L1 Tutorial Questions

docx

School

The University of Queensland *

*We aren’t endorsed by this school

Course

200

Subject

Business

Date

Feb 20, 2024

Type

docx

Pages

Uploaded by DukeElephantMaster936

TUTORIAL 1 - QUESTIONS INTRODUCTION TO AYB200 AND OVERVIEW OF THE GLOBAL REGULATORY ENVIRONMENT (Lecture 1) PRACTICAL QUESTION Slater & Gordon Ltd The 2016 Slater & Gordon Annual Report is a document consisting of 104 pages. It is divided into various sections including the financial statements. To assist you in becoming familiar with the financial report of a major Australian publicly listed company, download the 2016 Slater & Gordon Annual Report (PDF version) here https://www.slatergordon.com.au/investors/reports-and-presentations and answer the questions below. Question 1. What are the rules and regulations that govern the preparation of this report? Where do you find this information in the Annual Report? This can be found in the Director’s Declaration (pg. 98) or Note 1(pg. 56) of the financial report, which lists the rules and regulations applied in the basis of preparation. These include basis of accounting, According to director’s declaration: Corporations Act 2001, Accounting standards, Corporations Regulation 2001. The Auditor’s report and the Director’s report. Question 2. If an auditor provides an opinion that the financial statements comply with accounting standards does this indicate that there are no errors in the financial statements? No, this is considered a non-qualified independent opinion and hence, there still maybe errors in the financial statements. This is because auditors observe and come to a conclusion in terms of large and significant transaction of the business and hence, there still maybe errors in smaller transactions. Question 3. The items included in the 2016 Slater & Gordon Annual Report are indicated in the Table of Contents on p. 2. Answer these questions about the following items from the Annual Report, and indicate where in the report (i.e. section, page number) you located the information. Unless otherwise stated, refer to the figures for 2016. (a) What was the amount of Revenue from contracts with customers? $891,470,000 ( pg. 52, Revenue from contracts with customers ) (b) Identify the largest expense in 2016. Impairment of intangible assets ($879,506,000)( pg. 52, less expenses)

(c) Did the company make a profit or a loss (after income tax) for the year 2016? How much was it? A loss of $1,017, 595,000 after tax or $1,053, 738 (after other comprehensive income, net of tax). (d) Identify the largest intangible asset for 2016 and 2015. What is the difference? Discuss the items that contributed to this difference. The largest intangible assets for both years in goodwill. The goodwill decreased by $936,588 in 2016 compared to 2015. This is due to a large impairment expense of $879, 506 and exchange differences of $57,802. The 2015 balance was very high due to addition in regards to the acquisition of entities. Why impairment loss: market capitalisation of group below book value of its equity (Dec 2015), UK business not inline with director’s expectations (also forecasts about adverse impacts from changing regulatory environment – BREXIT. Australian businesses has not met acquisitions targets. Compensation firm legal. UK government crackdown on the compensation law – no win no fee (not good). Refer to pg. 70, Intangible assets (continued) and pg.7, Impairment loss recognised. Impairment – write down when something has suffered (inventory caught in a fire) (e) Identify the amounts for the three cash flow activities: operating, investing and financing. How much cash was left at the end of the financial year? Compare the cash balance to profit for the year (from part (c)). Is there a difference between these two figures? Why? Operating: - $104,244 Investing: - $28,243 Financing: $ 125,530 Cash balance: $82, 494 The cash balance is a positive while a net loss was incurred. These figures are not the same as the profit loss does not represent cash balance or cash lost by the business. This is because of expenses such as depreciation, bad and doubtful debts etc, which are book values only. Further, revenue items such as credit sales. Since, this financial statement uses Accrual accounting instead of cash accounting, the profit/ loss does not represent increase/ decrease companies bank balance. Refer to pg. 52,53 and 55 Question 4. What is included in a Directors Declaration, and what are the implications if a director signs the declaration and the organisation subsequently fails, owing millions of dollars that it cannot repay? The Director’s declaration states that the financial statements and notes and director’s report are in accordance with Corporations Act 2001. The director declares that accounting standards are followed, complying with IFRS and that financial statements provide a true and fair picture of companies positions. The director provides their opinion that the company can repay its debts (their own or due to the deed of cross guarantee). Director’s personal assets are usually safe unless they

make the declaration fraudulently and carelessly or recklessly, it is possible that they might become personally liable if director’s allow the organisation to keep trading when they knew. Since this is a publicly listed company, the director’s have limited liability. Hence, if the organisation fails, while the director has taken appropriate control, the director may not be charged. However, they may lose their reputation. In the case, the director has not taken appropriate controls and not fulfilled their duties, they will be liable and can be criminally charged.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

CRITICAL THINKING QUESTION Read the article “Carbon price hits record high, but Australia still a long way behind” by Matt Brann Reference: Brann, M., 2021, Carbon price hits record high, but Australia still a long way behind, ABC, 6 November 2021, viewed on 21 November 2021 at: https://www.abc.net.au/news/2021-11-06/carbon-price-record-but-why-is-australia- behind-/100595060 As an alternative to a carbon credits scheme, the government could require firms to employ particular technologies or inputs (eg. SO2 scrubbers, solar panels and battery storage) through explicit regulation and/or subsidies. Discuss whether these two schemes are more aligned with the “free market” or the “pro-regulation” perspective. Required Use the AREA framework to address the statement above. ANALYSE (30 – 50 words) Identify the issue and why it matters. Determine what you need to find out. RESEARCH & EVALUATE (300 words) Discuss relevant facts and evidence, or issues. ANSWER (50 – 100 words) Provide your opinion based on your discussion of relevant facts, evidence, or issues. 1) In the context of climate change what are the main differences between the free-market and the pro-regulation perspectives? 2) More expensive the carbon = less the companies will pay and hence emit less 3) Pro regulation: the government sets the price 4) Australia = voluntary carbon credit scheme (free market approach) 5) What are the key ideas behind carbon credits schemes discussed in the article? 6) Does the carbon pricing scheme align more with the “free market” or the “pro- regulation” perspective?

Analyse In a world where climate change is a prevalent issue faced by businesses, the free- market and pro-regulation market perspectives are often debated. In a free-market, businesses are able to make decisions about the extent of implementation of practises that reduce the impacts of climate change, with no regulations in place. In contrast, in a pro-regulation market, a government body imposes legislation that will set out the practises/ processes or products businesses must implement to reduce the impacts of climate change. The carbon pricing scheme is an approach that supports the free- market perspective, which relies on the demand and supply forces to determine the price of carbon credits. In Australia, carbon credit pricing is rising, however remains significantly cheaper than European countries, that have followed a pro-regulation approach. The alternative, where the government requires firms to employ particular technologies or inputs follows the pro-regulation approach. Research and Evaluate In the carbon credits scheme, the higher the demand of carbon credits, with a lower supply of these credits, the carbon credit price will rise. This approach places the onus on consumers purchasing decisions based on climate. In the 21 st century, where consumers are becoming more conscious about environmentally friendly products, businesses find it incentivising to reduce their carbon footprint on the environment as they will attract more consumers. This in turn will rise the pricing of carbon credits to a point where many businesses will focus on implementing environmentally friendly practises as it is more economical than offsetting unfriendly practises using carbon credits. In a free-market, this will approach will promote businesses accountability towards the climate. However, this approach will be less effective on industries that consumers are reliant upon, example: fossil fuel. Since, consumers have no feasible alternative, these organisations will be more resistant to change and may continue environmentally unfriendly practices without significant impact to their bottom line. In contrast, the alternative approach of imposing technologies or inputs into businesses ensures a baseline level of climate friendly practices followed by all organisations. This approach places the onus on the businesses to follow practises in order to not be fined. It will encourage some businesses to go beyond the governments necessary practises to increase their competitive advantage to attract consumers. However, in the case where the government-imposed practices are too intensive, it may disadvantage smaller businesses as it will take significant resources for them to implement, In contrast, larger corporation may benefit from this when fines are not significant enough for them, they will find it more economical to continue practising environmental unfriendly practices without having significant economic impact. Answer I believe a mix of both pro-regulation where government sets baseline requirements which are feasible for both small organisations and large, while continuing the carbon credits scheme will provide the most benefit. The baseline requirements will ensure that industries that consumers heavily rely upon (fossil fuel) do not neglect their responsibility towards the climate and are held accountable through hefty fines. Baseline requirements should differ between small, medium and large businesses. This will ensure that smaller businesses are not disadvantaged. The growing environmental consumer conscious will also result in more proactive businesses

through the carbon credits scheme.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

L1 Tutorial Questions

Related Documents