- 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.
- 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 noncurrent 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?
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.
- 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
If the company did not disclose this information please give your own comments on the possible indications based on the nature of the asset (CGU) and the operations of the company.
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.
Your report should be structured as follows:
Content pages showing headings and their pages.
Glossary and list of abbreviations, if necessary.
Main text, which is subdivided into relevant headings including introduction and conclusion.
The list of references at the end of the coursework assignment, which should be in the correct
style and in the alphabetical order. You are not required a bibliography of sources.
Your report should be written in a professional business style.
The following criteria will be used in evaluating this assessment:
Maximum marks Clear, well-structured report, with appropriate referencing and headings. 5%
Introduction: Briefly introduce the company and the regulatory framework for financial reporting (approximately 100-150 words for introduction)
Depth of analysis and synthesis of question 2 (a) 25%
Depth of analysis and synthesis of question 2 (b) 25%
Depth of analysis and synthesis of question 2 (c) 25%
Conclusion: Critical evaluation of the quality and usefulness of the company’s
financial disclosure that you have reviewed – you should explain the rationale for