Case study assignment
These notes will guide you in writing a business letter to an accounting client. An effective letter meets your receiver's needs. In this case, it answers the client's questions in a clear, accurate, concise way.
Business letter layout
Most businesses have a house style for their letters. This is the Kaplan Business School house style.
Parts of a business letter. The following parts are essential.
1. Letterhead - generally created for the sender organisation with key contact details. The letterhead is only used on the first page. At least three 'returns' to the date.
2. Date - remember to put the month in full, do not use ordinal numbers (1st, 2nd...) and have no punctuation. An example of the correct format is 10 February 2013. Two to three 'returns' to the inside address.
3. Inside address - this is the receiver's name/title and address. Remember to include no punctuation (except between two address items on the same line), do not abbreviate the street type (eg Lane, Avenue), capitalise suburb and state and have two spaces between suburb, state and postcode. An example of the correct format is:
The Manager
Kaplan Business School
Level 1, 68 Grenfell Street
ADELAIDE SA 5000
Two to three 'returns' to the salutation.
4. Salutation - this is the greeting. The decision on the title/name to use in the salutation depends on how well you know the receiver. If you address the receiver by their given name, you can use that. If you are unsure whether that is appropriate, use Mr/Ms Family name. If the receiver's name is gender neutral (eg Chris), and you do not know their gender, you can use given and family name eg Dear Chris Brown. If you do not know the receiver's name, then you can use Dear Manager. Two returns to body of letter.
5. Body of letter - this is your main text. Use line spacing of 1.15, left justify the text and have two 'returns' between paragraphs. Do not indent the paragraphs. See the example letter. Two 'returns' to the complimentary close'.
6. Complimentary close - this shows your respect and thanks to the receiver for reading your letter and precedes your signature. Generally use 'Yours sincerely'. Do not use a capital 's' in sincerely and do not punctuate the complimentary close. If you have not used a name in the salutation, then the appropriate close is Yours faithfully. The number of 'returns' used after the complimentary close depends on the size of your signature.
7. Signature block - this is usually your name and title eg John Wang
Senior Accountant
Note: The number of returns between the letterhead, date, inside address and salutation depends on the length of the letter. If it is a short letter, use more returns to ensure that the letter is centred on the page. But in the body of the letter, there should only be two returns (one blank line) between each paragraph
Enclosure - this indicates that a document is attached to the letter. It is placed after the signature block.
Below is a sample letter which shows the layout and discusses the features of fully blocked, open punctuation letters.
Letter writing process
There are seven steps in planning a business letter:
1. Decide on the purpose of the letter
2. Decide what is to be said. You will do this by researching accounting standards.
3. Write all the ideas in point form
4. Order these ideas into a sequence appropriate to the type of letter required
5. Write the first draft using correct business writing style (plain English)
6. Read the letter to ensure that the intended purpose can successfully be achieved
7. Rewrite if necessary
Editing is very important. Business letters should be error free. Purpose and structure of business letters
Business letters have one of a number of purposes. They should be written to:
- initiate action
- inform
- request
- persuade
Think about your Financial Accounting assignment. What is the purpose of your correspondence with your client?
Structure of letter giving information
1. Purpose of letter. You could refer to the client's letter. You should intralL, subject that you discuss in the letter.
2. Answer the client's questions, one at a time. You may use meaningful headings for each accounting issue.
3. For each answer, include supporting details/secondary information. Provide any details or supporting evidence. Make sure that you link your explanations to a specific action or advice that your client can follow. While presenting all options, your advice should be clear.
4. Close the letter with a statement of goodwill. This should be sincere and encourage them to contact you if they have any further questions.
You may use headings, and minimal use of numbered lists and bullet points in your letter. Keep it clear and simple. Avoid using underline and italic fonts. You should answer the client's questions separately and in the same order he/she asks them. You may include details in appendices. For the purposes of this assignment, reference any resources used and include a reference list.
Language in business letters
Your letters should sound positive and confident. You should be firm and clear in your opinions.
You should consider your reader's level of knowledge. Don't use accounting terms that the reader will not understand but don't patronize the reader by using language which is too simple and basic. Your final letter should be:
- initiate action
- inform
- request
- persuade
Think about your Financial Accounting assignment. What is the purpose of your correspondence with your client?
Structure of letter giving information
1. Purpose of letter. You could refer to the client's letter. You should intralL, subject that you discuss in the letter.Assessment Description
You are required to complete the assessment task noted below as a word document and submit your answer electronically through the subject portal; instructions are on the portal. Any work which has been copied or shared among students will result in a Fail grade for all students concerned.
CASE STUDY:
This research question consists of a case study: You are a graduate accountant working for McKenzie and Associates a public accounting firm. The address of the firm is 777 South Terrace, Adelaide SA 5000. The manager of your firm, Ms. Maria McKenzie has asked you to draft a letter in response to an email received from a client - Mr. Con Pewter, the managing director of Pewter Ltd, raising a number of issues regarding his company - see the copy of the email on the next page.
Dear Maria
Thank you for your phone call this morning, as agreed I am emailing you regarding the accounting issues we briefly discussed. By the way to assist the accounting team in our decision-making process could you please make sure you reference any relevant sources relating to your advice, for example, AASBs, Corporations Act, and relevant websites.
1. A number of employees who work on our strategic management team have been with us for a number of years - at least 12 of them have been with us since the company commenced operations in 2009. In accordance with the Employee Bargaining Agreement (EBA), all employees are entitled to long service leave of 13 weeks if they remain in service for 10 years. They are also entitled to pro rata long service leave after 6 years of service. Our usual practice is to show the long service leave expense in the income statement when the employee actually takes leave and is paid. Of course, we maintain a memorandum record of the number of days each employee is entitled to. Peter, our Senior Accountant, has indicated to us that he thinks we should consider treating this expense in a different manner, which seems complicated. The directors are wondering why we should complicate a very simple way of calculating long service leave - why not "stick with" recognising the expense when we pay for it? What do you think we should do and why?
2. Our company has recently entered into a long-term and a radical agreement with several of our retailers in Australia. Under the new agreement, at the start of every quarter, we will ship a variety of our products (suitable for that state and that time of the year) to our retailers. All retailers have agreed to set aside a section in their stores to exclusively display our products including the display windows at the front of the store. In return we have agreed to pay a fee to each store on a monthly basis for allowing us the access to this window space and space on the shop floor to advertise and sell our products. The average fee is around $600 per square metre, per store per month. At the end of the quarter, the store will return all the unsold products to us and we will send out a new shipment to prepare for the next quarter. The stores will also transfer the revenue from total sales to us after deducting the display fee noted above. The board unanimously agreed to recognise the sales revenue at the start of the quarter (when the goods are shipped). At the end of the quarter when the excess inventory is returned to us by the stores, we can always make the necessary adjustments i.e. reverse both the sales revenue and cost of sales as well the amount owed by the stores and the incoming inventory. After all, the net effect would be the actual sales of the period. The board also agreed that the fee we pay to the stores should not be recorded separately because that is the cost of doing business. So we will only record the net amount received as sales revenue. This should simplify matters, shouldn't it?
3. At our recent board meeting, several directors raised concerns about spending too many man hours (and dollars I must say) on accounting for future tax consequences. Their biggest argument was that as long as the tax man is happy and we are not cheating on our tax returns, then we are simply wasting money in accounting for temporary differences and Deferred tax assets (DTAs) and Deferred tax liabilities (DTLs) (which I must admit is a mystery to me). Do you have any problems if we do not account for the DTAs and DTLs and just account for the current tax liability?
Please respond by letter (not email) as I would like to present this to the Board. I look forward to hearing from you in the near future.
Regards Con Pewter
Managing Director, Pewter Ltd Level 6, 510 King William Street,
Adelaide SA 5000
Attachment:- sample.rar