Accounting theory essay Example

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The Wesfarmers Australia

their 2015 Annual Report”
Wesfarmers Australia 2015 Annual Report: “Wesfarmers Australia Holdings have poor corporate governance practices and disclose little in

their 2015 Annual Report.” The reason being that what is literary written or analysed in the report is not what basically happen in the company since the shareholder do not get the expected satisfaction, and the stakeholders’ interests are not fully fulfilled
The Wesfarmers Australia Holding in its 2015 annual report state that; “The board of Wesfarmers Limited is committed to providing a satisfactory return to its shareholders and fulfilling its corporate governance obligations and responsibilities in the best interest of the company and its stakeholders (Wesfarmers, 2015, 64).” It is true that; “Wesfarmers Australia Holdings have poor corporate governance practices and disclose little in (Akbar, & Ahsan, 2014).

In the corporate governance of an organization, it is vital to focus at the business ethics, alignment of the business goals, strategic management, the structure of the organization, and the reporting system (Klettner, Clarke, & Boersma, 2014). Wesfarmers Australia Holding has a strong board of directors offering bold leadership to the company and its dedicated workforce enhances its industrial development. However, despite the knowledge and expertise of the directors in the business, the leadership hardly focuses or gets committed to its duties (Wesfarmers, 2015, 64). The skill set, poor recognition of the diversity of people’s background, and weak integrity and ethics leads to the experienced management problems. The management and the board of directors have the responsibilities and roles of approving the strategic direction of the entire group, but management of the business do not enhance achievement of the expected strategic plans (Kemp, 2011). It is evident that the board aims at protecting the shareholders’ interests and taking into account all the interests of the shareholders, but there are realized complaints from the suppliers, customers, employees, and the entire community. The board is self-centered and focuses less at fulfilling the directors’ duty, thus poor performance.

Wesfarmers business ethics does not perform as per the expectations because the holding’s business is profit-based, but not taking into account the efficient corporate social responsibility (Kemp, 2011). Proper behaviour is essential in the governance of the Wesfarmers, but due to cultural relativism of the individuals, there are some cultural problems. According to the Wesfarmers 2015 annual report, “the Board is committed to a high standard of corporate governance practice and fostering a culture of compliance which values ethical behaviour, personal, and corporate integrity, accountability and respect for others (Wesfarmers, 2015, 64).” Nevertheless, the strategic priorities negatively influence the diversification of the responsibilities and the leadership decision-making. There are some limited resources, which hinder business ethical gain and application of sound governance system for efficient business protection.

The business goals of Wesfarmers do not align as they are supposed to be because the model associated with stakeholder decision making is not suitable. Wesfarmers does not have strategic direction and clear goals to make the business goals align. In addition, not all the stakeholders are aware of the business goals of Wesfarmers because of poor and inefficient corporate communications. There is also disagreement of the leadership’s view to the business goals, thus making it difficult for the stakeholders to understand how the business is run (Kemp, 2011). This is a clear evidence that the board of directors have failed in playing its responsibilities of managing the organizational procedures and policies.

The strategic management of Wesfarmers Australia Holding does not follow an effective strategic process; hence, not able to incorporate stakeholder value (Grayson-Morison, & Ramsay, 2014). The board of directors in Wesfarmers set goals, but some of the goals do not match with the stakeholders’ expectations. Furthermore, the management does not emphasize on the feasible strategy of achieving the particular goals. When encountered with some events that are not expected, Wesfarmers board fails to handle the issues positively. In addition, the management fails to conduct efficient risk management activities because of lack of focus in the assessment of legal, industry-based, environmental, reputational, operational, and financial risks (Kemp, 2011). There is also poor establishment of the risk tolerance, which negatively influences the performance implications. It is perceptible that good management equals to good governance. It is clearly stated in the Wesfarmers 2015 annual report that the focus areas include, “Monitoring the implementation of risk management plans to address identified operational, financial, reputational risks for group business (Wesfarmers, 2015, 64).” On the other hand, the board of directors fails to address the mentioned risks effectively because of poor analysis of the stakeholders’ views, poor analysis of the external environment, poor setting of the business goals, and poor monitoring of the business operations.

The organization structure of Wesfarmers is not effective for efficient corporate governance. The Wesfarmers Australia Holding is a good and focused organization, but the conduct and carrying out of the strategy and goals is problematic. The organizational ineffectiveness is because of not understanding the organizational vision very well in order to have some focus (Klettner, et al. 2014).

The reporting system applied in Wesfarmers is not well structures to enable provision of accountability and transparency, thus making the management of the organization ineffective (Grayson-Morison, & Ramsay, 2014). Sometimes he board of directors conduct some operations and fail to inform the stakeholders. Corporate communication is not efficiently conducted because the management team fails to disclose some of the business matters to the Wesfarmers stakeholders (Akbar, & Ahsan, 2014). In addition, there is no stakeholders’ consultation regarding issues that are sensitive to financial aspects because of fear of disclosing the profit acquired by the organization from its operations. The stakeholders fail to get the entire information required and when they raise complaints about the proposed strategy, they do not receive the desired response (Wesfarmers, 2015, 64). This means failure of the board of director in playing its roles and responsibilities, as well as obligations related to the corporate governance. The Wesfarmers board of directors fails to implement the necessary disclosure policies and the appropriate code of conduct, as well as transparency and accountability rules. The conflict of interest policy is not well implemented in the organisation because some of the directors raise conflict of interest in a manner that they do not want the stakeholders to realize, thus not disclosing most of the business matters.


Akbar, S., & Ahsan, K. (2014). Analysis of corporate social disclosure practices of Australian retail firms. International Journal of Managerial and Financial Accounting, 6(4), 375-396.

Grayson-Morison, R., & Ramsay, I. (2014). Responsibilities of the Board of Directors. Company and Securities Law Journal, 32(1), 69-77.

Kemp, S. (2011). Corporate governance and corporate social responsibility: lessons from the land of OZ. Journal of Management & Governance, 15(4), 539-556.

Klettner, A., Clarke, T., & Boersma, M. (2014). The governance of corporate sustainability: Empirical insights into the development, leadership and implementation of responsible business strategy. Journal of business ethics, 122(1), 145-165.

Wesfarmers. (2015) Annual report 2015. Retrieved from;…/1472-wesfarmershttps://www.