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The Teck Resources Companys Accounting Policies
Tecks annual report demonstrates a high degree of transparency, as the financial statements are highly detailed and supplied with analysis and explaining notes. As it is instructed in the CPA Canada Handbook, the company includes the assets, liabilities, income, expenses, and equity in the statement. The numbers are separated into annual and quarterly categories, each of which is compared to two previous years as well as estimations for 2022 (Teck, 2021). As a result, the potential investor sees both the earlier results of the company and its possible future earnings. Overall, Teck seems to follow the IFRS Standards and disclose as much information as possible to create a clear view of its financial operations.
The structure of the report allows one to review the main categories, such as revenue, income, and liabilities, first and then move on to the more detailed explanations of each section. As listed in the handbook, the annual report includes all major categories required for a financial statement revenue, cost of sales, gross profit, other income, distribution, administrative and other expenses, and profit before tax (Chartered Professional Accountants of Canada [CPAC], 2022). Some of these categories are included at the beginning in a table disclosing the results for the current finished year as well as two previous years.
It should be noted that the company chooses to separate the cost of sales section into a part that is not merged with the general revenue and profit section at the beginning of the report. Instead, the cost of sales is described later in the Operations part of the statement. The numbers are divided by business units, such as steelmaking coal, copper, energy, and others (Teck, 2021). The choice to use this strategy adheres to policy 103, which allows for the cost of sales method to present expenses according to their function (CPAC, 2022). Teck (2021) discloses the contents of each cost of sales, stating that it includes all of the expenses required to produce our products, such as labour, energy, operating supplies, and more (p. 33). Similar to other segments, the report contains numbers for the cost of sales in 2021, 2020, and 2019, which allows for comparison. It is apparent using the production volume that the cost of sales increased due to the growth of interest in the companys products.
Furthermore, Teck also provides a statement about translating the foreign currency. According to the report, each transaction completed with the use of foreign currency is shown in the final statement at the rate at the date of the transaction (Teck, 2021, p. 84). Thus, the company is applying the temporal rate method, which raises the reliability of data and lowers the risk of volatility linked to changes in the rates. This decision allows the company to avoid creating a separate reserve account and keep the transactions performed in different currencies in one net income statement.
Overall, the presentation and the detailed description of each number and category are in line with the latest edition of the IRFS standards. The financial statement contains all necessary elements and provides explanations for each separate category and calculation. The policy chosen by the company is income comparability, and Teck demonstrates growth through a transparent comparison of its income and expenses both annually and quarterly, adding data from 2020 and 2019. The company also adds notes about future and present IRFS policy changes and comments on whether they are applicable to the current statement. These notes and the structure of the financial report demonstrate the high reliability of the presented data.
References
Chartered Professional Accountants of Canada. (2022). CPA Canada Handbook. CPA Canada Standards and Guidance Collection.
Teck. (2021). 2021 annual report.
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