Analysis of the reporting practices of APN Industria REIT

Dear Mr. Shipton

As the external consultant appointed by the Australian Securities and Investment Commission to study the reporting practices of APN Industria REIT, I am writing to you with the completed report and results of the findings. The enclosed report also includes the implications of the findings in the form of the reporting practices followed by the organisation and the conclusions and inferences drawn from these. The report concludes with presenting recommendations for APN Industria REIT and for all the other organisations listed on the Australian Securities Exchange so that they can practice better compliance with accounting standards and improve their disclosures and practices.

I am confident that this report is exhaustive and relevant and the conclusions drawn from the research will be valuable for ASIC and for the organisations willing to improve the quality of their financial reporting. I would like to thank you for giving me this opportunity.
Sincerely
Student name
COVER PAGE

Individual Case Study: APN Industria REIT

Submitted by: Student name

Executive summary

APN Industria REIT is a real estate investment trust operating in Australia. It is managed by APN Funds Management and Organisation collectively holds the ownership of workspaces all over Australia. APN Industria REIT has 28 workspaces including business parks and industrial parks that are spread across Adelaide, Brisbane, Melbourne and Sydney. The total portfolio of the organisation holds a value of $739 million and the people availing that services are provided with practical, modern and cost-effective spaces that fulfil all their needs associated with the specific business that they are running. The portfolio of APN Industria is extremely diversified in terms of geography, tenants availing the services and the sector. The weighted-average period for lease expiry for the properties of APN Industria is estimated to be 6.1 years. Founded in the year 1996, APN Industria is presently listed on the Australian securities exchange and is responsible for the management of real estate worth $3.1 billion. As the external consultant appointed by the Australian Securities and Investment Commission to study the reporting practices of APN Industria REIT this report presents the results of the research findings. The above report also includes the implications of the findings in the form of the reporting practices followed by the organisation and the conclusions and inferences drawn from these. The report concludes with presenting recommendations for APN Industria REIT and for all the other organisations listed on the Australian Securities Exchange so that they can practice better compliance with accounting standards and improve their disclosures and practices. After conducting the analysis of the annual report of APN Industria REIT for the financial year 2019, it can be stated that the organisation practices comply with the accounting standards issued by AASB and the listing rules applicable to the organisations listed on the ASX. At present, the operational leases of the organisation are considered an off-balance sheet item. After the adoption of AASB 16, this will change for the company. This accounting standard will become applicable to the organisation from the current financial year. In terms of the conditions introduced by this new accounting standard, APN Industria is a lessor in all the lease arrangements that the organisation is associated with for the investment properties. The lessor accounting is not altered much with the new accounting standard and therefore, APN Industria does not expect any severe impact on the financial report or recognition of the leases in their financial statements. It is recommended that the organisation should continue to abide by the accounting policies and procedures and continue to maintain the confidence of the investors on the economy of Australia and all its capital markets. It is also recommended that the organisation should provide quality information about their environmental, social and governance measures for increasing the goodwill of the company. The organisation demonstrates good corporate governance and accountability by issuing the corporate governance statement every year. It is recommended that your organisation should also include the environmental and social impact of its practices and the measures that it is taking to own and be accountable for these issues.

Introduction

A real estate investment trust (REIT) is defined as an organisation that holds the ownership and carries out the operations of the real estate properties that produce income. These organisations hold the ownership of various commercial real estate properties that range from Apartment buildings, offices, warehouses, shopping centres, hotels, timberlands and hospitals. APN Industria REIT is one such real estate investment trust operating in Australia. It is managed by APN Funds Management and Organisation collectively holds the ownership of workspaces all over Australia. APN Industria REIT has 28 workspaces including business parks and industrial parks that are spread across Adelaide, Brisbane, Melbourne and Sydney. The total portfolio of the organisation holds a value of $739 million and the people availing that services are provided with practical, modern and cost-effective spaces that fulfil all their needs associated with the specific business that they are running. The portfolio of APN Industria is extremely diversified in terms of geography, tenants availing the services and the sector. The weighted-average period for lease expiry for the properties of APN Industria is estimated to be 6.1 years. Founded in the year 1996, APN Industria is presently listed on the Australian securities exchange and is responsible for the management of real estate worth $3.1 billion. The ASX code for the organisation is APD and your organisation is driven by the strategy of demonstrating strong commitment giving outstanding service and improving investment performance (APN Property Group Limited, 2020).

APN Industria has responsibly carried out the management of the property investment for numerous clients for more than two decades and has built an excellent industry of portfolio in the last seven years. The organisation draws its competitive advantage from the excellent track record maintained for more than 21 years, strong governance policies, expertise in the field and great alignment with the investors for co-investment in the properties. With the focus of the organisation specifically on real estate, APN Industria has developed an excellent understanding of the sector with the significant experience and tries to deliver good value to the investors. APN Industria is responsible for the active management of 12 points and 109 properties spread across Australia. This includes the listed and direct property funds and the securities for the properties across the markets (APN Property Group, 2020).

The detailed breakdown of the portfolio of the organisation is presented in the figure below.

Figure: APN Industria REIT Portfolio

Among the properties owned by the company, the occupancy rate is 97% and there are 3% average annual fixed uplifts of their properties. All the workspaces offered by APN Industria REIT are priced very attractively and have excellent location. The organisation believes in adopting a proactive approach towards innovation and explores all the alternative initiatives for ensuring excellent tenant satisfaction and retention. In addition to this, APN Industria REIT is also focused on working towards business sustainability by ensuring consistent returns on capital growth and income.

All the organisations operating in Australia in both public and private sectors need to present their financial performance in the form of an annual report. The financial reporting of the organisations has to be carried out in compliance with the accounting standards issued by the Australian Accounting Standards Board (AASB) (AASB, 2011). This is made mandatory by the Corporations Act 2001 applicable to the Australian entities. In this report, a detailed examination of the reporting practices of APN Industria REIT is carried out to understand how these practices of the company impact the financial projections, position and performance indicated by its annual report. This is followed by drawing implications from the findings and presenting recommendations to the company for improving the quality of their financial disclosures.

Research methodology

The research methodology discusses the detailed practices and procedures followed for conducting the study and the justification for them. This research makes use of a combination of qualitative and quantitative data gathered from the secondary data sources. The qualitative information is more conceptual and descriptive and not statistical. Qualitative data is also not structured and cannot be measured or compared with the help of any statistical techniques. On the contrary, quantitative information is more structured and statistical in nature. It is well defined and numeric comprising of values and numbers making it very convenient to carry out analysis and comparison of the date of. Quantitative data for this research was come size and closed-ended that has helped in analysing the financial position and the relative performance of the organisation on the basis of the results and reports published by the company APN Industria (Day & Guthrie, 2003).

The secondary data sources provide information that has been collected and analysed by some other person for a purpose other than the specific research. Secondary data sources present the information in a cost-effective, quick and convenient manner. The most significant source of secondary information for this research is the reports of financial performance and annual reports presented by APN Industria. In addition to this, the accounting standards and their guidance presented by the ASIC through textbooks and online resources are also used for this study. The analysis of the application of accounting standards by the organisation when presenting the report of the financial performance is carried out with the help of the secondary sources like books, newspaper articles, magazines, journals, thesis and other academic writings written on this subject. All these secondary sources have provided the relevant information about the accounting standards, their application and the impact that it has on the results portrayed by the organisations (Farneti & Guthrie, 2008).

The specific accounting standards that are used for evaluating the compliance of the organisation for this analysis are:

AASB 16 – Leases

This is a relatively new accounting standard that was published by AASB in the year 2016. This accounting standard provides guidance to the organisations as the account for their leases as a part of accounting disclosures especially in their income statements and the balance sheets. It became mandatorily applicable for the organisations beginning from the financial year 2019. This accounting standard provides comprehensive guidance to the organisations on measuring, identifying and recognising the lease arrangements and is a replacement for the old accounting standard AASB 117. APN Industria adopted this accounting standard from the financial year 2019 and it has changed the way the organisation recognises its lease commitments, the corresponding liabilities with the least and the right of use asset. This is also reflected in the financial position of the company as discussed in the later sections (Commonwealth of Australia, 2016).

AASB 6 – Exploration for and Evaluation of Mineral Resources

This accounting standard was made applicable to the Australian organisations from the financial year 2015. It presents guidance on how the organisations need to report for the expenditure on the evaluation and exploration of the mineral resources. It also presents the details associated with the disclosure of the amount of money utilised by the organisations in these tasks and its inclusion and presentation in the financial statements. Since the operations of the organisation APN Industria are not related to exploring or evaluating the mineral resources in anywhere, this accounting standard is not relevant for the analysis of their financial report and its compliance (AASB Standard , 2015).

AASB 121 – The Effects of Changes in Foreign Exchange Rates

This accounting standard was made applicable for the public and private organisations operating in Australia from the financial year 2012. It is an interpretation of the previous accounting standard AASB 121 released in July 2004. AASA 121 takes into consideration all the foreign activities carried out by the organisations. An entity can either have transactions that are carried out in foreign currencies or have operations at foreign locations. Both these are categorised as foreign activities. Some Australian organisations also choose to present their financial statements in a foreign currency. AASA 121 is compiled to provide guidance on how these organisations can present and include all the foreign currency transactions and information about their foreign operations in the annual reports and financial statements. It also dictates how the financial statements of the company are translated into the currency of presentation (Morales-Díaz & Zamora-Ramírez, 2018). The operations of APN Industria are restricted to the Australian market and the organisation also does not carry out any transaction in foreign currencies. Therefore, this accounting standard is also not applicable to the company or their financial reporting practices (AASB, 2011).

Sustainability and environmental accounting

The organisations all over the world are becoming increasingly aware of their impact on the environment. Because of this, environmental accounting has become a significant reporting matter for the business. In order to ensure sustainable development of the business organisations and the effective management of the natural resources, it has become important to adopt the right accounting approach that finds a balance between the environment, human culture, economic performance and other statistics presented by the annual reports. The Government of Australia has presented a detailed guide to environmental accounting in Australia. According to this guide, the organisations can inculcate environmental wellbeing into their decision making and policy formation for achieving sustainability and for making significant contributions to the economic systems at the same time. More and more organisations are being encouraged to include the sustainability measures undertaken by them in their annual report. This report will discuss how APN Industria reports for sustainability and acknowledges the impact that its operations have on the environment and the community where it operates (White, Crawford, Mottershead, & Carrington, 2016).

Earnings management practices

The practices for earnings management followed by the organisation involve altering the financial records and reports of the company so that the stakeholders and all the other users of the financial information can be misled. This is usually carried out by the organisations by making use of accounting techniques so that the performance of the organisation demonstrates an overly positive perspective of the business performance. It can have a significant negative impact on the quality of the earnings of the business and also diminishes the trustworthiness and credibility of the financial information shared by the companies. The accounting standards, listing rules and other accounting regulations are developed to ensure that the organisations do not practice earnings management and so that the individual investors and organisations can identify and detect these practices by the companies. The methodology followed in this report will analyse whether APN Industria is practising earnings management and presenting incorrect, insufficient or manipulated results of the financial performance of the company (Omar, Rahman, & Sulaiman, 2014).

Observed findings

APN Industria REIT is an organisation that is listed on the ASX. It was incorporated in Australia and carries out all its operations within the country itself. The annual report of the organisation includes the general-purpose report of the financial performance of the company that is prepared according to the Corporations Act 2001. The organisation states that it has complied with the accounting standards issued by the AASB and the consolidated financial statements prepared by the company state that it is a for-profit entity. The annual report for the company for the financial year ending July 2019 was published on 21st August 2019. APN Industria states that all the consolidated financial statements published by it make use of the historical cost basis for keeping the financial records except for the revaluation conducted by the organisation for the investment properties and accounting for the financial instruments of the company. These are recorded and reported at their value according to the Australian accounting standards (HM Treasury, 2019). The fair value of any asset is considered to be the actual prize the organisation is going to receive if it decides to sell the Asset in the market. Similarly, the fair value of a liability is the price that the organisation will have to pay in order to transfer it to some other party. The statement of compliance published by the organisation is presented below.

Figure 2: Statement of compliance APN Industria REIT

The introduction of the new accounting standard AASB 16 from the financial year 2019 has presented the organisations with a very comprehensive that can easily help in identifying, measuring and recognising the lease arrangements for both the lessees and the lessors. APN Industria will be adopting this accounting standard for the financial year that ends on 30th June 2028 it will bring about a fundamental change in the way organisation measures and recognises the operating leases that were previously considered to be an off-balance sheet item. The organisation has already carried out a preliminary analysis of the existing lease obligations for the right-to-use assets and their corresponding liabilities. The preliminary analysis (Appendix A) also indicates that the impact of this adoption will only be restricted to the way organisation measures and recognises the existing ground rentals. According to the calculations carried out by the management of APN Industria, there are the non-cancellable ground leases worth $32,863,000 for the financial year 2019 that the organisation has not recognised in their consolidated financial statements. These are in the form of operating leases. The initial adoption of AASB 16 by the group will result in reducing the statutory profit of the consolidated entity by y $591,000. This is because of the value of the assets calculated according to the fair value measurement and the amount will offset the non-recognition of operating leases that was earlier practised by the company (Australian Government, 2019).

In addition to this, the organisation has also presented a detailed assessment of the recognition and measurement of the rental income, the lease incentives, de-recognition of the properties and the changes in the valuation process. APN Industria has a consistent rental income as a source of revenue from the lease components of the properties that it is renting out. This includes the base rent charged from the tenants and the recovery is made from the property insurance and property tax. The property outgoing recovery is reported by the organisation are usually the non-lease components. APN Industria has recognised the rental income at fair value and the income associated with these components is recognised on a straight-line basis by the company. There are certain properties of the group that have the rental income determined on the basis of the unknown variables that may change in future. This includes the review of the market, inflation, economic performance and various other factors. For these properties, the organisation has made use of the accrual basis depending upon the terms included in the lease. The lease incentive that the organisation provides to its tenants in the form of the rent-free duration of stay, fit-outs and other living conditions have been recognised by the group by reducing the rental income following the straight-line basis of recognition. APN Industria derecognises the properties only upon their disposal when the organisation cannot expect the property to bring in any economic benefits at present or future (Aylward, 2018). APN Industria has carried out this de-recognition by calculating the difference between the carrying amount of the property at the date of disposal and the net proceeds that it receives from the disposal. This is duly recognised by the company in the statement of profit or loss.

The annual report of the organisation for the financial year 2019 includes a dedicated section reporting for the sustainability initiatives of the company and how it is taking measures to carry out management for the long term. APN Industria is trying to make the Brisbane Technology Park owned by the organisation increasingly self-sufficient. 52% of the total power consumed during the day by the four buildings in this technology park makes use of solar energy. The individual consumption percentage for each of the buildings located in the Brisbane Technology Park is depicted in the figure below.

Figure 3: Brisbane Technology Park Buildings self sufficiency

Along with this, the organisation has also reported for the average power consumption by the technology park in a day segregated on the hourly basis and how much of this power is contributed by the solar plants installed in the park. The figure below depicts this percentage and the solar power production by the Brisbane technology park.

Figure 3: Brisbane Technology Park power consumption distribution

APN Industria has a dedicated policy for ensuring that the organisation is carrying out effective communication with all the market participants and the investors of the company. This is the continuous disclosure policy that provides the guidelines for the organisation to maintain the clarity, timeliness and accuracy of the information shared by the organisation and all its dealings. The continuous disclosure policy of the company is also dedicated towards enhancing the quality of communication and ensuring that the organisation provides the details in a fair, open and transparent manner (CPA Australia, 2019).

The primary tools that are used by APN Industria for communicating with the investors and other stakeholders of the company are the official website of the AON Group and the official website of the Australian Securities Exchange. The APN Industria website is regularly updated by including all the recent newsletters, market information, company disclosure documents, announcements, seminar, webinars, policies, charters, fund information and distribution announcements made by the company. This also includes any information that may be price-sensitive or market sensitive. As soon as APN Industria presents any such information to the ASX, it is also disclosed on the company’s official website. Abiding by the policy of continuous disclosure, the regular communication by the organisation is carried out through the following documents:

Annual reports
Half yearly reports
Market announcements
Meeting notices
Presentations
Newsletters
Periodic correspondence
Investor briefings
Analyst briefings
Webinars

At least two authorised persons from the organisation hold the responsibility of preparing, signing off and reviewing the external communication for the organisation that is not otherwise price sensitive. The people holding the responsibility of signing of the documents of communication include the CEO of the group, the CFO, the company secretary, the distribution marketing head and the respective fund manager. APN Industria is responsible for conducting an Annual General Meeting of the entity at least once in a year. For this, the organisation needs to send a notice of the meeting to all the investors along with the detailed explanatory notes well in advance. This notice and explanatory notes are also made available by the organisation in their official website according to the ASX listing rules (APN Group, 2019).

The organisation also releases and regularly updates the corporate governance statement of the company. APN Industria is made up of four trusts and a company. All the respective subsidiaries of these trusts and the companies are also included in APN Industria. The corporate governance statement of the organisation is in compliance with the recommendations presented by the ASX Corporate Governance Council. APN Industria discusses the detailed measures taken by the company for ensuring compliance to all these recommendations for the specific reporting periods. This ensures that the organisation practices good corporate governance and fulfils all the requirements and expectations of its stakeholders (APN Industria, 2019).

The notes to the financial statements of the organisation include the details about the revised accounting standards that are adopted by the company. All the accounting standards mentioned in the section are relevant to the operations of APN Industria and the organisation has adopted them for the present year. In addition to the AASB 16 Leases, there are two more accounting standards that are included in this section. AASB 9 Financial Instruments (Appendix B) is the accounting standard that was made mandatory for application by the Australian entities for the reporting periods starting after January 2018. APN Industria adopted the accounting standard for the first time in the financial year 2019. Classify the financial assets making this process based on the principles as opposed to the previous accounting standard AASB 139. According to this standard, a financial instrument is defined as any contract that contributes to the creation of a financial asset for one organisation and liability or an equity instrument for any other company. This can be the derivatives owned by the company, the cash deposited in the bank; trade receivables, bonds or other convertible notes owned by the company, equity interests the organisation holds in any other entity and loans along with other receivables (BDO, 2019). The classification provided by this accounting standard for recognising the financial assets is presented in the table below.

Figure 4: Recognising financial instruments and their value (Olde, 2017)
AASB 15 is another accounting standard that was adopted by the organisation for the financial year 2019 for the first time (Appendix C). This standard replaces the existing guidance for organisations for recognising the comprehensive revenue by developing a model that not only improve the compatibility of the financial reports presented by the entities but also enhances the uniformity across the different capital markets, jurisdictions and industries. APN Industria is exposed to the development and implementation of this new accounting standard and it has resulted in the creation of a need for increasing the level of disclosure by the companies. While some of these exposures are commercially sensitive, it has mostly been a smooth transition for the company (E&Y, 2018). The rental income which is the major source of revenue for the organisation does not fall within the scope of this accounting standard. As a result, there is no impact on the accounting and reporting practices followed by APN Industria after the introduction of AASB 15.

Implications of the findings

The general-purpose financial reporting is carried out by the organisations so that they can communicate with their current and potential investors and stakeholders and provide them with information that is reliable and relevant. They are the uses of this financial information. The business organisations all over the world and control of numerous resources and they also hold the power to influence the community and its members by offering the goods and services produced by them and deciding the prices for them. These organisations also influence the general charges of the market taxes and other rates and can control the acquisition and investment in the resources. It is in the best interest of everybody belonging to the community that the squares resources that are controlled by the business organisations are effectively allocated to the other organisations who can make use of it and maximize the output. The effective use of the available resources not only helps in increasing the general output of the community but also has a positive impact on the macroeconomic factors that, in turn, influence the level of employment, the standard of living and the general well-being of the society (Thorton, 2019). This allocation of the resources can only be carried out in an efficient manner if there is open and transparent communication about the performance of the business entities. This is the purpose of maintenance of the financial information and the preparation of the financial reports that are shared by the organisations annually. The financial reporting practices also provide the governing bodies and the regulatory institutions to extend control and ensure accountability from the organisations.

There is a lot of information included in the annual financial report of the business organisations. However, there are four major categories into which all this information is classified. This information is necessary for the users of the financial information to evaluate the performance of the company and their decision making associated with resource allocation. This includes:

Performance information

The performance of the business organisations is evaluated in terms of the financial and nonfinancial factors that define its present performance. This information allows the users to evaluate the total cost the organisation needs to be here in order to provide the goods and services and how the changes made by the organisation in the control over the resources that they own can change the fund available to them.

Financial position information

The current financial position of the reporting entity is important to gauge its financial structure, ability to adapt to the changes in the markets, the control that extends over the resources and solvency. This enables the uses of the financial information to understand how the resources controlled by the entity are used and water the patterns of Finance utilised by the organisation for meeting its objectives (NSW Government, 2017).

Investing and financing information

Every organisation carries out financing and investing. They need to disclose this information as a part of the general-purpose financial statements so that they can determine how the resources are finance and invested by the company. When the organisations utilise the resources effectively, the users can determine whether the company is in the capacity to continue to provide the goods and services produced by it in future as well. This also helps in eliminating whether the organisation will be able to achieve the long term and short-term objectives decided by it.

Compliance information

The information about the compliance with the rules and regulations for carrying out the organisational activities and for preparing the general-purpose financial statements helps in ensuring that the quality of the information shared is good. Irrespective of the sector, region, country or industry of the company, compliance information is very important and relevant to the users of the report. This helps the users in determining whether the organisation has complied with all the requirements that are internally and externally imposed on it (PWC, 2016).

After analysing the financial statements and the annual report of APN Industria for the year 2019, it can be stated that the organisation fulfils these requirements and the general-purpose financial reporting by the business includes information belonging to all the above categories.

The most important implications for the business organisation are after the introduction of the new accounting standard AASB 16 the dictates how the organisation account for the leases. The comprehensive model that transforms the way the lease arrangements are recognised and identified by the business organisations will help in bringing about greater transparency in the financial reporting and a better understanding of the actual financial position of the companies. The operating leases that were earlier considered to be a commitment off the balance sheet by the lessees need to be recognised now as a qualified lease. The new treatment requires the organisations to carry out the initial measurement of both the liabilities and assets by making use of the net present value and equating it with the unavoidable lease payments for the business organisations. The subsequently recognised value of the Asset needs to be measured by the entities at its fair value and the interest expense also have to be recognised in the financial statements that they need to pay for extinguishing any lease liability. It can be stated that the organisation has clearly recognised and identify the contracts that are going to be impacted by the adoption of the new accounting standard AASB 16 from the financial year 2020. In terms of the conditions introduced by this new accounting standard, APN Industria is a lessor in all the lease arrangements that the organisation is associated with for the investment properties (IASB, 2016). The lessor accounting is not altered much with the new accounting standard and therefore, APN Industria does not expect any severe impact on the financial report or recognition of the leases in their financial statements.

Figure 5: Sustainability and environmental reporting snapshot – Australia (CDSB, 2016)

The above figure represents the reporting provisions in place in Australia at present, the reporting obligations for the organisations and channels adopted by the companies carrying out sustainability reporting. Sustainability and environmental accounting are the issues that have become increasingly relevant in the present day. The consumers and all the other stakeholders of the organisation are willing to know more about the impact that the business operations have on the community and the environment in the short-term and the long-term. The current reporting landscape in Australia is majorly focused on the environmental issues of water conservation, energy conservation and climate change. Of these, the issue of climate change is particularly gaining Momentum because of the increased focus of the United Nations and other international organisations. All the governing bodies including ASIC AASB and the investors of the business organisations are asking for introducing a regulatory change so that good corporate governance and accounting for sustainability and environmental conservation practices can be enhanced. While most of the organisations have voluntarily started disclosing sustainability information through their annual report, there are some companies that release separate communication in the form of sustainability reports to discuss their sustainability and environmental initiatives and their success (KPMG, 2019).

APN Industria REIT has adopted no such practice and because of the absence of any legal requirement for sustainability reporting by the organisations, it has managed to stay away from the scrutiny of the investors and the regulatory bodies. The non-financial included in the annual report of the company only briefly discuss the use of solar energy in one particular Business Park owned by the company. The detailed portfolio of APN Industria REIT is presented in the figure below.

Figure 6: APN Industria REIT Portfolio

The Brisbane Technology Park only comprises of 22% of the total portfolio of the company. This is the only property that is emphasizing on driving efficiencies through sustainability and promoting the use of renewable resources like solar energy. Other than this, the annual report of the company does not mention any sustainability initiative undertaken by APN Industria REIT.

Conclusion and recommendations

As the external consultant appointed by the Australian Securities and Investment Commission to study the reporting practices of APN Industria REIT this report presents the results of the research findings. The above report also includes the implications of the findings in the form of the reporting practices followed by the organisation and the conclusions and inferences drawn from these. The report concludes with presenting recommendations for APN Industria REIT and for all the other organisations listed on the Australian Securities Exchange so that they can practice better compliance with accounting standards and improve their disclosures and practices.

After conducting the analysis of the annual report of APN Industria REIT for the financial year 2019, it can be stated that the organisation practices comply with the accounting standards issued by AASB and the listing rules applicable to the organisations listed on the ASX. The reporting trends followed by the company are in line with the changes taking place in the reporting requirements and the framework presented by the regulatory bodies. The financial information presented by the organisation is complete and provide a true and fair view of the current financial position and performance of the business. Since the organisation is only operating within Australia, accounting standard associated with foreign currency transactions are not relevant for the company (APN Property Group, 2020). The accounting standards governing the accounting for mineral resources are also not applicable to the organisation. At present, the operational leases of the organisation are considered an off-balance sheet item. After the adoption of AASB 16, this will change for the company. This accounting standard will become applicable to the organisation from the current financial year. In terms of the conditions introduced by this new accounting standard, APN Industria is a lessor in all the lease arrangements that the organisation is associated with for the investment properties. The lessor accounting is not altered much with the new accounting standard and therefore, APN Industria does not expect any severe impact on the financial report or recognition of the leases in their financial statements.

The accounting standards developed and issued by AASB help the users of the financial information to make the necessary decisions related to the allocation of the resources available with them. They also ensure that the information presented by the organisations is reliable and relevant. The correct information presented in the recommended format by AASB enhances the compatibility of the financial performance of the organisations within the industry, the countries and even outside. It makes the information easy to understand and helps in the convenient assessment of the financing and investment decisions of the company, its financial performance and the general position of the organisation. It is also beneficial for the economy of the country as it enables the Australian entities to compete in the international markets and reduces the cost of capital for the entire economy. Therefore, it is recommended that the organisation should continue to abide by the accounting policies and procedures and continue to maintain the confidence of the investors on the economy of Australia and all its capital markets (AASB, 2011).

The individuals and organisations all over the world are realising the importance of the issues associated with environmental and social well being and the significance of good corporate governance. With this increasing awareness, more and more organisations are introducing sustainability reporting practices and making them a part of their annual report. Sustainability reporting was practised by only 20% of the organisations in Australia in the year 2011. By the year 2017, this percentage has gone up to 85% (CDSB, 2016). APN Industria REIT needs to understand and take measures to fulfil these Expectations of its investors and stakeholders. It is recommended that the organisation should provide quality information about their environmental, social and governance measures for increasing the goodwill of the company. The organisation demonstrates good corporate governance and accountability by issuing the corporate governance statement every year. It is recommended that your organisation should also include the environmental and social impact of its practices and the measures that it is taking to own and be accountable for these issues.