Disclosure of Property, Plant and Equipment as per BAS #16: A Study on Selected Pharmaceutical Companies in Bangladesh

 

 

Dr. Md Shakawat Hossain

Assistant Professor

Department of Accounting & Information System

Faculty of Business Studies

Jagannath University, Dhaka, Bangladesh

E-mail: hossainnu@yahoo.com

Abstract

Disclosure practices of pharmaceutical companies in Bangladesh as per BAS-16 are not well structured at all although Companies Act, 1994, Bangladesh Securities Exchange commission Rules 1987 are followed strictly. The major reasons for non- compliance is that the application of BAS-16 is not made mandatory up till now. Details of measurement basis, depreciation methods used, useful life of assets, gross carrying amount, nature of impairment of assets etc. are not disclosed at all. This affects the decision making of the stakeholders. There is ample scope for developing the fair disclosure of Property, Plant and Equipment in consistence with the requirements of BAS-16.

 

Keywords: Disclosure, Property, Plant and Equipment, BAS #16, Pharmaceutical Companies, Bangladesh.

 

1. Introduction

Pharmaceutical is one of the highest priority sectors of manufacturing industries in Bangladesh. More than 230 companies are functioning, satisfying about 100% demand of medicine in local market & also exporting a lot in different countries in global market. Contribution of this sector to our national GDP is also highly satisfactory through employment of about one lac human resources. There is also bright scope of the industry due to global market of our Pharmaceutical products. In this context fair financial reporting is of prime necessity for the satisfaction of our stakeholders in competitive markets (Bhuiyan & Sultan, 2011). Disclosure is the presentation of significant financial facts influencing the judgment of informed stakeholder. Financial statements, notes to the financial statements & supplementary information like management discussion & analysis, chairman report, Board of director report, audit report and some other financial highlights are the major characteristics of disclosure requirements as per the provisions of the Companies Act, 1994, Bangladesh Securities Exchange Commission Rules 1987, Bangladesh Accounting Standard & Bangladesh Financial Reporting Standards etc. (Weygandt, Kieso & Kimmel).

 

2. Statement of the problem

Disclosure of Property, Plant and Equipment of pharmaceutical companies in Bangladesh depends on extensive uses of different regulatory framework like the Companies Act,1994, Bangladesh Securities Exchange commission Rules 1987,Bangladesh Accounting Standard & Bangladesh Financial Reporting Standards (BAS #16) etc. But practically there are variations in the extent of disclosure of relevant information among the listed pharmaceutical companies in Bangladesh. This is due to absence of mandatory requirement for the compliance with Bangladesh Accounting Standard & Bangladesh Financial Reporting Standards. We know that fair disclosure of Property, Plant and Equipment   is highly important for different stakeholders to understand their assets mix of the companies, their business growth & development, earning & stability. Investors always demand for extensive disclosure of reliable information for prudent investment decisions. But in reality disclosure volume, quality, timeliness, relevant and comparability & consistency become questionable. That is why the study is taken to arrive at concluding remarks for the fair disclosure scenario in our capital market.

 

3. Framework for disclosure

Disclosure is regulated by Companies Act 1994.The law requires presentation of statement of financial position in accordance with 11th  Schedule of the Act (part I & part II).Part I contains Form A Horizontal Form & Form B–vertical Form for presentation of assets and liabilities including Property, Plant and Equipment (Richard et al.,2007).

In horizontal Form assets are shown in different classification like fixed assets, investment, current assets etc. Here fixed assets include land, building, plant and machinery, furniture and fittings, development of property, vehicles etc. Under each head of fixed assets, the original cost and the additional there to and the deductions there from during the year and the total depreciation written off or provided up to the end of the year are to be stated.

Form B Presentation of Property, Plant and Equipment.

In Vertical Form, assets are shown under the heading of application of fund-

§  Fixed assets

§  Investment

§  Current assets, loan and loan and advance

§  Non-current assets. Depreciation deduct was shown from fixed assets.

Part-11 of the schedule contains requirements regarding presentation of profit and loss account including depreciation which runs as follows:

“In the case of all concerns having WIP, the amounts for which such works have been completed at the commencement and at the end of the accounting year.

The amount provided for depreciation, renewals or diminution in value of fixed assets. In absence of for depreciation relevant reasons are disclosed.

 

3.1 Securities & Exchange Rules, 1987

Listed companies in Bangladesh are also regulated by Securities & Exchange Rules, 1987 is applicable to the companies that are trading on the stock exchange in Bangladesh. The financial statements of an issuer of a listed security need to be shall be prepared in accordance with requirements given in the Schedule of this Rules and the relevant International Accounting Standards as adopted by the Institute of Chartered Accountants of Bangladesh. The schedule presents a statement of financial position (Balance sheet) & income statement showing assets and liabilities in details along with the necessary notes and clarifications (Bangladesh Securities Exchanges Commission Rules, 1987).

BAS-16: Property, Plant and Equipment are applicable to the listed companies which lay down detailed regulation for Property, Plant and Equipment. The standard contains definition of Property, Plant and Equipment, depreciation, useful life, cost, residual value, fair value, impairment loss, carrying amount etc.

 

Financial statements should disclose, for each class of   Property, Plant and Equipment:

§  The measurement bases used for deterring the gross carrying amount,

§  The depreciation methods used

§  The useful lives or the depreciation rates used

§  The gross carrying amount and the accumulated depreciation

§  A reconciliation of the carrying amount at the beginning and end of the period showing-addition, disposals, acquisitions through business combinations, impairment losses, depreciation and other movements;

As per Para 61 the financial statements should also disclose-

§  The existence and amount of restrictions on title, and Property, Plant and Equipment  pledged as security for liabilities;

§  The accounting policy for the estimated costs of restoring the site of items of Property, Plant and Equipment.

§  The amount of expenditures on account of Property, Plant and Equipment in the course of constructions.

§  The amount of commitments for the acquisition of Property, Plant and Equipment’s etc.

It is known that the objective of IAS 16 is to prescribe the accounting treatment for Property & Equipment. The major issues are the recognition of assets; determination of the carrying amounts, depreciation charges, & impairment losses to be recognized in accounts. AS 16 provides two Models like (a) Cost Model and Revaluation Model. As per cost model assets are shown at cost less accumulated depreciation and impairment thereon. (b) In revaluation model assets are carried at revalued amount i.e. fair value less depreciation & impairment thereon. Under the revaluation model, revaluation is done timely so that the difference between fair value and carrying value does not differ too much. For each class of Property, Plant & Equipment disclosure should be cover the basis for carrying amount, depreciation method, useful lives, depreciation rates, carrying amount less depreciation & impairment, reconciliation of addition & disposals etc., restriction on the title, contractual commitments, expenditures on the same, compensation from third parties etc. For revaluated property the effective date of evaluation, involvement of independent value, difference of the cost model & revaluation figure, revaluation surplus etc. should be disclosed.

 

4. Literature Review of the study

(Siddiqua and Hasan , 2010 ) prepared as article on “Financial reporting on Property, Plant and Equipment by the listed companies in Bangladesh. This paper examined current practices of sample companies regarding the presentation of Property, Plant and Equipment based on fourteen annual reports (2008-2009) of public limited companies. They concluded that sample companies were in line as per requirements of BAS#16 and proposed a few suggestions for the betterment of presentation of the statement.

(Ahmed, 2011) authored an article on “An Empirical Evidence on the Popularity and Consistency of Depreciation Methods Practiced in Bangladesh”. He analyzed the depreciation practices in Bangladesh. Findings are that practically reducing balance method of depreciation is followed in most of the listed companies of Dhaka stock exchange although next method applied is straight line method. There is consistency in such practices among the sample companies.

Evinita had made study on “Analysis of relationship revaluation of property, plant and Equipment Company on stock prices and rate of return on stock on Indonesian stock exchange”. She studies 199 manufacturing companies of Indonesian stock exchange covering the period 2011-2013.She found that Property, Plant and Equipment reporting at fair value could not produce realizable quality. Major causes are that overvalued increase in the value of Property, Plant and Equipment & changes in the value of Property, Plant and Equipment are shown side by side based on assessment made by investor & even historical cost was also shown side by side. She concluded that reporting Property, Plant and Equipment at a fair value develops revaluation difficulties which might be subjective in nature although due to over valuation reliability becomes questionable.

(Botelho et al., 2015) wrote an article on “Property, Plant and Equipment Disclosure Requirements and Firm Characteristics: the Portuguese accounting standardization system”. Objectives of the study were to find out the extent of compliance with the disclosure requirement of accounting standard in the Portuguese unlisted companies. Factors determining the degree of disclosure were also studied. They found that aged companies had shown maximum disclosure practically where influence of audit was also found in such compliance practices. Management is sincere in providing satisfaction of stakeholders through increasing inflow of resources of the sample companies. They suggested for study on motivation for higher disclosure as per regulatory framework.

(Egbunike et al.,2018) prepared an article on “Empirical Appraisal of IAS-16 Disclosure Compliance Level of Listed Cement Manufacturing Firms in Nigeria”. Sample of study covered four listed cement companies in Nigeria covering 5 years period (2010-2014).Secondary data were used through using statistical test. They mentioned that sample firms follow the disclosure requirements of IAS #16 in a satisfactory way..Internal Accounting standards are always emphasized in their disclosure practices although such compliance in not mandatory still now. They suggested for mandatory disclosure so that strict compliance with IFRS might be possible & penalty for non-compliance could be ensured.

(Akter & Hoque, 1993) conducted a study titled “Disclosure Practices in Bangladesh: A Case Study of the Banking Sector”. They focused on various legal provisions affecting disclosure along with their role. They observed that disclosure and reporting in banking sector of Bangladesh were not only inadequate but also biased and misleading. In most of the cases, financial statements of the local banks are dressed up and cosmetised. The writers stated about outdated legal frame work and poor performance of the accounting profession which significantly contributed to this undesirable situation. They suggested keeping attention for inadequate disclosure of specific provision, adjustment for exchange rate fluctuations, bad debt written off, transfer between provisions, charge against profit etc. which are very important for measuring the efficiency and profitability of the banking sector.

(Uddin et al., 2006) prepared a research paper on “Disclosure Practices: A Comparison of Commercial Banks and insurance Companies in Bangladesh”. They discussed the reporting practices of commercial banks and insurance companies in accordance with the compliance of all disclosure requirements under legal stipulations as well as non-regulatory practices. To evaluate the disclosure practices of commercial banks and insurance companies in Bangladesh, this study is based on the annual reports of a sample of companies. The authors showed that commercial banks and insurance companies do not comply with all the mandatory disclosure requirements in the annual reports. In addition, they do not make adequate voluntary disclosures in addition to mandatory disclosures. They offered some suggestions to update disclosure practices of the companies.

(Hossain, 2008) had a research papers on “The extent of disclosure in annual reports of banking companies: The Case of India” investigated of the extent of both mandatory and voluntary disclosure by listed banking companies in India. The study reported the results of the association between company-specific attributes and total disclosure, i.e., mandatory and voluntary, of the sample companies. A total of 184 items were selected of which 101 and 81 were mandatory and voluntary respectively. The study revealed that in disclosing mandatory items, the average score is 88, whilst the average score for voluntary disclosure is 25. The findings also indicated that size, profitability, board composition, and market discipline variables were significant, and other variables such as age, complexity of business and asset-in-place were insignificant in explaining the level of disclosure.

(Richard, et al., 2007) prepared an article on “Accounting Information, Disclosure, and the Cost of Capital”. They examined whether and how accounting information about a firm manifests in its cost of capital, despite the forces of diversification. The authors built a model that is consistent with the CAPM and explicitly allows for multiple securities whose cash flows are correlated. We demonstrate that the quality of accounting information can influence the cost of capital, both directly and indirectly. The direct effect occurs because higher quality disclosures reduce the firm's assessed covariance with other firms' cash flows, which is non-diversifiable. The indirect effect occurs because higher quality disclosures affect a firm's real decisions, which likely changes the firm's ratio of the expected future cash flows to the covariance of these cash flows with the sum of all the cash flows in the market. The study showed that this effect can go on in either direction, but also derive conditions under which an increase in information quality leads to an unambiguous decline in the cost of capital.

Based on the foresaid reasons it is clear that this study would be different type disclosing the required items of accounting information expected by the stakeholders in pharmaceutical sectors.

 

5. Objectives of the research

§  To study the disclosure practices regarding Property, Plant and Equipment keeping view the legal framework and BAS-16 by the sample companies

§  To examine the extent of compliance with BAS-16 regarding disclosure of Property, Plant and Equipment

§  To identify the variations in disclosure practices and causes thereon among the sample companies.

§  To provide suggestions for better compliance based on regulatory framework.

 

6. Methodology of the research

It follows mainly the sample mix, nature & sources of data, techniques of analysis etc. Sample of the study covers five pharmaceutical units selected on the basis of convenience in data collection. Sample companies are square pharmaceutical Ltd, Beximco Pharmaceutical Ltd, IBN Pharmaceutical Ltd, ACI Pharmaceutical Ltd and Renata Pharmaceutical Ltd. The study is based on mainly secondary data available in the 5 years annual reports of the sample companies. Techniques of analysis are that major items of Property, Plant & Equipment   disclosed in annual financial statements as per BAS-16, Bangladesh Securities Exchange Commission Rules-1987 & The Companies Act, 1994 are well detailed through effective compares in sample units. Mean value, std. deviation, Maxima & Minimum level are also shown. Interrelationship of various disclosed items are also demonstrated. Causes of non-disclosed & their impacts are also detected. Possible ways for better disclosures as per the provisions of regulatory framework are also highlighted. Inadequacy of the provisions for disclosure in regulatory framework is also shown.

 

7. Major findings & observations

 

Table 1: Details of property, plant & equipment of square pharmaceutical during 2013 to 2017

   (Amount in Million Tk.)

Year

Sample

 

2013

2014

2015

2016

2017

Total

Mean

Property, Plant & Equip

9908.01

13933.68

18009.2

18848.28

19323.56

80022.73

16004

Investment-Long term

157.69

147.69

251.6

555.87

588.8

1701.65

340.33

Investment-Associate

4914.95

5364.15

6036.14

6764.51

7504.64

30584.39

6116

Investment in Makeable

686.95

844.36

879.24

1071.73

1938.2

5420.48

1084

Capital-WIP

4907.03

3256.8

207.63

0

0

8371.46

1674

Total

20575

23547

25383

27240

29355

126100

25220

Average

4114.92

4709.33

5076.76

5448.07

5871.04

25220.14

 

SD

3944.55

5553.68

7628.53

7969.72

8085.13

32638.63

 

CV (%)

95.85

117.92

150.26

146.28

137.71

129.41

 

Max Lev.

9908.01

13933.68

18009.2

18848.28

19323.56

80022.73

 

Min Lev.

157.69

147.69

207.63

0

0

1701.65

 

Source: Annul reports of the sample companies.

Table-1 shows that there had been increasing trends in investment in property, plant & equipment during the period. Average value of property, plant & equipment amounted to Tk.16, 004 during the period. Property, plant & equipment comprise mainly investment in long term assets, investment associate & investment in marketable & Capital-WIP. There had been increasing trend in all of these elements

     Table 2:Details of property, plant & Equipment of  square pharmaceutical during 2013 to 2017

    (Amount in Million Tk.)

Year

Sample

 

2013

2014

2015

2016

2017

Total

Mean

Property, Plant & Equip

18364

20393

22168

22235

24472

107632

21526

Intangible Assets

198.22

235

269

380

462

1544.22

308.84

Investment in share

4.79

5.75

5.4

4

17

36.94

7.38

Investment in Makeable

0

0

0

0

0

0

-

Investment-Associate

0

0

0

0

0

0

-

Total

18567.01

20633.75

22442.40

22619

24951

109213

21842

Average

3713.40

4126.75

4488.48

4523.8

4990.2

21842.63

 

SD

8190.37

9093.67

9883.82

9902.21

10892.45

47962.30

 

CV (%)

220.56

220.35

220.20

218.89

218.27

219.58

 

Max Lev.

18364

20393

22168

22235

24472

107632

 

Min Lev.

0

0

0

0

0

 

Source: Annul reports of the sample companies.

Table.3: Similar trends are also found in Beximco pharmaceutical company although investment in share was negligible. Investment in marketable securities & Associate was absent during the period.

Table 3: Details of property, plant & Equipment of IBN pharmaceutical during 2013 to 2017

(Amount in Million Tk.)

Year

Sample

 

2013

2014

2015

2016

2017

Total

Mean

Property, Plant & Equip

383.64

515.90

870.48

951.72

1116.33

3838.07

767

Investment –long term

0

0

0

0

0

0

0

Investment-Associate

0

0

0

1.75

9.12

10.87

2.17

Investment in Makeable

335

266.58

310

326.03

359.10

1596.71

319.34

Capital-WIP

26.61

26.61

5.32

Total

714.64

781.48

1180.48

1279.95

1511.16

5472.26

1094.45

Average

179.66

195.62

295.12

319.87

302.232

1094.45

 

SD

208.40

247.75

410.46

448.25

479.37

1680.17

 

CV (%)

115.99

126.65

139.08

140.13

158.61

153.51

 

Max Lev.

383.64

515.90

870.48

951.72

1116.33

3838.07

 

Min Lev.

0

0

0

0

0

0

 

Source: Annul reports of the sample companies.

In IBN, similar trends were found in property, plant & equipment but no investment was as long terms invest & even investment in M/S had also increasing trend during the period but capital WIP was only found in 2017.

Table 4: Details of property, plant & Equipment of ACI pharmaceutical during 2013 to 2017

(Amount in Million Tk.)

Year

Sample

 

2013

2014

2015

2016

2017

Total

Mean

Property, Plant & Equip

3384

3799

6540

6596

7882

28201

5640

Investment –Share

1846

1799

1858

1902

2068

9473

1895

Total

5230

5598

8398

8498

9950

37674

7534.80

Average

2615

2799

4199

4249

4975

18837

 

SD

1087.53

1414.21

3310.67

3319.15

4111.11

13242.69

 

CV (%)

41.58

50.52

78.84

78.11

82.63

70.30

 

Max Lev.

3384

3799

6540

6596

7882

28201

 

Min Lev.

1846

1799

1858

1902

2068

9473

 

Source: Annul reports of the sample companies.

In ACI, similar trends were available in property, plant & equipment & investment in share but no investment was available in some other items.

 

Table 5: Details of property, plant & Equipment of Renata pharmaceutical during 2013 to 2017

(Amount in Million Tk.)

Year

Sample

 

2013

2014

2015

2016

2017

Total

Mean

Property, Plant & Equip

6348

8106

8695

8969

9172

41290

8258

Investment –Share

60

89

92

241

48.22

Investment-Associate

0

0

0

0

0

0

0

Investment in Makeable

0

0

0

0

0

0

0

Capital-WIP

2026

857

723

702

1072

5380

1076

Total

8434

9052

9510

9671

10244

4691

938.20

Average

1686.8

1810.4

3170

4835.5

5122

9382.2

 

SD

2746.76

3537.72

4795.18

5845.65

5727.56

17984.28

 

CV (%)

162.83

195.41

151.26

120.89

111.82

191.68

 

Max Lev.

6348

8106

8695

8969

9172

41290

 

Min Lev.

0

0

92

702

1072

0

 

Source: Annul reports of the sample companies.

In Renata property, plant & Equipment had also increasing trends but negligible investment was in other elements only capital WIP was higher in 2013 having decline trend up to 2016 following an increase in 2017.

 

Table 6: Disclosure of property, plant & Equipment mix of Square pharmaceutical during 2013 to 2017

(Amount in Million Tk.)

Year

Sample

 

2013

2014

2015

2016

2017

Total

Mean

Cost of PPE

17151

22132

22132

31085

32574

125074

25014.80

Depreciation

7243

8198

8198

12237

14146

50022

10004.40

Carrying Value

9908

13933

13933

18848

18428

75050

15010

Total

 

Average

11434

14754.33

14754.33

20723.33

21716

83382

 

SD

5127.243

7003.215

7003.215

9562.919

9643.962

38213.444

 

CV (%)

44.842

47.465

47.465

46.145

44.409

45.829

 

Max Lev.

17151

22132

22132

31085

32574

125074

 

Min Lev.

7243

8198

8198

12237

14146

50022

 

Source: Annul reports of the sample companies.

In Square pharmaceutical company, disclosure of the cost of   property, plant & Equipment , depreciation & carrying value all of these had increasing trends  during the period. Available cost of property, plant & Equipment   amounted to Tk.25014.80 during the period .Accumulated depreciation amounted to Tk.50022 at the end of 2017.Avarage carrying value was Tk.15010 during the period

 

Table 7: Disclosure of   property, plant & Equipment mix of Beximco pharmaceutical during 2013 to 2017

(Amount in Million Tk.)

Year

Sample

 

2013

2014

2015

2016

2017

Total

Mean

Cost of PPE

20788

21510

22479

22799

23680

111256

22251

Depreciation

4686

5425

6157

6520

7220

30008

6001

Carrying Value

18364

20393

16321

16279

16460

87817

17563

Total

 

Average

14612.666

15776

14985.666

15199.333

15786.666

76360.333

 

SD

8681.761

8981.610

8242.527

8193.028

8250.632

41818.067

 

CV (%)

59.412

56.932

55.002

53.903

52.2632

54.764

 

Max Lev.

20788

21510

22479

22799

23680

111256

 

Min Lev.

4686

5425

6157

6520

7220

30008

 

Source: Annul reports of the sample companies.

Beximco pharmaceutical company also shows that there had been increasing trend in all of the three elements during the period. Average cost of PPE amounted to Tk.22251 during the period. Average carrying value was Tk.17563 & Accumulated depreciation was Tk.30008 following of the end of 2017.

Table 8: Disclosure of   property, plant & Equipment    mix of IBN pharmaceutical during 2013 to 2017

(Amount in Million Tk.)

Year

Sample

 

2013

2014

2015

2016

2017

Total

Mean

Cost of PPE

668.02

834.83

935.17

1352.4

1606.35

5396.77

1079.35

Depreciation

284.41

318.91

412.3

423.12

490.12

1928.86

3857.78

Carrying Value

383.65

515.9

813.4

940.45

1116.33

3769.73

7539.46

Total

 

Average

445.36

556.546

720.29

905.323

1070.933

3698.453

 

SD

199.111

260.350

273.587

465.634

559.497

1735.053

 

CV (%)

44.707

46.779

37.983

51.432

52.243

46.912

 

Max Lev.

668.02

834.83

935.17

1352.4

1606.35

5396.77

 

Min Lev.

284.41

318.91

412.3

423.12

490.12

1928.86

 

Source: Annul reports of the sample companies.

 

In IBN similar growth trends were found in all of the three elements. Mean value of the cost of PPE was 1080 & carrying value was 7540 during the period under study. Accumulated depreciation amounted to Tk.1928.86 at the end of 2017

 

Table 9:  Disclosure of   Property, Plant & Equipment    mix of ACI pharmaceutical during 2013 to 2017

  (Amount in Million Tk.)

Year

Sample

 

2013

2014

2015

2016

2017

Total

Mean

Cost of PPE

3099

3821

3490.45

3707.7

5357

19475.15

3895.03

Depreciation

549.64

836.68

10.1

165.39

520.95

2082.76

416.55

Carrying Value

3384.48

3799.15

12600.81

14526.92

18984.7

53296.06

10659.21

Total

 

Average

2344.37

2818.94

5367.12

6133.33

8287.55

24951.32

 

SD

1560.82

1716.72

6501.76

7481.72

9574.37

26042.11

 

CV(%)

66.577

60.89

121.14

121.98

115.52

104.37

 

Max Lev.

3384.48

3821

12600.81

14526.92

18984.7

53296.06

 

Min Lev.

549.64

836.68

10.1

165.39

520.95

2082.76

 

Source: Annul reports of the sample companies.

In ACI, increasing trends were found in cost of property, plant & Equipment & carrying value, Accumulated depreciation was Tk.2082.76 at the end of 2017.Average cost of   property, plant & Equipment was Tk.3895.03 & carrying value was 10659.21 for the period.

 

Table 10:  Disclosure of Property, Plant & Equipment   mix of Renata pharmaceutical during 2013 to 2017

   (Amount in Million Tk.)

Year

Sample

 

2013

2014

2015

2016

2017

Total

Mean

Cost of PPE

7741

9903

11013

11581

12380

52618

10523

Depreciation

1393

1796

2317

2610

3208

11324

2264

Carrying Value

6348

8106

8695

8969

9172

41290

8258

Total

 

Average

5160.66

6601.66

7341.66

7720

8253.33

35077.33

 

SD

3336.40

4257.71

4503.19

4614.07

4654.49

21336.50

 

CV (%)

64.65

64.49

61.33

59.76

56.39

60.82

 

Max Lev.

7741

9903

11013

11581

12380

52618

 

Min Lev.

1393

1796

2317

2610

3208

11324

 

Source: Annul reports of the sample companies.

In Renata similarly growth rates were found in all of the variables. Average cost amounted to Tk.10523 & carrying value was Tk.8258 during the period. Accumulated depreciation was Tk.11324 at the end of 2017.

 

 

 

Table 11: Per employee Property, Plant & Equipment of sample companies during 2013-2017.

(Amount in Million Tk.)

Year

Square

Beximco

IBN

ACI

Reneta

2013

3.50

7.10

6.38

4.15

4.75

2014

3.73

7.68

6.45

3.40

4.70

2015

3.78

7.66

6.68

3.58

4.64

2016

3.79

7.75

6.76

3.74

4.56

2017

3.97

7.65

7.12

3.51

4.82

Mean

3.75

7.56

6.68

3.67

4.69

Source: Annul reports of the sample companies.

Property, plant & Equipment per employee were highest in Beximco followed by IBN, Renata, and Square &ACI respectively. Actually there are variations among the sample companies. We know that volume of property, plant & Equipment are dependent on operating capacity of the units and maximum capacity utilization ensures the major return on operating assets assuming such other factors constant.

 

Table 12: Disclosure of total assets per employee of sample companies during 2013-2017

(Amount in Million Tk.)

Year

Square

Beximco

IBN

ACI

Reneta

2013

0.57

0.48

2.70

0.15

.32

2014

.63

0.50

0.03

.23

.34

2015

.85

.51

0.04

.45

.36

2016

1.28

0.55

0.05

.18

.38

2017

1.48

0.58

0.05

.24

.42

Mean

0.96

0.52

0.57

0.25

.36

Source: Annul reports of the sample companies.

Total assets per employee were highest in square pharmaceutical followed by Beximco, Renata, ACI & IBN respectively. Practically volume of total assets is positively correlated with the size of property, plant & Equipment per employee.

Table 13: Disclosures of total equity per employee of sample companies during 2013-2017

(Amount in Million Tk.)

Year

Square

Beximco

IBN

ACI

Renata

2013

4.04

0.34

0.34

2.96

2.93

2014

4.21

0.33

0.33

2.24

2.90

2015

4.67

0.42

0.42

2.73

2.86

2016

7.32

0.43

0.43

2.90

2.80

2017

5.98

0.52

0.52

3.23

2.97

Mean

5.24

0.40

0.40

2.81

2.89

                        Source: Annul reports of the sample companies.

Equity per employee was highest in Square followed by Renata, ACI & Beximco, and IBN respectively. There are also variations among the sample companies. Practically volume of equity depends on growth of earnings, nature of dividend payment, retention policy, issuing of convertibles and some other financing & investment strategic

 

 

Table 14: Disclosures of total equity per employee of sample companies during 2013-2017.

(Amount in Million Tk.)

Year

Square

Beximco

IBN

ACI

Renata

2013

3.84

6.82

0.21

1.13

1.45

2014

4.24

6.83

0.18

0.95

1.55

2015

5.67

6.78

0.21

1.65

2.47

2016

5.65

6.56

9.44

1.64

1.77

207

6.63

6.54

7.55

1.55

2.05

Mean

4.36

6.70

3.52

1.38

1.85

Source: Annul reports of the sample companies.      

Beximco had maximum net income per employee followed by Square & others. Extent of disclosure is also positively correlated with volume of earnings, equity & sustainable development of any business.

8. Conclusion

Extent of disclosure of Property, Plant & Equipment in sample companies is not up to the mark as per the provisions of BAS-16, Bangladesh Securities Exchange Commission Rules-1987 & the Companies Act, 1994. Financial statements should disclose for each class of Property, Plant & Equipment , the measurement basis used, Depreciation methods used, useful life, Gross carrying amount, Accumulated depreciation, Reconciliation of carrying amount, addition to assets, Assets classified for sale (BFRS-05), acquisition in business combination, impairment of assets (BAS-36) differences & some other changes. Practically not a single company follows the aforesaid disclosure thoroughly. So there is enough scope for fair disclosure of Property, Plant & Equipment specially relating to impairment of Assets changing carrying value, fair value of assets etc. We know that major indicators of impairment of assets might be market value decline, increase in interest rate, physical damage, restructuring of capital, worst economic performance, stock price below book value, change in technology ,market economy etc. Practically for fair & adequate disclosure of expected information of the stakeholders management need to be more careful for mandatory as well as voluntary disclosure items. There should be strict compliance with the provisions given in the Regularity Framework specially BAS & BFRS should be made mandatory and financial reporting council should try to penalize the companies for non- compliance. In that case more awareness would be developed for the satisfaction of the expectation of the stakeholders.

 

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