Accounting Assignment: Integrated Reporting of Qantas Airways

Question

Task: This accounting assignment requires preparing an in-depth analysis of Integrated Reporting in accounting. Please visit www.integratedreporting.org Students should:

1. Prepare a summary of the requirements for companies when completing integrated reports.
2. Select a recently added recognized report (www.integratedreporting.org) and review the integrated report material with respect to the chosen company.
3. Prepare a comprehensive report directed to this research. The report extracted from the integrated report and additional material relevant to the analysis.

Answer

Introduction
Regulation, globalization and the increased expectations of the stakeholders from the organization have succeeded in making the businesses more complex. With this, the information that is also used in order to manage businesses, support the decisions made by the stakeholders have also become increasingly complex which has given birth to the importance of integrated reporting(PWC, 2015). This integrated report aligns complex information related to governance systems, their strategies, future prospects and performances and helps in reflecting the environmental, social environmental and economics on which the organization operates. This information is used in order to create a comprehensive picture of the entire organization that helps the management, stakeholders and the investors in making better-informed decisions for the organization. The report will be therefore reviewing an integrated report material with respect to a company which is Qantas Airways which is the flag carrier of Australia and also the largest airline in the country by fleet size. As one of the oldest operating airline in the world, Qantas Airline has gone through significant changes throughout the year in its governance, strategies and its future prospects which all will be evaluated and reviewed in accordance to a recently recognized report. Lastly, a comprehensive report directed to this particular research will also be created.

Summary of the companies when completing integrated reports
As mentioned above integrated report is a dynamic process of thinking about the business(Deloitte, 2015). It is related to the creation of value and identity value at risk in the long, medium and short term. It is related to how the strategies and business model can be articulated in order to create long term sustainable values for the company. This report is created with the help of principles mentioned in the International Integrated Reporting Framework. The integrated report aims to provide an insight into the relationship and resources of the company that is known as capitals and also aims to provide how the companies interact with its capital and external environments in order to create value. Therefore, it can be said that the companies are required to provide information on their capital that can be either manufactured, financial, human, social, relationship as well as natural capital. The report also has to be complete, concise and reliable and should include all matters whether they be negative or positive without any errors(ACCA, 2015).

These are the key requirements from a company while preparing an integrated reporting

• Overview of the organization and the external environment in which it operates.
• The governance structure of the organization and how it supports the ability of any organization in creating values.
• The business model of the organization.
• The organization's risk and opportunities that they are dealing with and how they affect the value-creating abilities of an organization.
• Resource allocation and the strategy of an organization.
• The performance of the organization, the achievement of its strategic objectives within a certain period and its consequences.
• Every outlook and challenges that are faced by the organization.
• Lastly, the relationship of the company with all of its stakeholders.

Review of integrated material with Qantas Airline
A revised framework for Integrated Report has been created which has put much more emphasis on the ways how corporate businesses have changed over the course of the years and new things are to be considered. The revised framework has identified and presented the guiding principles that would help in understanding the social, environmental and economics on which it operates. The revised framework calls for a focus on strategy and future orientation. The strategy and the future prospects of the organization are crucial for creating short, medium and long-term values (Integrated Reporting, 2021). Qantas Airline can be seen adopting this guideline in their performance in the FY19 as they successfully adopted the long term strategy on innovation and investment. Qantas Airline has been constantly working on the restructuring of its international network and its partnership, which is a part of their strategy to create a carbon-constrained future that would help them create value for the stakeholders without bringing any harm to the community as well. Qantas Airline has also taken into consideration the price of the fuel and has implemented strategies in the portfolio of their business. It has adopted a dual-brand strategy in order to negate the impact of rising fuel cost. The revised framework has also given a lot more emphasis on the stakeholder relationship and Qantas Airline has been proactively building its relationships with all of its key stakeholders. The legitimate needs as well as their interest are the top priority of Qantas Airline and understands the importance of creating values. The governance structure is another point that has been mentioned in the framework as the companies are to create a framework that would support their ability to create values for the short, medium and long term. Qantas Airline has laid the foundation for management and oversight that would allow them to disclose information in every part of the organization regarding matters that substantively affects its ability in creating values. Qantas has created four committees namely the Nominations Committee, Board Committee, Safety, health, Environment and Security Committee as well as Audit Committee who assists the Board with some specified value-creating responsibilities (Qantas, 2019). The change within the Cyber and privacy landscape has also been recognized by Qantas and has embedded numerous cyber securities as a means of data governance into its business process. Qantas Airline has been planning to grow into a much bigger company with the help of Qantas International, Qantas Domestic, Jetstar and Qantas Loyalty. Though all of its subsidiaries are performing extremely well Qantas International has been underperforming which cause the annual revenue for the airline to be lower than its previous year. This was because of the significant impact from the high fuel cost which was needed more because of the flight distance. Also, the airport charges that has significantly increased in Singapore compared to many other countries around the world has proved to be a challenge that has hindered its financial performance.

Comprehensive Report of Qantas Airline
Qantas Airline has shown its resiliency once again through the implementation of various strategy behind its business portfolio. Qantas Airline was able to deliver a strong financial result during the year 2019 which was able to improve its financial situation by a large margin. However, the pandemic and the global shutdown has had an immense impact on the financial situation of Qantas Airline. Qantas Airline experienced its worst fiscal year due to the pandemic and was able to earn a profit of only A$124 million. This figure was 91% lower than what the organization was able to earn during the previous year of 2019 (Butler, 2020). This was however due to how quick the organization was able to react to the lockdown and pandemic situation as it implemented numerous costs cut in response to the situation. Despite various measures, the financial year of 2020 saw the organization experience a full-year net loss of A$1.94 billion after-tax compared to its $840 million profit after tax in 2019. The financial capacity of the airline because of the pandemic and the global lockdown has decreased so much that it had to reduce its fleet in all of its operation around the world. The net debt of the organization is towards the bottom of the target range and an unencumbered aircraft asset base of $4.9 billion which has helped in stabilizing its current financial situation. This will be used by the organization in weathering the impacts of the pandemic as the company has planned numerous strategies after the pandemic and its $1,083 million operating cash flow. The airline is currently hoping to resume its international flight by October of 2021 and continue its meteoric rise as one of the most successful airlines from Australia.

Conclusion
In conclusion, it can be said that the integrated report has become one of the most important aspects of modern business and efficient implementation of the values and information derived from the integrated report can help the business in the short, medium and long term. However, this is only possible if the organization relies on the guiding principles as per the integrated reporting framework as it helps to rely on all the fundamental values of the company that has a direct impact on the organization. The framework requires the use of governance, strategy, risks, opportunities and the ability of the organization in order to understand the environmental, social environmental and economics on which the organization operates which further helps in the various decision-making process and future prospects of the organization. Qantas Airline has been taken as an example in order to review the material used within integrated reporting which has further helped in the analysis of the integrated report as well as the airline company. A comparative analysis of Qantas Airline has also been carried out that has helped in highlighting the financial difficulties that arose in the organization and has provided the financial situation of Qantas Airline.

References
ACCA (2015). The integrated report framework | ACCA Global. [online] Accaglobal.com. Available at: https://www.accaglobal.com/gb/en/student/exam-support-resources/professional-exams-study-resources/strategic-business-reporting/technical-articles/integrated-report.html#:~:text=The%20report%20should%20be%20concise [Accessed 15 Apr. 2021].

Butler, B. (2020). Qantas blames coronavirus for $2bn loss in worst financial result for a century. [online] the Guardian. Available at: https://www.theguardian.com/business/2020/aug/20/qantas-blames-coronavirus-for-2bn-loss-in-worst-financial-result-for-a-century [Accessed 15 Apr. 2021].

Deloitte (2015). A Directors’ Guide to Integrated Reporting. [online] Deloitte. Available at: https://www2.deloitte.com/content/dam/Deloitte/na/Documents/audit/na_za_Directors_Guide_on_Integrated_ Reporting.pdf [Accessed 15 Apr. 2021].

Integrated Reporting (2021). International Framework. [online] Integrated Reporting. Available at: https://integratedreporting.org/wp-content/uploads/2021/01/InternationalIntegratedReportingFramework.pdf [Accessed 15 Apr. 2021].

pwc (2015). Integrated Reporting The Future of Corporate Reporting. [online] Pwc. Available at: https://www.pwc.nl/nl/assets/documents/pwc-handboek-integrated-reporting.pdf [Accessed 15 Apr. 2021].

Qantas (2019). Annual Report 2019. [online] Qantas. Available at: https://investor.qantas.com/FormBuilder/_Resource/_module/doLLG5ufYkCyEPjF1tpgyw/file/annual-reports/2019-Annual-Report-ASX.pdf [Accessed 15 Apr. 2021].