In a newspaper article of 7 July 2017 entitled ‘Australia Post’s accounts a mess’ (by Tony Boyd, The Australian Financial Review, p. 40), it was noted that numerous restatements seemed to have been made in the financial accounts of Australia Post in recent years that did not impact the overall results of Australia Post,  which did change the reported financial performance of the different operating segments. Specifically, it was reported that the restatements resulted in generally adverse outcomes for the earnings of the ‘letters’ segment, positive outcomes for the ‘parcels’ and ‘retail’ segments and large swings in the reported earnings  those parts of the business that were ‘unallocated’. The newspaper article then quoted an Australian university professor who noted that the apparent restatements made the performance of the ‘letters’ segment look worse and the performance of the ‘parcels’ segment look better. Further, according to the newspaper article,  various adjustments and restatements appeared to be occurring at the same time that Australia Post was campaigning for higher prices for posting letters, and for the introduction of a two-speed letter service.

The newspaper article also noted that the professor believed that this raised legitimate questions about whether the restatements were done purposely to make the performance of the ‘letters’ segment look worse.

REQUIRED

Do you think it is realistic to believe that reporting entities might use segment data opportunistically to help them achieve desired outcomes? Further, why would making the performance of the ‘letters’ segment look worse than it should be in turn help Australia Post to get approval for a rise in the price of letters?