In order to analyse and interpret the business strategy and the resulting accounting policy choices and disclosures, this paper examines the macroeconomic environment as well as the industrial and firm level of GlaxoSmithKline during the accounting period 2019. Therefore, property, plant and equipment (PPE), intangible assets, business combinations, impairments as well as inventories are considered in more detail. In conclusion, the accounting and disclosure methods are evaluated with regard to their requirements and completeness.
Table of Contents
1 BACKGROUND
1.1 MAJOR EVENTS OCCURRED AT MACROECONOMIC LEVEL
1.2 MAJOR EVENTS OCCURRED AT INDUSTRY LEVEL
1.3 MAJOR EVENTS OCCURRED AT FIRM LEVEL
1.4 EXPECTATIONS
2 ANALYSIS OF GSK ACCOUNTING POLICY CHOICE AND DISCLOSURE COMPLIANCE
2.1 PROPERTY, PLANT AND EQUIPMENT – IAS 16
2.2 INTANGIBLE ASSETS – IAS 38
2.3 IMPAIRMENTS – IAS 36
2.4 INVENTORIES – IAS 2
2.5 BUSINESS COMBINATIONS – IFRS 3
3 CONCLUSION
Research Objectives and Core Themes
The primary objective of this study is to evaluate the accounting policy choices and disclosure compliance of GlaxoSmithKline (GSK) for the 2019 financial year, specifically examining how macroeconomic, industrial, and firm-level events have influenced financial reporting practices under IFRS standards.
- Analysis of the macroeconomic environment including Brexit and the COVID-19 pandemic.
- Evaluation of industry-specific trends and their impact on corporate strategy.
- Detailed review of accounting disclosures for tangible and intangible assets.
- Assessment of compliance with IAS and IFRS standards regarding impairments, inventories, and business combinations.
Excerpt from the Book
1.1 Major events occurred at macroeconomic level
The 2019 financial year has been characterised by several significant macroeconomic events which have affected nearly every national economy. In this context, the major events are Brexit, climate change and the outbreak of the coronavirus.
GlaxoSmithKline is facing an uncertain future regarding the UK-EU trade relationship due to the Brexit. In its risk management report, the company addresses risks of concern and refers to product quality, which remains stable in view of Brexit, despite ongoing concerns about drug shortages, safety and complexity. In addition, the political instability and uncertainty have also an impact on medicine supply continuity both into and out of Europe.
In order to be prepared for the future impacts of Brexit, GSK has a post Brexit operation model in place, for example taking care of a packaging update or additional warehousing for the products. Subsequent and ongoing costs are expected to be further customs duties and costs for double-checking and releasing products, with these estimated at around £50 million. It is considered that Brexit will not have a material impact on GSK's business.
Summary of Chapters
1 BACKGROUND: This chapter contextualizes the analysis by discussing the macroeconomic, industry-specific, and company-specific events of 2019 that influenced GSK's business operations.
2 ANALYSIS OF GSK ACCOUNTING POLICY CHOICE AND DISCLOSURE COMPLIANCE: This section provides a detailed examination of GSK's adherence to various IFRS standards, including PPE, intangible assets, impairments, inventories, and business combinations.
3 CONCLUSION: The final chapter summarizes the findings, confirming that GSK provides comprehensive disclosure and generally complies with all major IFRS requirements.
Keywords
GlaxoSmithKline, GSK, IFRS, IAS, Accounting Policy, Disclosure Compliance, Financial Reporting, Brexit, Pharmaceutical Industry, Intangible Assets, Impairment, Business Combinations, Inventories, PPE, Annual Report
Frequently Asked Questions
What is the fundamental focus of this research?
The work focuses on analyzing the financial reporting quality and accounting policy choices of the pharmaceutical company GlaxoSmithKline (GSK) based on their 2019 annual report.
What are the central thematic areas?
The study centers on the impact of macroeconomic and industry-wide events on corporate disclosures, and specifically on the application of IAS 16, IAS 38, IAS 36, IAS 2, and IFRS 3.
What is the primary goal of the study?
The primary goal is to assess whether GSK's accounting disclosures meet the transparency and completeness requirements expected under current IFRS standards.
Which scientific methodology is employed?
The paper utilizes a descriptive, document-based analytical approach, reviewing official annual financial reports and evaluating them against specific IFRS regulatory requirements.
What topics are covered in the main section?
The main section investigates specific accounting areas including Property, Plant and Equipment, Intangible Assets, Impairment tests, Inventory valuation, and Business Combinations.
Which keywords best characterize the work?
Key terms include GlaxoSmithKline, IFRS, IAS, Accounting Policy, Disclosure Compliance, and Financial Reporting.
How did Brexit affect the accounting considerations discussed?
Brexit created uncertainty leading to anticipated costs regarding logistics and supply chain adjustments, which influenced risk reporting and disclosure choices.
How are intangible assets handled within the report?
The report details that GSK distinguishes between software, licenses, and brands, applying a straight-line amortization method and conducting annual reviews of useful lives.
What is the conclusion regarding GSK's disclosure compliance?
The analysis concludes that GSK generally complies with all major disclosure obligations and provides detailed, transparent information to the addressees of the financial statements.
- Quote paper
- Anonym (Author), 2021, Business strategy and accounting policies of GlaxoSmithKline (GSK), Munich, GRIN Verlag, https://www.grin.com/document/1137472
