Assignment: ADVANCED CORPORATE REPORTING
Objectives
This assignment seeks to assess your ability to:
• Critically evaluate and discuss the following financial reporting questions in the context of International Financial Reporting Standards (IFRSs);
• Analyse and critically appraise published financial reports, including accounting policies, disclosures and strategies;
• Interpret and apply international financial reporting standards to various situations;
• Apply relevant knowledge, techniques and concepts systematically and creatively to situations and problems in the field.
• Create a range of valid alternative responses to situations and problems and evaluate and discriminate between them in a critical way;
• Communicate information, ideas, arguments, concepts, theories in financial reporting and develop an argument in a clearly and effectively organised report.
Context & Requirement
You are a financial analyst in a credit rating company and are required to write an analysis report on the basis of a company's latest group accounts and annual report. The company that you analyse must be a prominent company and trading on the FTSE 1001 in the London Stock Exchange. The published financial statements of the selected company must be prepared in accordance with IFRSs. Your choice must be discussed and agreed with the module leader by 18 February 2019. The company that you analyse cannot be changed once your choice is agreed with the module leader. Your company choice is registered on a first-come first-served basis.
You should address and evaluate the research questions set out below by applying appropriate knowledge, analytical techniques and concepts. The research questions are designed to be attempted within the context of the operations and annual report of a FTSE 100 group company. Please note that this is a research-based report. It is not acceptable to copy or cut and paste sections from the annual report, the internet or other documents. You should analyse and discuss the issues and include some qualitative and quantitative evidence to support your arguments and analysis. In addition, you need to compare and contrast your findings with industry practice and/or economic indicators, where necessary. Referring to the company's latest year-end group financial statements and annual report, and making your comments based on IFRSs, are both essential. A brief summary of the scope of your investigation and its main findings should be provided with the understanding that you are writing for a busy lender whose time is limited.
Research questions:
1. Briefly introduce the company, its investments in subsidiaries and associated companies, and its operations by providing information about the regulatory framework for the financial reporting of the company.
2. Analyse and discuss the accounting policies of the company by considering the following questions:
a) How is the company divided into cash generating units for the impairment test of non- current assets in accordance with IAS 36? How does the management assess the cash flows for an impairment review? What indications of impairment are there at the statement of financial position date?2 What are the bases of recoverable amounts and its assumptions to estimate the value of the assets at the reporting date? Are the key assumptions used in impairment testing different from historical results and industry/economic forecasts? Has the company performed a sensitivity analysis in assessing recoverable amounts? Does the company impair goodwill? Why or why not? How does the impairment loss affect the company's financial statements and potentially its capital structure? Does the company have historical impairment losses, suggesting tendency to delay? How are the company's impairment policies different from what are disclosed by other companies operating in the same industry under IAS 36? Discuss.
b) What are the types of financial instruments reported in the statement of financial position? What are the main financial risks faced by the company? How does the company manage its financial risks? How do the financial risks affect the company's financial position in the future? Does the company have any material sensitivity to changes in financial risks? Which measurement bases are used to recognise financial instruments on financial statements? What are the assumptions made by the company to estimate the value of financial instruments those do not have an active market? Are there any provisions for impairment of financial instruments? How are they measured? How do these policies/results affect the company's financial position and performance? How are they different from the industry practice? Does the company use hedge accounting? How does it affect the financial position and performance of the company? What are the company's hedging policies? How are they in line with the industry practice? What is the impact of adopting IFRS 9 on the company's financial statements? Discuss.
c) What are the accounting policies of the company to recognise post-employment benefits (i.e. defined benefit pension plans)? What are the principal assumptions made by the company to estimate its obligations for defined benefit pension plans? Are they realistic? What impacts do these assumptions have on the financial statements of the company? How does the company determine the discount rate on the plans? How realistic is it? Are these assumptions different from historical results and industry/economic forecasts? Does the company have any material sensitivity to changes in key assumptions? What is the current financial status of the plans? Are there any improvements? Why or why not? What are the effects of actual and forecasted parameters for defined benefit plans? What is the impact of pension contributions to the plans? How do they impact the current and future financial position and performance of the company? Discuss.
3. What would you think about the quality and usefulness of the company's disclosure that you have reviewed? Discuss it as a conclusion of your report. You need to refer to the qualitative characteristics of useful financial information described in the IASB's Conceptual Framework in your discussion.
Your report should be clear, concise and predominately analytical rather than descriptive. It is not enough only to show negative or positive points or to give short answers to the identified questions above. You need to analyse, discuss and critically evaluate the identified issues in your report and explain the rationale for your points, where necessary. Good critical discussion normally accounts for why something is good or poor, why it works or fails, why it is rational or irrational, why it is useful or useless.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.