a good business option. To open and manage a factory needs huge investment and expertise. So, local manufacturer will be one of the most important stakeholders for them. The infrastructure and managing ability for factory in Africa is not enough compared to developed countries, so they

Accounting for Normal Liabilities and Contigent Liabilities

Question: Discuss about the Accounting for Normal Liabilities and Contigent Liabilities. Answer: Introduction The financial statement item liability arises because there exist no timely payment of payables hence outstanding mostly at the time of reporting and since they form the great part of entities obligation there exist the need for measurability, recognition, disclosure, and provision too. By virtue of being future sacrifices of economic gains that entities are obliged for upon past transaction, therefore, the need for recognition of liabilities in the balance sheet is highly required. Recognition starts from identification of the existence of the liabilities upon proofs of future benefits and measurability aspects via monetary presentation Fischer(2010, Pg.54). The existence of liabilities especially current is only approved upon verifiability aspect of amounts value that requires payment on specific dates. Recognition is mostly done in the statement of financial position as well as in the statement of cash flow upon contra payment done on debtors as illustrated in Rio Tinto Ltd annual reports of the financial statements year 2016 Deegan(2012.Pg 17)wherein the cash flow there exist cash outflow on repayment of borrowing as well as recognition of current and non-current liabilities of trade and other payables, tax payables Sawyer(2010.Pg 5) and borrowings as well as other financial liabilities that are somehow partly recognized hence disclosure done in notes 30 of the statements Cairns(2011, Pg18). There is finally recognition of provision of made on post-retirement benefit made in the statement of financial position and that of liabilities of disposals that are held for sale. Rio Tinto Ltd annual reports has, therefore, illustrated presentation of liabilities in the financial position as well as partly disclosure in the notes IAS 37 defines items whose present purpose entirely relies on the occurrence of uncertain future events thus no certainty on its payment return to as contingent liability. The same IAS 37 standard dictates to what is extent are the item important to the users of the information hence the need for disclosure in the financial notes. It is more of currently resolving and settling expectation of past events although due to its probability nature amount is mostly no measurable. Accounting for liability is so vital since it affects the income statement and financial position in totality as long as the debt obligation is probable and respective amount can be approximated or determined. The benchmark applied while accounting for the contingent liability is a little bit different to that exercised on the normal liabilities since its existence depends on whether the expected outcome of events uncertain future events will occur or not relatively exclusive from the internal control of the firms. There are two events that ought to happen so as to define an item as a contingent liability; (a)is the absence of surety that there will exist return economic in nature that can settle the debt at hand while (b)is the reliability of the amount in the measure. It is further seen that the existence of (a) and (b) events explains why it is not possible to recognize this liability in the financial statements but only have them disclosed unless there exist expectation of economic benefit that is termed remote as stipulated in IAS 37.86. AASB 137.11 further outlines the difference while measuring, setting provisions and recognition of normal liabilities against the contingent. It describes the approach being different since contingent relies on occurrences of future events while the other relies on already happened event i.e. if its payable the products are already supplied hence some probability of payment to be made exist. AASB 137.14 and IAS 37.72 sets guidelines on how provision and recognition should be made and its applicability. The clauses stated above further narrows down the benchmark of the provision to only apply when there exist liabilities whose obligation are present and that whose economic benefit available or expected can settle the obligations in place. Clause 14 of AASB 137 strongly defines recognition for provision to apply to entities that have current reliable and estimable obligation of previous transactions and that whose returns in wait can settle the debt in place hence if this is not met the aspect of recognition of provision is missed. We can therefore comfortably classify contingent liabilities as those liabilities that have not to satisfy the requirement of AASB 137.14 not involved in recognition of its provision in the financial statements. However, though the clause states so in cases where economic benefits are realized later and hence used to settle the obligation the need for recognition exists but only to the extent of the portion capable of settling the obligation as defined in AASB 137.30 and IAS 37.86. Contingent liabilities are mostly seen to be disclosed rather than being carried forward on accrual basis AS(2004.Pg 40).It is expected to be disclosed on the following grounds pursuant to clause 84 for the 1AS 37; the need to disclose opening and closing balances is important so as to analyze on movements of products and trends for decision-making. In cases of increasing the items likewise forms part of disclosure together with respective used and unused balances a well as changes resulting from discount and interest rates. The disclosure should be timely in nature with assumptions, full of uncertainties as well provision of reimbursement if any. The law as stated in IAS 37.85 examines the characteristics of the disclosure expected on these contingent liabilities. AASB 137.16 further outlines the extent of recognition of provision to be on the basis of identification and examination of the present existence obligations via the analysis of the evidence at the end of a reporting period. If therefore exist no present obligations at the end of the period provision ceases to be recognized instead contingent liabilities disclosure dominates the way. It is, therefore, the reason as to why we cant recognize contingent liabilities in the balance sheet since items appearing at the financial position are only those recognized at the end of financial year period thus referring the contingent liabilities to form part of post balance sheet events that are expected for disclosure. There are instances where the materiality of contingent liabilities is not felt hence disclosure on the same is not deemed material either but a backup note emphasizing on the same should be stated for information purposes. Rio Tinto Ltd Company financial statement for the year 2016 illustrates more on the provision, recognition and measurability of liabilities and especially more on contingent. Note number 31 of the 2016 financial statements of Rio Tinto Ltd Company explains on contingent liabilities Cebotari(2008.Pg.7) disclosure relating to control interest in subsidiaries and joint ventures. It is seen to expose all relevant approach of the indemnities as well as for guarantees performance hence disclosing the outflow of resources for the satisfaction of obligations under contractual agreements the likes of supplier terms that are not presentable in the balance sheet due to its possibility nature rather than remote a clear indication of non-economic benefit in return. The users of Rio Tinto financial information for decision-making are further informed on immateriality concept on disclosure of the contingent liabilities in the statements, especially on the joint and associates interest ventures. Rio Tinto Ltd is further informing the users of its great attempts through its external counsel to reach relevant authorities on its contractual payments obligation and hence a show of cooperation and honor of its contractual terms Nethercott(2009.Pg 111). However the notes further inform of litigation filed against Rio Tinto Ltd directors by the Southern District of New York on linkage with Simandou payments Bradbury(2008.Pg 290) The magnitude of the allegation of noncooperation, as well as the likely outcome of investigations on litigation set in place against Rio Tinto, is engulfed by the significant uncertainties of events at the current time limiting Rio Tinto Ltd from setting provision on the same but only to disclose any information seen material at the time of reporting Bova(2016.Pg 21). Disclosure on guarantees information is likewise done by Rio Tinto Ltd company where they state to have fully and unconditional guaranteed all financial securities without favor to all subsidiaries with its future maturity hence not certain on its return upon maturity due to its payback period therefore not certain on economic benefits as well as what estimation on provision for purposes of recognition is deemed viable Nehme(2009, Pg. .11) Rio Tinto guarantee on Turquoise funds is further seen not being able to satisfy Oyu Tolgoi projects thus leaving debt obligation un-serviced and unsettled due to prevailing political and risk events or rather factors free from entities control therefore deeming the contingent liability on guarantees precognitive but disclose able Palmer(2006.Pg 7). Rio Tinto disclosure of the contingent liability in the notes is therefore done as per AASB 137 and IAS 37. Conclusion Liabilities whether normal or contingent must appear in the statements as either notes upon disclosure or as recognition and provision in the financial position in lieu of consideration made on economic benefits and measurability test. By only recognizing, measuring or even disclosing the liabilities in the financial statements does not mean full accounting for liabilities is achieved thus the need to view the obligation as the burden that ought to be offset, settled or recovered either in future or present is important. Records should be kept in accordance with the regulation and respective closing and opening balances reported within the burdened financial year. Finally we need to know that appearance of well accounted for liabilities in a firm financial statements depicts the going concern concept thus promoting possible future existence of the firm in market for business purposes. References AS, A.S., 2004. Provisions, Contingent Liabilities and Contingent Assets. MEASUREMENT, 35, p.45. Bova, M.E., 2016. The Fiscal Costs of Contingent Liabilities. International Monetary Fund. Bradbury, M.E., 2008. Fifty?seven Curious Defects in Haswell and Langfield?Smith (2008): A Comment. Australian Accounting Review, 18(4), pp.287-293. Cairns, D., Massoudi, D., Taplin, R. and Tarca, A., 2011. IFRS fair value measurement and accounting policy choice in the United Kingdom and Australia. The British Accounting Review, 43(1), pp.1-21. Cebotari, A., 2008. Contingent liabilities: issues and practice (No. 8-245). International Monetary Fund. Deegan, C., 2012. Australian financial accounting. McGraw-Hill Education Australia. Fischer, D., 2010. Der Standardentwurf Measurement of Liabilities in IAS 37. PiR2010, pp.53-55. Nehme, M., 2009. Unascertained future claims: Current issues and future reforms. Nethercott, L. and Anamourlis, T., 2009. The relevance of accounting and business principles in consolidations. Tax Specialist, 13(2), p.112. Palmer, P.D., 2006. The impact of adopting AIFRS in Australia: The extent and quality of disclosures, and their relationship to corporate characteristics. School of Commerce, Flinders University. Sawyer, A., 2010. Financial Institutions' Tax Disclosures and Discourse: Analysing Recent Australasian Evidence. eJournal of Tax Research, 8(1), p.6.