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Identification of Potential Questionable Numbers

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Identification of Potential questionable numbers

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Identification of Potential questionable numbers
The financial statements of an organization should present the accurate and true financial position of the organization. Information contained in financial statements should, therefore, be clear, reliable, self explanatory, and easy to understand. This will ensure that these financial statements are useful to the concerned stakeholders. In evaluating the financial statements of Wesfarmers Limited, I have identified several potential questionable numbers. These potential questionable numbers include; other expenses, Impairment expenses, receivables, and good will. These are explained in detail below.
There is inadequate disclosure on other expenses. The amount of other expenses $3,212 million is a significant amount in comparison with the total expenses. The breakdown of other expenses on Notes to the financial statements is also inadequate, since a $ 1,252 million is classified as other expenses. The component of this “other expenses” is questionable.
There is a sharp increase on the amount of impairment expenses from 2011 financial year to 2012 financial year. Impairment expenses have increased from $27 million to $197. This difference is very huge and, therefore, questionable.
There figure for receivables have also increased by more than 350% from financial year 2011 to financial year 2012. Receivables numbers has changed from $9 million to $33. This difference is quite huge and makes it questionable.
The amount of goodwill for Wesfarmers limited is very high. The figures for goodwill in the year 2012 stands at $16,097 million. To my opinion, this figure is overvalued. The amount is very high and, therefore, questionable.

Reference
Zunker, T. (2013). Attaining Legitimacy by Employee Information in Annual Reports. Accounting, Auditing & Accountability Journal, 26(7), 2-2.

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