ATHE L7 Unit 1: Corporate Reporting for Strategic Business Assignment

Assignment Scenario

You are employed as a financial accountant for a medium-sized accounting firm in your local area. You have worked for the firm for the last five years and had very positive feedback from your line manager and clients.

The firm has recently been reorganised and a number of vacancies have arisen for new departmental managers. You have decided to apply for one of the new management posts. As part of the selection process, you have to demonstrate your skills and ability and are required to submit a portfolio of evidence to the firm’s partners that demonstrates your abilities.

You have decided to complete the following tasks to include in your portfolio of evidence.

Task 1

You have decided to use the Annual Report of an international business, and any other supporting documentation, to write a report on how fundamental ethical and professional principles in relation to accounting standards and corporate reporting have been applied and the appropriateness of the financial reporting framework. You are free to decide upon which Annual Report you will use for this task.

Your report must:

• Explain the importance of professional behaviour and compliance with accounting standards
• Analyse ethical requirements of corporate reporting
• Assess the applications of the financial reporting framework
• Analyse the strengths and weaknesses of the financial reporting framework

Extension activities

To achieve a Merit, your resource guide must compare and contrast the reporting of financial performance of different entities.

Learning outcomes and assessment criteria

• LO1 AC 1.1, 1.2
• LO2 AC 2.1, 2.2, 2M1

Task 2

You have decided to use the Annual Report in Task 1, and any other relevant information, to provide an example of a report you would send to a client who has asked you to interpret and make recommendations in respect of the financial statements contained in the Annual Report. The client has requested that, in relation to their current shareholdings in the company, your recommendations take into account both financial considerations and their wish to invest in companies which promote sustainable business practices.

Your report must:

• Interpret financial statements using ratio analysis, cash flow and trend analyses
• Make justified recommendations based on financial statement integration
• Develop advice to the client regarding sustainability reporting, in particular, discussing the issue of double materiality

Extension activities

To achieve a Merit, your report must analyse solutions to current issues in financial reporting that may affect the interpretation of key financial statements.

Learning outcomes and assessment criteria

• LO4 AC 4.1, 4.2, 4.3, 4M1

Task 3

You have decided to prepare a practical business case study showing how to prepare financial statements for groups of entities. You should explain how the financial statements have been prepared and show workings for all of your calculations.

Your case study must include:

• Prepared group accounts including statements of cash flows
• Prepared group accounts incorporating associates and joint arrangements
• Prepared group accounts involving changes in group structures

Extension activities

To achieve a Merit, your case study must analyse the accounting requirements that relate to foreign transactions and entities.

To achieve a Distinction, your case study must evaluate the need to prepare detailed financial statements when changes in a group structure occur.

Learning outcomes and assessment criteria

• LO3 AC 3.1, 3.2, 3.3, 3M1, 3D1

Guidelines for assessors

Work submitted by learners must achieve the learning outcomes and meet the standards specified by the assessment criteria for the unit. To achieve a merit or distinction grade, the learners must demonstrate that they have achieved all the criteria set for these grades. Where work for the pass standard is marginal, assessors can take account of any extension work completed by the learners. The suggested evid ence listed below is how learners can demonstrate that they have met the required standards. The command verbs contained within the AC are highlighted in bold in the suggested evidence boxes.

Task 1 : LO1 AC 1.1, 1.2    LO2 AC 2.1, 2.2, 2M1

Suggested evidence
PASS: The learners must produce a report about fundamental ethical and professional principles in relation to accounting standards and corporate reporting and the applications of the financial reporting framework. Learners should make substantial use of the indicative content and ensure their work includes references to a real business organisation.

AC1.1 Learners must explain the importance of professional behaviour and compliance with accounting standards including professional behaviour characteristics with practical examples, the requirements of compliance and the consequences of non-compliance.

AC1.2 Learners must analyse ethical requirements of corporate
reporting and the consequences of unethical behaviour.

AC2.1 Learners must assess the applications of the financial reporting framework showing an understanding of different Accounting Bodies in different countries around the world, including AAT, ACCA, ICAEW, CIMA, CIPFA; and of accounting standards including IAS 1 Presentation of financial statements, IAS 2 Inventories, IAS 7 Statement of cash flows, IAS 8 Accounting policies, changes in accounting estimates  nd errors, IAS 10 Events after the reporting period, IAS 16 Property, plant and equipment, IFRS 15
Revenue, IAS 36 Impairment of assets, IAS 37 Provisions, contingent liabilities and contingent assets, IAS 38 Intangible assets.

AC2.2 Learners must discuss the strengths and weaknesses of the financial reporting framework as described in 2.1.

Suggested additional evidence
MERIT: 1M1 Learners must compare and contrast the reporting of financial
performance of different entities. A range of different entities should be considered, for example:
• Sole Traders
• Partnerships
• Private Limited
Companies
• Public Limited Companies
• Third Sector
Organisations
• Groups of Entities

Task 2: LO4 AC 4.1, 4.2, 4.3, 4M1

Suggested evidence
PASS : The learners need to prepare a business report that demonstrates their ability to interpret financial statements and make justified recommendations for a business stakeholder, in this case a shareholder in a public limited company. Learners should use the published Annual Report of a public limited company. To ensure the authenticity of learner work, tutors are advised to ensure that individual learners choose different Annual Reports.

AC4.1 Learners must interpret financial statements using ratio analysis, cash flow and trend analyses. When completing the task, the learners should ensure they include the calculation and interpretation of:
• Liquidity ratios
• Profitability ratios
• Working capital ratios
• Efficiency ratios
• Resource utilisation ratios
The learners must provide worked practical examples that analyse the rationale for using quantitative and qualitative measures to assess organisational performance and position.

AC4.2 Learners must make justified recommendations based on the analysis they have carried out.

AC4.3 Learners must provide an assessment of the sustainable business practices exhibited in the business’s operations and advise the client regarding sustainability Unit 1 Corporate Reporting for Strategic Business Assignment v1.0 15/01/24 reporting. In particular, they should discuss the issue of double materiality

Suggested additional evidence
MERIT: 4M1 Learners must analyse solutions to current issues in financial reporting that may affect the interpretation of key financial statements.

Task 3: LO3 AC 3.1, 3.2, 3.3, 3M1, 3D1

Suggested evidence
PASS : The learners need to prepare a case study showing how to prepare financial statements for groups of entities and explaining how the financial statements have been prepared showing workings for all calculations.

AC3.1, AC3.2 & AC3.3 The case study must include prepared group accounts including statements of cash flows, incorporating associates and joint arrangements, and involving changes in group structures.

Tutors should provide the financial data used in the preparation of the financial statements.
Financial statements should be prepared with reference to the relevant accounting standards including but not limited to:
• IAS 1 Presentation of financial statements
• IAS 2 Inventories
• IAS 7 Statement of cash flows
• IAS 8 Accounting policies, changes in accounting estimates and errors
• IAS 10 Events after the reporting period
• IAS 16 Property, plant and equipment
• IAS 18 Revenue
• IAS 36 Impairment of assets
• IAS 37 Provisions, contingent liabilities and contingent assets
• IAS 38 Intangible assets.

Suggested additional evidence
MERIT: 3M1 Learners must analyse the accounting requirements that relate to foreign transactions and entities.

Suggested additional evidence
DISTINCTION: 3D1 Learners must evaluate the need to prepare detailed financial statements when changes in a group structure occur.

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