QuestionQuestion

Audit telecommunications company Telstra.
Identify a business risk and what account that risk is associated with.

Telstra debt financing is majority from overseas borrowings, they have an incentive to manipulate from the surplus of foreign exchange.
In essence a surplus from foreign exchange should be classified as a "gain from foreign exchange" however my question is, how can Telstra manipulate this foreign exchange gain?
Should this be added in their equity and what section?
Would this be more beneficial then adding it as a gain?
Also, what is a "reserve" in the equity section, and why can it be negative, because telstra has a negative reserve.

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The increasing prevalence of mobile messaging applications such as WhatsApp, Google’s Hangouts, Skype, Viber and many more is a cause for concern for the telecommunications industry. Telstra’s mobile communication services are a large contributor to the company’s revenue. However, with mobile messaging applications now shifting towards integrating voice calling services, we can forecast that the revenue from bundled talk and text plans will be decreasing....
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