22748 Financial Reporting and Analysis

22748 Financial Reporting and Analysis

Group Case-Study, Autumn 2024

Submission requirements of the case study

1) Recommended Start : you may start the case study assignment at anytime after week 4 (census date). 2) Group size : 4-6 students. You do not need to be in the same workshop/class.

3) Submission Deadline: due by 5pm on 31st October 2024. ONLY ONE STUDENT PER GROUP NEEDS TO SUBMIT THE CASE STUDY.

4) Information  required on front cover: The front cover of your assignment must show the names and student numbers of all members of your group. The names shown must be the names under which you are enrolled, although you may add a nickname or other name by which you are known, so long as your enrolled name is included in full.

5) Format : Your written report must not be longer than eight pages (1.5 lines spacing, font size 12) excluding the title page, executive summary, tables, charts, references, footnotes etc. This case study report must be accompanied by the relevant extracts from the annual report that have been used,i.e., the financial statements (balance  sheet, income statement, cash flow statement) and the relevant notes to the financial statements specifically referred to in the written report. These extracts do not count in the page limits. Penalties apply if not provided (see #7)!

6) Value : The case study contributes 25% of your overall grade for the subject.

7) Penalties : Penalties of 10% of the assignment weighting will apply for each of the following: per page exceeding eight pages; not providing relevant extracts from the company’sannual report (noted in (5) above); poor formatting of the report (i.e. not following professional report format).

8) Late  penalty:  Assignments submitted after the due date/time without approval from the subject coordinator or an approved special consideration application will be penalised 10% of the total assignment weighting for each calendar day in which the assignment is late. A calendar day is defined as a 24-hour period or part thereof following the published due date and time of the assignment. This rule applies until the 5th calendar day after which the assignment is awarded a zero mark.

9) Lodging online: further information will be provided on the submission method prior to the submission date. Only one student per group needs to submit the case study.

Task requirements of the case study

Once the group is formed each group will be allocated an Australian listed company by the subject coordinator. Each group is required to download the company annual report for the year indicated when companies are allocated and complete an accounting analysis.

Accounting Analysis

Students are required to answer all the following items.

1.           Provide a very brief summary of the company’s activities as outlined in the annual report and any other sources considered relevant (i.e., What does the company do? Where does the company operate?).

2.           Identify and describe the accounting policies, choices and estimates made by the company relating to: i) Property, plant and equipment; ii) Intangible assets;

iii) Two other key accounting policies most relevant to the company’sfinancial report – provide a justification for your selection in your answer using financial statement information.

In your description, state the accounting standards and rules (AASBs) which apply in respect of these accounting policies.

3.           Classify the accounting strategy employed by management in respect of each of the four key

accounting policies identified in 2) as either aggressive or conservative. In your discussion, it would be extremely useful to compare the accounting policies and choices made by the firm to a close competitor(s) in the same industry. By accounting strategy, we mean the accounting policy choices and accounting estimates made by management identified in part 2 (not business strategy).

4.           Identify possible management incentives behind the choice of the accounting strategy identified in part 3). Think about managements’ incentives to distort and bias the financial performance/position of the business discussed in class. Your discussion needs to be supported by reference to specific incentives identified in the company’s annual report and from other sources.

5.           Based on your discussion in 3) and 4) identify three specific financial statement items which you

believe are potentially questionable. By specific items we mean a line item on the financial statements and not a total. Attempt torecalculate these questionable numbers to undo the identified distortion and describe the overall impact on the financial statements. You will need to conduct research and critical analysis to explain what you think the correct numbers should approximately be.

6.           Evaluate if the disclosures made in the financial report for the key accounting policies identified in 2) comply with the relevant accounting standards. It may be useful to answer this section using a table format.

Bonus points are awarded for extremely innovative or original analysis.

Marking Rubric – Group case study                                GROUP:				Score: Penalty: Bonus: Grade:	/55 /25%
	Max Mark	Exceeds criteria (75-100%)	Meets criteria (50-74%)	Below criteria (<50%)
1. Activities and Business Operations	/5	Comprehensively describes business activities and location of operations and markets.	Lists main business activities.	Incorrectly outlines business activities.
2. Accounting Policies	/10	Comprehensive discussion of accounting policies for PPE and intangibles. Correctly identifies the two other most key accounting policies and justifies selection with reference to figures in the annual report. Corresponding AASB’s identified.	Basic discussion of accounting policies for PPE and intangibles. Correctly identifies less than two key accounting policies and does not provide sufficient discussion to justify selection. Corresponding AASB’s identified.	Incorrect discussion of key accounting policies for PPE and intangibles. Incorrectly identifies key accounting policies or correctly identifies minimal accounting policies or identifies most accounting policies as ‘key’ . AASBs not identified.
3. Accounting Strategy	/10	Aggressive or conservative application of accounting policies is clearly explained and justified with multiple specific examples and comparison to competitors. Analyses the overall combined effect of the choices within the key accounting policies.	Aggressive or conservative application of accounting policies is explained and justified with some examples from the annual report. Only a basic comparison to competitors is provided.	Incorrectly identifies the accounting strategy as conservative or aggressive. No comparison to competitors is provided.
4. Management Incentives	/10	A comprehensive discussion of possible motivations for why managers have chosen the identified accounting strategy in part 3). The discussion is supported by specific reference to items both in the financial statements and annual report and from other sources	Some possible motivations for the manager’s choices are identified with basic reference to the annual report and financial statements and other sources.	The possible motivations of managers are missing or do not rationally explain accounting strategy. No effort is made to tie discussion to items in the financial statements and annual report or from other sources.
5. Questionable numbers and undo distortions	/10	Provides a clear, persuasive rationale for why an accounting number is questionable, with reference to relevant figures/information for justification. Provides a detailed step-by-step process of undoing questionable numbers. Overall impacts of these distortions on the income statement and balance sheet as well as subsequent years’ reporting are convincingly explained.	Possible accounting distortions/questionable numbers in the financial statements are identified with basic explanation as to why these numbers are questionable. Provides a basic attempt to ‘undo’ the questionable numbers.	Minimal attempt at identifying questionable numbers. Justification is not convincing. Very little attempt at undoing the distortion and/or the process is incorrect.

6. Quality of disclosure

/10

Provides a thorough analysis of whether disclosures in the annual report relating to the key accounting policies identified in part 2) meet the accounting standards.

Provides a basic analysis of whether disclosures in the annual report relating to the key accounting policies identified in part 2) meet the accounting standards.

Provides a minimal or incorrect analysis of whether disclosures in the annual report relating to the key accounting policies identified in part 2) meet the accounting standards.