FNS60215 - Advanced Diploma of Accounting - Corporate Governance - Accounting Report Writing Assessment Answer

Assessment Task:

FNS60215: Accounting Report Writing Assessment Answer

Scenario 1:
Your client has earned more income than expected. On July 2nd the client pays for advertising and asks you to backdate the expense to the preceding financial year. Backdating the deduction would lower the client’s immediate tax payments. After all there is a difference of only 2 days, what should you do? Write a report to explain what control devices could prove that you have behaved unethically if you backdated the transaction in the accounting records? Could an ATO audit prove that the expense occurred in July rather than in June? Why is falsifying ATO documents both unethical and illegal.

Scenario 2:
Your company owes $40,000 to the commonwealth bank. The loan requires your company to maintain a current ratio (current assets divided by current liabilities)
of 1.50 or higher. At present the company’s ratio is 1.4. At this level you are in violation of your loan agreement. You can increase the current ratio to 1.53 by paying off some current liabilities right before end of year. Is this ethical to do so? What other issues might you need to be aware of in this situation?

Audit reporting
Scenario 4:
Go to the website of the ASX, choose a company and obtain its most recent financial report. Study the independent audit opinions contained in the financial
statements and answer the following questions.

1. What is the name of the independent auditing firm? Do you think the auditing firm really is independent? What office of this firm signed the audit report? Is
it a qualified or unqualified audit report? How long after the year-end did the auditors issue their opinion? 

2. Who bears primary responsibility for the financial statements? How can you tell? 

3. Does it appear that the firm’s internal controls are adequate? How can you tell? 

4. What standard of auditing did the outside auditors use in examining the financial statements? By what account standards were the statements evaluated?

5. By how much did the firm’s cash balance (including and cash equivalents) change during the year? What were the beginning and ending cash balances?

Reporting performance indicators
Goal: Create an excel spreadsheet to help evaluate various options for an ethical dilemma.
Scenario 5:
Mike Schoenfeld is vice-resident of Left Bank in Lane Cove and active in Roseville community affairs. Schoenfeld also serves on the board of directors of Baker Publishing Company in Chatswood. Baker is expanding and relocating its plant. At a recent meeting the board members decided to buy land which is being rezoned. The owner of the property Jack Fletcher is a customer of Left Bank. Fletcher is completing a divorce and Schoenfeld knows that Fletcher is eager to sell his property. In view of Fletchers difficult situation, Schoenfeld believes Fletcher would accept almost any offer for the land. Realtors have appraised the property at $5 million.

Apply the ethical judgement to help Schoenfeld decide what his role should be in Baker’s attempt to buy the land from Fletcher. Consider Mike’s dilemma, in addition to the facts in this problem, the board of Baker Publishing is considering additional options. First there is a comparable site in the same general area with and appraised value of $3.9 million. But this location is home to a woodland fungus that may aid in the treatment of diabetes. Second, the board is considering expanding the existing location’s square footage by 25%. The board has received a bid of $3.2 Million on the new construction from Schoenfeld’s brother–in–law.

Assume the following: if the board makes an offer on Fletcher’s’ property, it will propose a price of 3.5 Million. If an offer is made on the comparable site, it will be $3.4 Million. If the board chooses to remodel and expand the current location, the bid price will be accepted.

Your task is to create a spreadsheet that weighs the issues associated with each scenario option and calculate the best choice.

After you have prepared your spreadsheet, answer these questions:
1. What additional issues did you include in your list?

2. Which option does your spreadsheet suggest the board choose?

3. For each option, which issue did you weigh the most? (In other words which issue was most important?)

4. If you were Schoenfeld which option would you recommend to the board and why?

Assessment 2
Step-by-Step:
1. Open a new Excel Spreadsheet.
2. Create a bold-faced heading for your spreadsheet that contains the following:
a. Reporting performance indicators
b. Ethical Dilemma
c. Today’s date

3. In row 5, create the following column headings:
a. Issues
b. Option 1 (Fletcher)
c. Option 2 (Comp Site)
d. Option 3 (Remodel)
e. Option 4 (Do Nothing)

4. In the issues column list the issues that should be considered in making a decision. Add as many issues as you believe are relevant Here’s a starter list
a. Cost
b. No potential environmental issues
c. Absence of conflict of interest
d. No Exploitation of seller’s circumstances
e. Local community support

5. Next, using a range of 1 to 10 assign a score to each issue for each option. The higher the number the more desirable it is for Schoenfeld and the Baker
Publishing board. For example, if the local community response for Option 1 is unimportant, the score should be close to 1 or 2.

6. Underneath your last row of issues create a ‘Total’ row, and add up the numbers for each column. This number represents the score for the option. Assuming all relevant issues have been appropriately ranked, the option with the highest score indicates the best choice.

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