BFA582 Financial Reporting &Analysis

BFA582
Financial Reporting
&Analysis
Semester One 2010
(Part-Time)
School of Accounting and Corporate Governance
Faculty of Business
Unit Outline
John Pugh
CRICOS Provider Code: 00586B
Your lecturer: John Pugh
John completed a Bachelor of Commerce and a Bachelor of Education at the University of
Cape Town, a post-Graduate Certificate in Education through London University and a
Master of Arts at the University of Sussex. He has extensive teaching experience in the
University Sector and was previously a full-time Senior Lecturer in Accounting and Finance
at the University of Tasmania. He is a CPA and a current member of CPA Australia.
His research interests are curriculum development and design in accounting education and the
linguistics of accounting.
Contact details
Unit coordinator/
Lecturer and Tutor:
John Pugh, BCom, Bed, MA, Postgrad. Cert. Ed, CPA
Campus:
Launceston
Room:
A259
E-mail:
John. [email protected]
[email protected]
Tel:
6324 3315
Mob:
0419 544 803
Fax:
(03) 6324 3369
Postal Address:
School of Accounting & Corporate Governance
University of Tasmania
Locked Bag 1314
LAUNCESTON TAS 7250
Consulting Hours:
By appointment
2
Contents
Page
Unit description
4
Aims and learning outcomes
4
Generic graduate attributes
5
Learning resources required
6
Details of teaching arrangements
7
Assessment details
8
How your final result is determined
10
Submitting assignments and penalties
11
Requesting extensions
12
Returning assignments
12
Academic referencing
12
MyLO
12
Plagiarism
13
Other information and assistance
14
Unit schedule
16
3
Unit Description
Welcome to Financial Reporting and Analysis. We hope that you find the subject challenging
and rewarding. The subject aims to develop your ability to understand, use and interpret
financial reports and information from the points of view of an investor and of a manager. It
is about developing your understanding of accounting concepts, issues and problems and not
learning the skills and knowledge needed by a professional accountant.
We do not expect you be able to actually design and maintain accounting systems - this is the
task of the professional accountant. However, as a manager you must able to communicate
intelligently with accountants, investment advisers and other managers and feel confident in
using financial information and terminology in managing an organisation. You should also
understand articles in the financial media and contemporary debates about issues and events,
such as the recent ‘financial crisis’. In other words you should become financially ‘literate’
by understanding the ‘language of business’. We don’t assume that you have any previous
knowledge of accounting.
Aims and Learning Outcomes
Aim of the unit
An aim is a broad statement that guides how we teach the subject and how we expect you to
learn it (think of it as a large signpost!). In this unit our main aim is to give you the ideas,
concepts analytical skills and language to pass the subject. We want you to understand how
and why accountants, managers and other people affected by accounting (its numbers) think
and behave in contemporary Western Society. A second aim is to make sure that you
understand the limitations of the numbers in financial reports.
Learning outcomes
These follow from the broad aims and spell out what we expect you to do or demonstrate
when you have completed the work and assessment for the subject. In more detail (smaller
signposts!) we expect that you will be able to:
1. Explain the legal and organisational setting in which financial information is prepared
and used.
2. Record a set of accounting transactions on a worksheet and prepare a simple set of
financial reports.
3. Define the elements of accounting reports and describe the principles and concepts
underpinning the preparation of financial statements
4. Analyse and interpret information contained in financial reports.
5. Demonstrate verbally and in writing your understanding of the language of
accounting.
6. Explain the inherent limitations of information contained in financial reports.
7. Use financial information and financial models to make decisions about the efficient
and effective allocation of economic resources within an organisation.
8. Specify the role of management accounting in decision-making.
9. Describe and analyse the contemporary issues of ethics and social responsibility in
accounting.
10. Reflect critically upon (think about) and evaluate constructively your progress
through the unit.
These are very broad outcomes that link to your assessment. We give you more detailed
learning outcomes for each topic, as does the textbook.
4
Generic Graduate Attributes
The University has defined a set of generic graduate attributes (GGAs) that can be expected
of all graduates. You can read them in detail on the following website:
http://www.learningsupport.utas.edu.au/generic_attributes.html
By studying this unit you will make some progress in achieving the following attributes:
1. Knowledge: be able to identify, evaluate and implement personal learning strategies;
learn both independently and cooperatively; and discuss and apply a range of
underlying concepts and principles relevant to the practice of accounting.
2. Communication Skills: be able to effectively communicate using a range of media
including oral, written and numerical communication; present well reasoned
arguments in a logical and coherent manner, consistent with, and appropriate for the
context of accounting; listen to and evaluate the views of others; and access and
organise information from a variety of media.
3. Problem Solving Skills: become effective problem solvers, capable of applying
logical, critical and creative thinking to a range of problems. This skill includes being
able to demonstrate an understanding of the conceptual basis of financial accounting
and corporate reporting; prepare and analyse general purpose financial reports for
companies in accordance with legal and professional requirements; apply accounting
concepts to controversial accounting issues and emerging issues ; and find, acquire,
evaluate, manage and use relevant information in a range of contexts.
4. Global Perspective: acquire and demonstrate a global perspective and intercultural
competence. This involves being able to show that you are aware of the local and
global context of financial accounting and corporate reporting.
5. Social Responsibility: act ethically, with integrity and social responsibility by
acknowledging the social and ethical implications of corporate accounting and
reporting, and the importance of ethics to the accounting profession.
Alterations to unit as a result of student feedback
Where appropriate, alterations have been made to this unit as a result of student feedback.
5
Learning resources required
Prescribed Text
Bazley, M & Hancock, P 2010, Contemporary Accounting, 7th edn, Cengage Learning
Australia Pty Limited, South Melbourne.
You should also obtain a recent copy of an Australian company’s annual report to
shareholders (the full version, not the “concise” report) from that company’s website. The
report should be of a company that sells inventory. Don’t get the report of a financial or
banking institution or of a mining company (or of Woolworths, which is at the back of the
textbook!).
Recommended reading
The publications listed below are recommended for further reading on the topics covered in
the unit.
Books
Atrill, P, McLaney, E, Harvey, D & Jenner, M 2009, 4th edn, Accounting: An introduction.
Pearson Education Australia Pty Ltd, Sydney.
Bakan, J 2005, The Corporation: The Pathological Pursuit of Profit and Power, Constable &
Robinson Ltd, London, UK.
Brooks, LJ 2004, Business & Professional Ethics for Directors, Executives and Accountants,
3rd Edn, Thomson Learning, Ohio, USA.
Bruns, WJ 1999, Accounting for Managers: Text and Cases, 2nd edn, South-Western College
Publishing, Boston, USA.
Godfrey, JM & Robb, AJ 1997, The Australian Dictionary of Accounting and Finance Terms,
3rd edn, Longman, Melbourne.
Kenley, WJ 1989, Using Financial Statements, CCH Australia Ltd, Sydney.
Carlon, S, Kimmel, PD, Loftus, J, Mladenovic, R, Kieso, DE & Weygandt, JJ 2009,
Accounting: Building Business Skills, 3rd edn, John Wiley & Sons Australia Ltd, NSW.
Pierson, G & Ramsay, A 2003, Financial Accounting—An introduction, 3rd edn, Longman,
Melbourne.
Porter, G & Norton, C 1996, Financial Accounting: The Impact on Decision Makers, The
Dryden Press, Fort Worth, USA.
Journals and periodicals
Apart from books, you will find it valuable to read relevant articles from journals and
periodicals (including the Business section of the Australian, the Financial Review and
magazines, such as The Economist). The Australian Accounting Review is a particularly
relevant academic journal. You can restrict your reading to periodicals and journals available
from University of Tasmania libraries.
Other references
There is a list of references at the end of most topics in your text. This gives full
bibliographical detail for all references cited. The reference lists themselves are not required
additional reading. However, you may wish to supplement your reading with any of the
entries from these lists or from the list of further readings supplied in some topics.
6
Details of teaching arrangements
Saturday Workshops
There will be seven three-hour workshops scheduled on Saturdays. These workshops are a
compacted style of teaching the conventional weekly lecturer/tutorial, with face-to-face
contact between students and lecturers usually occurring every two weeks. You must
complete the required reading and study tasks in the unit schedule (and/or accompanying unit
materials) before the workshop. In this way, you will be able to keep up with the study
schedule and be prepared to discuss the material during the workshops.
The dates, topics, readings and workshop questions are detailed in the unit schedule on the
last page of this outline.
Assessment details
In order to pass this unit you must achieve an overall mark of at least 50 per cent of the total
available marks. Details of each item of Coursework are given in the Assignment Topics
section.
Method of Assessment
Value
Due Date
Length*
Coursework
Assessment task 1
Transactions and reports
10
Saturday
27 March
As required
Assessment task 2
Ethics Case Studies
10
Saturday
17 April
2000 maximum words
30
Saturday
15 May
2400 maximum words
Assessment task 4
Examination
50
Exam Period
3 hours
Total Marks
100
Assessment task 3
Report analysis and
interpretation
* Word Limit: The word count includes such items as headings, in-text references, quotes
and executive summaries. It does not include tables, appendices or the reference list at the
end of the assignment.
Assessment Tasks
Please note that you must submit the first two assessment tasks individually, not as a group.
This is not to say that you can’t discuss the assignments with your peers (we encourage you
to do this), but the submitted assignment needs to be your own work.
The third assessment task is different as you will work on this in pairs and submit it jointly.
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Assessment Task 1 – 10%
Task description
Record accounting transactions using worksheets, and prepare
financial reports.
(The transactions and worksheets will be handed out at the first
workshop).
Task length
As appropriate (show all workings and calculations)
Links to unit’s learning
outcomes
Learning outcomes 2 & 3
Assessment criteria /
guidelines
Each question will be assessed for the accuracy of information
presented. This is both numerical accuracy and understanding of
accounting rules.
Date due
27 March
Assessment Task 2 – 10%
Task description
Complete a number of ethical case studies (to be handed out in
second workshop)
Where necessary, justify your arguments by referring to the
Accountants’ Code of Professional Conduct and definitions in the
“Framework”.
Task length
Approx. 2000 words
Links to unit’s learning
outcomes
Learning outcomes 1-4, 5, 9
Assessment criteria /
guidelines
Assessment will be based on both your value structure, analysis of
the ethical dilemma and the requirements identified in the code of
professional conduct
Date due
17 April
Assessment Task 3 – 30%
Task description
Financial Analysis of an Australian listed company
Task length
2400 max.
Links to unit’s learning
outcomes
Learning outcomes 3-6
Assessment criteria /
guidelines
A detailed guide is provided. The guide will relate to the practical
completion of the ratio and other analysis, and the report presented.
Date due
17 May
8
Topic:
Financial Analysis of an Australian listed company
A major investor has asked you to perform a financial analysis of a listed company of your
choice. The analysis is to be based on the company’s Annual Report for 2008 or 2009. The
company should include inventory in its balance sheet, and should not be a mining company
or be involved in banking and financing.
Due to a range of other attractive investment opportunities, the investor is anxious to receive
an opinion on the financial prospects of the company. The is considering either buying a
substantial block of shares or subscribing for a forthcoming issue of five-year unsecured
debentures.
To complete the Assignment you will need to understand Topic 4 thoroughly (together with
the related readings). Most of the recommended texts have chapters on ratio analysis and you
should consult a couple of these as well. You will find most listed Australian companies
have web sites that are useful to research the company’s background, current financial status
and future prospects. There are other useful web sites that give industry average data that you
can use for comparisons.
Below is a suggested contents page that you may find helpful in structuring your report.
Contents
Part I
•
•
•
Overview
Introduction and terms of reference
Basis of analysis
Sources of information
Part II Financial analysis
• History and nature of business (what it does)
• Summary of key financial data (that you use for your analysis)
• Trends in profit and cash flows
• Ratio analysis
o Profitability
o Management efficiency
o Liquidity
o Capital structure
o Industry comparison (if applicable)
o Prospects (trends and predictions)
Part III Other Considerations
• Non-financial influences/considerations (political, economic, managerial)
Part IV Conclusions
• Conclusions/recommendations
• Limitations to analysis
• Disclaimers
Appendices
• A summary of the key figures in the financial statements on which ratios were based
(up to 2 pages)
• Explanation of terms/ratios
• Ratio calculations
When you submit your assignment you should append a double-sided copy of the company’s
annual report. This should be a hard copy of at least the financial statements and notes
(preferably the whole report). Also attach a pair performance report.
9
Assessment Task 4 – 50%
Description / conditions
A 3 hour closed book final examination. Information about the
content of the examination will be provided in the lecture in
Week 13
Date
The final examination is conducted by the University Registrar
in the formal examination period. See the Current Students
homepage (Examinations and Results) on the University’s
website.
Format
The final examination will be of three (3) hours duration, preceded by 15 minutes reading
time. The exam will contribute to 50% of the overall assessment of the unit. Nonprogrammable calculators are permitted into the examination room.
Further information about the examination will be given during the semester.
Scheduled date and place of the examination
Your final examination will be held during the scheduled examination period as indicated by
Student Administration in correspondence to you.
Examinations are normally scheduled Monday to Saturday inclusive. They may be held
during the day or evening and students should consult the university information that is made
available towards the end of semester.
You are advised to make any necessary arrangements with employers now for time off during
examination period to sit this examination. Your participation at the scheduled time is not
negotiable unless there are exceptional circumstances (such as illness).
Note that you are expected to sit the examination at your recorded study centre.
Supplementary Examination
Except in special circumstances and on the recommendation of the lecturer-in-charge or the
Head of School, a student who fails will not be granted a supplementary examination.
How your final result is determined
We work out your final result simply by adding your weighted marks for the different
assessment components of the unit. To obtain a pass grade or better in the unit, the sum of the
weighted marks must be 50% or more of the marks available.
The School expects high standards and insists that you spend sufficient time (12 hours a
week) and effort to your studies throughout the semester to achieve grades of pass or higher
on merit. As noted previously, this needs good time management.
10
Submitting assignments and penalties
Your assignments are to be presented and submitted in accordance with the Guide for
Students - Presentation and Submission of Assignments issued by the Faculty of Business.
The Faculty of Business Guide for Students is available via MyLO or from the school’s
website - http://www.utas.edu.au/accg/studentres.htm. The appropriate individual
assignment cover sheet must accompany all assignments.
Again, we draw to your attention the University’s rules on plagiarism. Assignments
containing any plagiarised information will be given a zero mark and will be subject to the
disciplinary processes of the University. Please read the section on plagiarism. If you are not
sure what constitutes plagiarism, ask your lecturer. Assignments will be marked as quickly as
possible after all have been submitted, and will be returned with comments and marks
achieved.
Penalties
1. In this Policy:
(a) ‘day’ or ‘days’ excludes weekends and public holidays;
(b) ‘late’ means after the due date and time; and
(c) ‘coursework’ includes all internal non examination based forms of assessment
2. This Policy applies to all students enrolled in Units taught by the Faculty of Business at
whatever Campus or location.
3. Students are expected to submit coursework on or before the due date and time specified
in the relevant Unit Outline. The onus is on the student to prove the date and time of
submission.
4. Students with special circumstances may apply for an extension. ‘Special circumstances’
include medical or compassionate grounds but will not include work or other
commitments. Requests for extensions should be made in writing to the Unit
Coordinator on or before the due date. Students will need to provide independent
supporting documentation to substantiate their claims.
Medical certificates or other evidence must be attached and must contain sufficient detail
for the Unit Coordinator to make an informed decision. A statement or certificate from a
doctor, counsellor, health professional or independent member of the community should
state:
• the date the medical condition or other circumstance affected the student
• how the condition or circumstance affected the student’s ability to complete the
assessment task
5. Late submission of coursework will incur a penalty of 10% of the available marks for
each day the coursework is late unless an extension had been granted on or before the
relevant due date.
6. Coursework submitted more than five (5) days late will not be accepted.
7. Late work must be submitted to a staff member in the relevant School or Faculty Office
and the time of submission recorded.
8. Academic staff do NOT have the discretion to waive a late penalty.
11
9. If a student submits coursework that exceeds the prescribed length he or she will be
invited to resubmit it within 48 hours. If the resubmission is late there will be an
automatic penalty of 10% of the available marks plus an additional penalty of 10% for
each day.
Requesting extensions
Consistent with the Faculty’s policy on late submission, you will only be given extensions of
time on medical or compassionate grounds. They will not be granted because of work or
other commitments. Make your request for an extension to the unit coordinator in writing on
the School’s Application for Late Submission Form (available on MyLO) before the due date
of the assignment. You must attach medical certificates or other evidence to support your
application, and these must contain enough information to justify the extension.
Returning assignments
Assignments will be returned during workshops or can be collected from the lecturer’s room
at nominated times; they will not be available from the School’s offices. In some
circumstances they may be mailed to you.
Academic referencing
In your written work you must support your ideas by referring to texts and scholarly
literature. It is important that you understand how to correctly refer to the work of others and
maintain academic integrity. If you don’t appropriately acknowledge the ideas of others it
constitutes academic dishonesty (plagiarism or cheating), which the University considers a
serious offence.
The appropriate referencing style for this unit is the Harvard referencing method. The
required text for this unit, Fleet, W, Summers, J & Smith, B 2006, Communication Skills
Handbook for Accounting, gives detailed information about using the Harvard referencing
system. More information on presentation of assignments, including referencing styles is
available at:
http://www.utas.edu.au/library/assist/gpoa/gpoa.html
You can also access information about the referencing style for this unit in the Faculty of
Business Guide for Students available via MyLO or from the school’s website http://www.utas.edu.au/accg/studentres.htm.
Please read the statement on plagiarism. If you don’t understand it please see your unit
coordinator or lecturer.
MyLO
As you know, MyLO is the internet service that is adopted by the University and is used in
this unit for posting PowerPoint presentations and readings, and for registering for tutorials.
MyLO can be accessed on computers in computing laboratories at the University or on your
computer at home or at work. Information about accessing and using this service, about
required computer specifications, frequently asked questions, and about how to get help if
you experience difficulties, is available at the following University website:
http://www.utas.edu.au/coursesonline
12
You should visit this site and become familiar with its features , especially if you haven’t
used it before. You will probably be using it in other units that you are studying as well. Here
are some important points about accessing our web site.
Access to MyLO
You can access MyLO from the Student Page on the University’s web site: Current
Students ËQuick Links MyLO or go directly to the web address noted above:
•
Enter your email POP account “Username” (for example, jpugh) and your
“Password”. These are identical to the pop account/email username and password
that you are given with your enrolment confirmation form. If you forget your pop
account username, contact the Help Desk (see below under ‘getting assistance with
MyLO). Both MyLO and e-mail passwords must remain the same. If you are going to
change your password, change your e-mail password first.
•
When you enter your user name and password, click on OK and choose “BFA582”
from the list of units (subjects) in which you are enrolled. [NOTE: Another box may
sometimes appear when using the University network which asks you to verify your
user name and password, this is simply a security device – enter your password when
asked and click OK].
o
•
MyLO will automatically check that your browser is properly configured. If the
MyLO ‘browser checker’ window appears – scroll down to make sure you have
a tick in each area shown – then close the window.
From the Unit’s homepage click on the area you wish to access e.g. “Unit
Information”. A table of contents will appear on the left hand side of your screen.
Scroll through the list until you find what you want & click the underlined topic.
Plagiarism
Plagiarism is a form of cheating. It is taking and using someone else's thoughts, writings or
inventions and representing them as your own; for example, using an author's words without
putting them in quotation marks and citing the source, using an author's ideas without proper
acknowledgment and citation, copying another student's work.
If you have any doubts about how to refer to the work of others in your assignments, please
consult your lecturer or tutor for relevant referencing guidelines, and the academic integrity
resources on the web at: http://www.academicintegrity.utas.edu.au/
The intentional copying of someone else’s work as one’s own is a serious offence
punishable by penalties that may range from a fine or deduction/cancellation of marks and, in
the most serious of cases, to exclusion from a unit, a course or the University. Details of
penalties that can be imposed are available in the Ordinance of Student Discipline – Part 3
Academic Misconduct, see http://www.utas.edu.au/universitycouncil/legislation/
The University reserves the right to submit assignments to plagiarism detection
software, and might then retain a copy of the assignment on its database for the
purpose of future plagiarism checking.
13
For more information on the above statement and general referencing guidelines, see
http://www.utas.edu.au/plagiarism/ or follow the link under ‘Policy, Procedures and
Feedback’ on the Current Students homepage.
Other information and assistance
If you are experiencing difficulties with your studies or assignments, have personal or life
planning issues, disability or illness which may affect your course of study, you are advised
to raise these with your lecturer in the first instance.
There are a range of University-wide support services available to you including Student
Services, International Services and Learning Development. Please refer to the Current
Students homepage at: http://www.utas.edu.au/students/
Should you need help in accessing the Library visit their website for more information at
http://www.utas.edu.au/library/
If you have a problem
In the first instance you should discuss the matter with your unit coordinator, lecturer or tutor.
However, if you do not feel comfortable approaching one of these people, or if you have a
discussion and are not satisfied with the outcome, then you are encouraged to contact the
course coordinator:
MBA
Name:
Room:
Ph:
Rob Hecker
307
(03) 6226 1774
email:
[email protected]
Discussions with the major / course will be kept in the strictest confidence.
You are always welcome to raise issues with the Head of School, Sue Hrasky, who you can
email for an appointment ([email protected]).
If you are on the Launceston or the Cradle Coast campus and the coordinator is not located on
that
campus,
you
may
consult
Trevor
Wilmshurst
(Launceston,
[email protected]) or Steve Allen (Cradle Coast, [email protected] )
with whom you can also have confidential discussions.
If you wish to pursue the matter further, a student advocate may be able to assist you.
Information about the advocates is available at:
http://acserv.admin.utas.edu.au/Complaintsstudentadvocates.html
The University also has formal policies, and the following link gives you advice about the
procedures that you can follow: http://acserv.admin.utas.edu.au/Complaints_SelfHelp_Checklist.html
14
Students with Disabilities –University & Faculty Equity Plans
Goal 1 of the University of Tasmania Equity Plan provides for: “An inclusive teaching and
learning environment that values diversity, supports the pursuit of academic excellence and
produces high quality education and employment results for all students and staff.
The Faculty of Business Equity Plan facilitates the University Plan at an operational level and
has developed an ‘Action Plan’. The Action Plan for Goal 1 lays down procedures to ensure
that all students, including those with disabilities, have equal access to lecture and course
materials. The School of Accounting & Corporate Governance complies with these
procedures.
15
Unit Schedule
Semester 1, 2010
Workshop
Workshop
Date
Topic
1
27 February
Topic 1:
Introducing the
accounting environment
2
3
4
5
6
7
13 March
27 March
17 April
1 May
15 May
29 May
Reading from
Bazley &
Hancock
Topic 2:
Preparing and
understanding financial
statements
Topic 3:
Working capital, noncurrent assets and cost
allocation issues
Ch. 1, 2, 3
Ch. 4, 5
Ch. 6, 7, 8,
Topic 4:
Financial analysis,
contemporary
performance
measurement
Topic 5:
Financing business
operations, capital
structure, long-term
decisions
Topic 6:
Management accounting
concepts and techniques
Workshop
Questions
Ch. 1: 2, 3, 7, 8,
Ethics case Study
Ch. 2: 1, 5, 7, Ethics
case study 1
Ch. 3: 6, 12, 14
Ch.4: 5, 9,12,19,
Ethics case study
CH.5: 12, 19, Ethics
case study
Ch.6: 15, 16, Ethics
case study
Ch.7: 18, 19
Ch.8: 14, 15
Ch.11, 13
Ch.11: 11, 16
Ch.13: 1, 4, 14,
Ethics case study
Ch. 9, 15
Ch.9: 10, 11
Ch.15: 8, 11,
Ethics case study
Ch. 16, 17, 18, Ch.16: 1, 4
19
Ch.17: 1, 2, 3
Ch.18: 1, 2, 3
Ch.19: 15
Topic 7:
Accounting for social
Ch. 12, 20
responsibility, Triple
Bottom Line and strategic
accounting
Ch.12: 9, 13, Ethics
case study
Ch.20: Ethics case
study
* I expect you to complete the review questions as these will show you how well you understand
the subject matter for each topic.
16