BFA582 Financial Reporting & Analysis Semester One 2011 (Part -Time)

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BFA582

Financial Reporting

& Analysis

Semester One 2011

(Part -Time)

School of Accounting and Corporate Governance

Faculty of Business

Unit Outline

Unit Coordinator: William Maguire

Lecturers: William Maguire; Kerri O’Donnell

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Your lecturers: William Maguire and Kerri O’Donnell

William holds a BCom and a Certificate in Theory of Accounting from the University of Natal at Durban, an MBL (Master of Business Leadership) from the University of South Africa and a PhD from the University of Cape Town. He is also a Chartered Accountant (South Africa). He worked in public accounting and commerce and industry before joining academe. He has held permanent positions at the Universities of Natal, Cape Town, and Auckland; and visiting appointments at Melbourne, Texas at Dallas and Copenhagen Business School. He has been a senior lecturer at UTAS since 2008. His teaching and research interests span management control, cost management, revenue management and related reporting.

Kerri holds a BCom (Accounting) from UTAS and is a Certified Fraud Examiner. She worked in Sydney for 17 years, and has business, legal and tertiary education experience, mainly in the entertainment industry. She has been teaching at UTas since 2007. Her teaching interests include both financial and management accounting.

Her research interests involve various contexts of risk management, behaviour and cognition. She is currently a research higher degree candidate, exploring professional scepticism and financial statement fraud.

Contact details

Lecturer and tutor: William Maguire

Campus: Hobart

Room: 422

Email: [email protected]

Tel: 6226 2277

Fax: 6226 7845

Lecturer and tutor: Kerri O’Donnell

Campus: Hobart

Room: 504

Email: [email protected]

Tel: 6226 2755

Fax: 6226 7845

Postal address: School of Accounting & Corporate Governance

University of Tasmania

Private Bag 86

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Unit Description and Aims

Welcome to Financial Reporting and Analysis.

We hope that you find the unit challenging and rewarding. It aims to develop your ability to understand, use and interpret financial reports and information from the points of view of a manager and an investor. The unit assumes that you have no previous knowledge of accounting. 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.

The unit is not concerned with the skills and knowledge needed by a professional accountant. We do not expect you be able to 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’.

Learning Outcomes/Generic Graduate Attributes

The University has defined a set of generic graduate attributes (GGAs) that can be expected of all graduates. You can read about them on the following website:

http://www.learningsupport.utas.edu.au/generic_attributes.html

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Learning Outcomes/Generic Graduate Attributes

Learning Outcomes In this unit students will learn:

Assessment Criteria:

In assessing the learning outcome we will be looking at ability to:

Assessment

Methods Graduate Attribute Outcomes

To read and interpret financial reports and knowledge of the origins of financial data:

Explain the legal and organisational setting in which financial information is prepared and used

Case study Tutorial activities Exam

The assessments and teaching activities in this unit have been designed to develop the following graduate attributes in students:

Case study Knowledge – Communication – Problem solving – Global perspective – Social responsibility – Tutorial activities Knowledge – Communication – Problem solving – Global perspective – Social responsibility – Online tests

Knowledge – Problem solving – Social responsibility – Exam

Knowledge – Problem solving – Social responsibility – Define the elements of accounting reports and describe the

principles and concepts underpinning the preparation of financial statements

Analyse and interpret information contained in internal and external financial reports.

Case study Tutorial activities Online tests Exam

The skills and concepts necessary to use and interpret the data offered in financial reports:

Record accounting transactions and prepare simple financial reports.

Tutorial activities Online tests Analyse and interpret information contained in internal and

external financial reports.

Case study Tutorial activities Online tests Exam Identify inherent limitations of the information contained in a

financial report.

Case study Tutorial activities Online tests Exam

To make decisions based on the information

contained in financial reports:

Use financial information and financial models to make decisions about the efficient and effective allocation of economic resources within an organisation.

Case study Tutorial activities Online tests Exam Consider the contemporary issues of ethics and social

responsibility in accounting.

Communicate financial information:

Explain orally, to internal and external stakeholders, the reasons behind financial decisions.

Case study Tutorial activities Write a report that details the financial decisions from financial

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Alterations to unit as a result of student feedback

No alterations to the unit were required following feedback in 2010.

Learning resources required

Prescribed Text

Atrill, P, McLaney, E, Harvey, D & Jenner, M 2009, 4th edn, Accounting: An introduction, Pearson Education Australia Pty Ltd, Sydney.

You should also obtain a recent copy of an Australian company’s annual report to shareholders (the full version, not the “concise” report) from companies’ websites specified by your co-ordinator. The reports will be of companies that sell inventory and will exclude reports of financial, banking or mining companies.

Recommended Reading

The publications listed below are recommended for further reading on the topics covered in the unit.

Books

Bazley, M & Hancock, P 2010, Contemporary Accounting, 7th edn, Cengage Learning Australia Pty Limited, Melbourne.

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.

Godfrey, JM & Robb, AJ 1997, The Australian Dictionary of Accounting and Finance Terms, 3rd edn, Longman, Melbourne.

Horngren, CT, Harrison, WT, Best P, Fraser, D, Willet, R, Accounting 6thedn, Pearson, Melbourne.

Pierson, G & Ramsay, A 2003, Financial Accounting — an introduction, 3rd edn, Longman, Melbourne.

Journals and Periodicals

In additional to reading other 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. 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, which provides full detail for all references cited. The items in these reference lists may be helpful in supplementing your reading.

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Details of teaching arrangements

Weekly Workshops

The dates, topic, and readings are detailed in the unit schedule on the last page of this outline.

Assessment details

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 Weight date due (at 15.00)

Length*/ duration

Coursework

Assessment task 1

On-line tests

Assessment task 2

Transactions and financial statements

Assessment task 3

Internal report

Assessment task 4

Report analysis and interpretation

10 10

10

20

To be advised 14 March

11 April

9 May

As required

1,500maximum words

1,500 maximum words

Examination

50 Exam period 3 hours + 15 minutes reading time

Total Marks 100

* 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

Submit the first two assessment tasks individually. While you may discuss the assignments with your peers, the assignment that you submit must be your own work. Submit assessment task 3 as a team.

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Assessment Task 1 – 10%

On – line tests Answer on-line tests as required Assessment Task 2 – 10%

Task description Record accounting transactions using worksheets and prepare financial reports.

(The transactions and worksheets will be handed out at the first workshop/ tutorial).

Task length As appropriate (show all workings and calculations) Links to unit’s learning

outcomes Refer to the table on page 5

Date due Monday 14 March

Assessment Task 3 – 10%

Task description Internal report

Task length 1,500 words Links to unit’s learning

outcomes

Refer to the table of page 5

Date due Monday 11 April Assessment Task 4 – 20%

Task description Financial Analysis of an Australian listed company Task length 1,500 words max.

Links to unit’s learning

outcomes Refer to the table on page 5

The following guide relates to the practical completion of the ratio and other analysis, and the report presented.

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Topic: Financial Analysis of an Australian listed company

A major investor has asked you to analyse the annual reports of a listed company of your choice. The company will include inventory in its balance sheet, and will not be a mining company or be involved in banking and financing.

The investor is considering either buying a substantial block of shares in the company or subscribing to 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). 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

Reference List 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.

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Examination – 50%

Description / conditions A three-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. Non-programmable 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

The final examination will be held during the scheduled examination period as advised by Student Administration.

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.

Make necessary arrangements with employers now for time off during examination period to sit this examination.

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.

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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 to 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.

Assessment Submission Policy 1. In this Policy

a. ‘day’ or ‘days’ includes all calendar days, including 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 Faculty of Business Units at whatever Campus or geographical 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. Requests for

extensions should, where possible, 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.

5. Late submission of coursework will incur a penalty of 10% of the total marks possible for that piece of assessment 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. Academic staff do NOT have the discretion to waive a late penalty, subject to clause 4 above.

Word length

The word limit specified on your assessment task is a maximum. If you submit over-length work there will be an automatic 10% penalty of available marks. It will be at the discretion of the Unit Coordinator whether the words beyond the limit will be assessed. Title pages, reference lists and appendices are not included in word counts.

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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://utas.libguides.com/referencing

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

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Access to MyLO

You can access MyLO from the Student Page on the University’s web site: Quick Links MyLO or go directly to the web address noted above:

• Enter your email POP account “Username” (for example, wmaguire) 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.

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.

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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 issue with your unit coordinator, lecturer or tutor

.

If you have a discussion with the appropriate person and are not satisfied with the outcome, then contact the course coordinator:

MBA

Name: Mark Wickham

Room: 312

Ph: (03) 6226 2159

email: [email protected]

Discussions with the major / course will be kept in strict confidence. You are also 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://www.utas.edu.au/governance-legal/student-complaints/student-advocates

The University also has formal policies, and the following link gives you advice about the procedures that you can follow: http://www.utas.edu.au/governance-legal/student-complaints/how-to-reslolve-a-student-complaint/self-help-checklist

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

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Unit Schedule

Semester 1, 2011

Workshop no. and date Topic Atrill et al:

Chapter

1 26 February

Introduction to accounting and finance; different accounting entities.

Measuring and reporting financial position

1, 2, 3

2 12 March

Measuring and reporting • Income flows • Cash flows

Analysis and interpretation of financial statements

4, 5, 6

3 26 March

Cost-volume-profit analysis and marginal analysis

Full costing

7,8

4 9 April

Budgeting

Projected financial statements Capital investment decisions

9, 10, 11

5 30 April Security and business valuations 12

25 April Easter break 21 April to 27 April

6 14 May Management of working capital

Financing the business 13

7 28 May Trends and issues in accounting

Unit review 14, 15

*Complete the review questions for each chapter as these will help you to understand the subject matter for each topic, and complete the problems and