Part -1:
Assessment Task 1:
Description:
Since re-listing in 1993 Woolworths has been one of Australia's most successful and largest retailers driven by the adoption of its 'Fresh Food People' and 'Everyday Low Prices' (EDLP) strategies. Woolworths (WOW) is a retailer with primary activities in Supermarkets. WOW's other operations include: BIGW discount department stores; Consumer Electronics through Dick Smith, Powerhouse and Tandy; Petrol through the Woolworths/Caltex alliance; and Hotels. Supermarkets are also operated in New Zealand (InvestSmart, 2012). Woolworths reported NPAT up 5.1% to $2.12bn for the year ended 30 June 2011.
In this task, you will be provided with a copy of Woolworth's 2011 annual report. Based on the annual report and your research of the company (company website, media reports and analyses), answer the following questions:
Q1. What is the purpose of an annual report? Explain its significance to the business.
Q2. What company's objectives and obligations of reporting would you identify from the report?
Q3. Who is the auditor?
Q4. What are the main items covered in the auditor's report
Q5. What are the main items covered in the directors' statement?
Q6. What are the main items addressed in the corporate governance statement
Q7. What risk management policies are discussed?
Q8. What does the company say about corporate ethical standards?
Q9. Provide examples from the accounts of the accounting principles of materiality, comparability, conservatism and consistency.
Assessment Task 2:
Description:
This exercise is aimed at developing and understanding of the audit and reporting process and skills in planning and conducting audits of balance sheet items including assets, liabilities, income, and expenses based on general auditing principles.
This task provides an opportunity to;
- Develop/enhance an understanding of the balance sheet accounts
- Analyse the relationships between balance sheet and income statement accounts
- Develop and apply audit techniques for certain balance sheet accounts
- Use analytical procedures and approaches in auditing
You will be provided with a sample balance sheet; alternatively you may use the balance sheet used in the previous tasks.
As an actual audit of balance sheet will require an examination of actual financial data such as bank statements, receipts, transactions, and actual reconciliations, in this task, you will assume a "preparatory" role of an auditor and develop an audit strategy ("how to" approach) for auditing balance sheet of a client organisation. You may use the organisational context used in the previous task (Assessment Task1).
Organisational context is the key as it provides a basis for management decisions and financial/investment activities.
Using and organisational context, prepare an audit strategy; how will be audit following balance sheet items; Cash and Bank Balance
Account Receivable Fixed Assets Liabilities
Investment (or Loans) In addition;
- Describe the purpose and significance of the audit
- Include an overview of legal (legislative) and compliance (AASB) information and references to specific laws/regulations and standards pertaining to financial reporting and auditing
- Describe company's responsibility for reporting, governance and record-keeping as a public company
- Outline governance and internal control issues that will be relevant to the audit
- Audit procedure and auditor's approach to audit (specific tasks that the auditors will perform)
- Analytical procedures (e.g. variation, trend, ratio) to be used and their significance
All in all, you above strategy should establish the foundation for a comprehensive audit plan in the subsequent assessment tasks.
There is a range of literature available on audit of balance sheet. However, you will need to devise your own audit strategy while maintaining the general auditing principles. All external sources must be cited using an appropriate referencing system.
Assessment Task 3:
Description:
In this summative task, you will be required to assume the role of a member of an audit team appointed to audit the financial reports of one of the ASX listed companies. This is an individual task. However, your trainer/assessor will play the role of audit team leader and provide you with necessary instructions and information to complete this task. Ideally, this task should be completed in parts in tandem with the relevant learning sessions during the allocated assessment times.
Read the following company brief and complete the given task. You may have to research more company information.
Company Brief:
Fortescue Metals Group Ltd (FMG) is world's forth largest iron ore production and exploration company with assets located in Pilbara region of Western Australia. Concerns about Fortescue's ability to pay back its gross debt of about $US9 billion ($A8.57 billion) have come to a head in recent days with the iron ore spot price falling below $US100 ($A95.24), leaving the company no longer profitable (thewest.com.au). Company's shares tumbled approximately 14 per cent to $2.99 in early September 2012 after the company asked its lenders to give it financial breathing room by waiving all its debt covenants for the next 12 months. Concerns were raised about Fortescue's ability to service its debt.
Fortescue is owned by its flamboyant CEO Andrew "Twiggy" Forrest (32% ownership), estimated to be worth $9.41 billion at the height of the commodity-fuelled boom in 2008. Forrest was still Australia's richest person as recently as 2010. However, his wealth has halved in the past five months leading to September 2012 to just over $3 billion; a fact directly link to company's performance.
Task:
As part of the audit team appointed to audit Fortescue's 2011 financial reports and identify any inconsistencies in its reporting and internal controls, you have been delegated with the task to prepare a draft audit plan and template for team's review. Prepare an audit plan and template covering the following elements;
- Executive summary
- Company brief and market/industry developments
- Audit purpose and objectives
- The legal and statutory requirements relevant to the financial audit
- Auditor's role, responsibilities and ethical guidelines
- Audit methodology
- Audit strategies and line of enquiry
- Materiality estimation and allocation
- Control environment evaluation (Summary of company's financial policies and internal control
systems)
- Risk assessment and contingency plans
- Audit test program
- Audit timeline, milestones and evaluation
- Matters to report to management
- Data storage, access and security procedures
The above must be covered in the audit plans and could be used as guides for headings/sections of the plan. The audit plan should be word-processed and written as a formal document for presentation to senior management and the audit team.
You will need to prepare two separate documents; The Audit Plan and the Audit Template.
You may take example of an audit plan template. However, they should be used only as reference and straight cut-and-paste should be avoided. All external sources must be cited using the Harvard Referencing System. If needed, attach copies of reference documents used as appendices.
- Risk mitigation strategies are suggested based on likelihood and severity of anticipated risk
- An audit test program includes verification and validation processes/methods for audit data
- Data storage, access control and security procedures are suggested in line with legal and regulatory requirements
- An audit template is prepared using an appropriate style (referenced)
- The audit template includes essential audit areas, functions, and reporting; and is consistent with a sample/generic audit template
- Evidence of synthesis and use of unifying concepts in own language and style throughout the plan
- Cited all external sources using an appropriate referencing system
Part -2:
Assessment Task 1:
The case organisations used in task can be changed. Other cases can be obtained from ASIC Investigations. As the assessment criteria does not include company name, it can be used for any company/case. However, any changes to the assessment task must be notified to the Course Coordinator in writing with copies of changes made. There have been several case histories in Australia that have highlighted the need for sound corporate governance. In this assessment task, you will be required to research corporate governance issues in relations to given cases.
The Australian Securities and Investment commission carried out investigations into these two cases and produced reports, which are available via the commission's ASIC website. Based on your understanding of these cases, complete the following tasks;
- Obtain a copy of the ASIC report/ media report and briefly describe the major corporate governance issues found and suggestions made to remedy the defects
- Describe the primary function of a Board of Directors and outline some of the basic elements Boards should adopt as sound corporate governance principles
- Identify the key organisations, both domestic and globally, that have played a role in shaping the corporate governance arena. Describe the recommendations each body has identified as the requirements for good corporate governance
You may need to conduct some other online research through newspaper reports and analyses to support your answers.
Write a brief report on your research providing;
- Provide an overview of the cases used in this task and highlight key rulings and legislative implications
- An overview of the governance framework in Australia including relevant guidelines and laws
- Corporate governance obligations for corporations and directors
- Specific governance issues with case organisations
- Remedial steps taken to address breaches of governance
Assessment Task 2:
Description:
As the assessment criteria does not include company name, it can be used for any company/case. However, any changes to the assessment task must be notified to the Course Coordinator in writing with copies of changes made.
Alternative cases that can be used for this task; Harris Scarfe
One.tel
Relevant case studies can be obtained from online search as both the cases featured prominently in the media.
From Parliament of Australia Library: On Thursday, 15 March 2001, HIH received approval from the NSW Supreme Court to place HIH into provisional liquidation. Tony McGrath of KPMG was appointed as provisional liquidator to HIH and 17 of its controlled entities. HIH comprised several separate government-licensed insurance companies, including HIH Casualty and General Insurance Limited, FAI General Insurance Company Limited (FAI), CIC Insurance Limited (CIC) and World Marine and General Insurances Limited (WMG).
HIH wrote many types of insurance in Australia, the USA, and the UK. Il Au1t0alia, this includes compulsory insurance (such as workers' compensation and compulsory third party motor vehicle) and non-compulsory insurance (such as home contents and travel insurance)
HIH collapse was one of the largest corporate collapses in the history and raised critical questions about corporate governance, internal controls and ethical behaviour of top managers.
Access the HIH case study from the following link and answer relevant questions.
Read the case study and published reports and answer the following questions;
1. Describe the factors that contributed to HIH failure (including examples of financial irregularities), including corporate governance failures
2. Scope of investigation conducted and relevant legislations that were found to be breached
3. Discuss at least three corporate governance issues that emerged from HIH case
4. What lessons can be learned from HIH collapse in the area of corporate governance and internal controls
5. In your view, which internal controls, policies and procedures HIH could have had in place as early warning signs of problems
Presentation:
Prepare and make a brief presentation of your case analysis to the class audience highlighting key governance and ethical issues - and the breaches that led to the collapse.
The presentation should be succinct and structured to provide a summary of your findings and views on the case. Allow for audience questions and take notes of key comments/issues raised by the audience.
Duration: 10-15 minutes
Assessment Task 3:
Description:
Note to Trainers/assessors: As this assessment tasks is project based, this task should be handed out at the beginning of the term to set the project in motion and allow the students to gradually develop the relevant concepts, knowledge and skills in conjunction with classroom learning sessions. Groups should be formed early in the term to allow for the necessary formation process. Some project time should also be allocated in each session to practice and complete relevant parts of the project; where group interaction and contribution can also be observed.
Corporate governance is a broad-ranging term which encompasses the rules, relationships, policies, systems and processes whereby authority within organisations is exercised and maintained (AICD, 2015). The board of directors plays a pivotal role in influencing an organisation's governance environment.
This task is a group task, to be undertaken by a group of up to four members. Your trainer/assessor will facilitate formation of the group within the designated sessions. For the purpose of this task, your group will assume the role of a compliance group working within a financial services firm. Assume that in view of increasing corporate governance responsibility on the directors, your group has been asked to research and present a governance guideline document based on a case study. Within the role-play context, your trainer/assessor will play the role of the senior manager.
Accordingly, your group will use the case analyses completed in the previous assessment task (Assessment Task2: HIH Insurance Case Study) and develop a Corporate Governance Monitoring procedure with a view to mitigate compliance risk and breaches identified in the case study. Delegating tasks within the group, this project will build around the following headings/subject areas;
- Corporate governance obligations for companies and directors under the Corporations Act 2001
- What could have been done to detect early signs of problems in the management and governance
- Research and outline common governance principles that can prevent cases such as this
- Based on your research develop a governance policies and procedures that can be used in an organisation (format and structure ideas can be taken from sample policy documents)
- Suggest Internal control procedures that support the governance structure (e.g. policy)
- Develop a governance checklist summarising the governance and internal control requirements that may assist meeting regulatory requirements
- Propose a conceptual accounting system that may help maintain compliance and accounting principles
- Suggest internal audit procedures that could enhance corporate governance and internal control
- Suggest Reporting mechanisms including information technology options
The group will be required to draft some key documents in this project. The group may refer to policies and procedures of other organisations but the work produced by you should be original. All the references and external resources must be cited using Harvard Referencing System. Your trainer/assessor will provide you with a referencing guide.
Word Limit:
Up to 2000 Words
Assessment Criteria
The following assessment criteria will be used for marking this assessment task. Ensure that you have addressed all of the criteria in your work.
Individual:
- Communicated effectively with the team members and clarified own roles and responsibilities
- Actively participated and contributed in team discussions
- Completed own tasks as delegated by the team
- Provided feedback to team members and maintained effective relationships
- Demonstrated effective communication and team skills within the context of the tasks
Group:
- Maintained an effective and a coherent work culture and interaction between team members
- Regularly met and provided feedback to each other
- Completed the given task and achieved team objectives
- All the team members equally participated and contributed in the project
Project:
- The paper is appropriately structured an maintains a consistent style, format and content flow
- Used appropriate references as per referencing guidelines
- Researched and outlined key legislative requirements relating to corporate governance with references to the relevant laws and regulations, including company directors
- Analysis of the case is used to draw appropriate suggestions for early detection of governance issues in an organisation
- Identified critical corporate governance issues need to be addressed based on the given case analysis
- Developed a corporate governance policy and procedure the represents key governance areas, internal control mechanisms and processes
- Policy document is consistent in format and follows a conventional structure (based on an actual, sample policy document)
- Internal control procedures are articulated and aimed at supporting the governance policy
- Developed a checklist of checks and controls that can be used as a reference in developing a governance structure
- Suggested an internal control mechanism that helps enforce corporate governance requirements
- Linked accounting principles and practices to governance and suggested an accounting system that supports that governance policy
- Concepts demonstrate a reasonable degree of research to obtain and collate information and knowledge of governance issues required at this level
- Developed and suggested internal audit processes that assist management and reporting of governance issues and improvements
- Demonstrated understanding of accounting principles and financial reporting requirements under corporate governance legislation
Assessment Task 4:
Description:
- Research and prepare answers for the questions below
- To be prepared on an individual basis.
- Assessment will only be accepted if they have an assignment cover sheet on them signed by the student.
- Students must provide detailed answer for every question along with relevant examples.
- There is no word limit, but answer for every question should be reasonable in size, preferably ½ a page.
- The Trainer/Assessor may further prompt and question in order to receive answers of appropriate quality and to verify the authenticity
Research and type answers for following questions in a word document:
1. What is your understanding of "Corporate Governance"? Describe at least four major corporate governance obligations under current legislations.
2. What are the objectives of an internal control system? What should organisations do to ensure employee accountabilities in their job functions?
3. How would you monitor and evaluate efficacy and effectiveness of internal control procedures? Provide a detailed explanation of the applicable processes.
4. List and describe types of employee records that an organisation must maintain to monitor employee performance
5. Describe key accounting principles that an organisation must maintain to meet legislative requirements. Support your answer with an example.
6. What are ethics? Where do the managers and employees derive ethical values and guidelines from? Support your answer with at least one example of ethical behaviour.
7. Describe are the key statutory reporting requirements for a publically listed (ASX listed) company?
8. Describe the key principles of internal control
9. Describe the key principles of valuation and common methods of depreciation
10. Describe the significance of performance indicators and key result areas relevant to monitoring corporate governance activities
Part -3:
Assessment Task 1:
Description:
An Enterprise Resource Planning (ERP) system is a fully integrated business management system covering functional areas of an enterprise such finance and accounting, HR, production, sales and logistics. It organises and integrates operation processes and information flows to make optimum use of an enterprise's resources (erssource, 2012).
Most ERP systems contain modules, including an accounting module, within them and organisations have the option of deploying the full system or select modules depending on their specific requirements. An accounting module will handle only individual business functions of accounts whereas a complete Enterprise Resource Planning (ERP) package will handle the entire range of business functions of the organisation.
In this assessment task, you are required to research and compile information on five different ERP systems that incorporate finance and/or accounting modules. Present your research information in a tabular format with comparative functions listed side by side. You comparison will be based on;
1. System type and platform
2. Core functions and modules (or applications)
3. Accounting functions (Detailed and itemised)
4. Database type and flexibility
5. System (installation) requirements
6. Approx. cost (if available)
7. Customisation and flexibility
8. Training and support documentation
9. Market differentiation (unique selling point of each system)
10. Local support (Australia)
Once you have collected and compared the information, write a brief report summarising your understanding of ERP systems and their functionality; especially the finance and accounting applications (modules). In addition, cover the following information in your report. You may have to further research these topics.
- Basic structure of an ERP system
- Five key advantages and disadvantages of using an ERP system
- ERP implementation life cycle
- Security issues and measures
- Impact of ERP on business performance
- Key principles of internal control, including statutory requirements and how an ERP system can impact on these processes
- Costs: Implementing and running
- Problems and issues with implementation
The report should be written as a formal business document with appropriate structure and style.
All external sources must be cited using the Harvard referencing system. The report should be written in your own words. Extensive and straight copy-paste from the external sources without an appropriate analysis will not be accepted.
Assessment Task 2:
Description:
Note to Trainers/Assessors: The case scenarios provided in this task should be taken as examples. These scenarios can be replaced with new scenarios if necessary. Case study in this task has been taken from Microsoft Dynamics NAV case studies at: https://www.navisioninfo.com/casestudies.htm.
Rapid advances in Information Technology within the last decade have been catalyst for organisational change, especially in implementation of enterprise resource planning (ERP) systems. ERP implementation means implementation of new software package and business processes that substantially alter workflow and jobs.
Organisations that successfully implement ERP systems, including new software and business processes, have reported enormous benefits, such as greater efficiency and effectiveness at both individual employee and organisational levels (erssource, 2012). However, ERP systems also fail and one of the reasons for the failure is organisation's inability to effectively manage the chance process.
In this assessment task, you will be provided with a case scenario of an organisation in need of an ERP system; especially in the area of financial/accounting management. From the given scenario, you will be required to identify and analyse the specific ERP needs. This assessment task will serve as the first part of the major task, provided in Assessment Task 3: Develop and Present an ERP Project Plan. You will be using information developed in this task as an input into your major project. You must retain a copy of your work in this task.
Case scenarios:
Cockatoo Ridge Wines has grown to be one of the most recognized wine labels in Australia. Listed on the Australia Stock Exchange in February 2002, the company continues to expand distribution of its wines in Australia, as well as increase sales and distribution to international markets. It has just started to export to Britain after a strong year in the US.
Situated in the heart of the Barossa Valley in Australia's largest wine producing region, Cockatoo Ridge Wines includes white and red table wines made from a single variety of grape, as well as white and red sparkling wines. Using the latest viticultural practices, their products are designed as modern, low-cost wines.
Cockatoo Ridge Wines currently exports 2,000 cases per year. Two of its business objectives are to increase its exports from 25% of distributions to over 50% within the next 12 months and occupy a larger proportion of the domestic market. However, the company realized its current reporting software would not allow it to reach these goals.
As a condition of being a publicly listed company, Cockatoo Ridge must provide complete financial and data analysis reports to all shareholders on a monthly, quarterly, and annual basis.
Such reports meant that fields within the company's database needed to be populated by hand from a number of different sources. The process of manually entering data each month was time-consuming and prone to errors. As a result, the reports were often delayed by up to two weeks.
Cockatoo Ridge needed a solution that provided specific software functionality relevant to the wine industry that could also be tailored to its needs. In particular, Cockatoo Ridge wanted a package that would handle sales and distribution at the same time it allowed the company to report on any area within its operations, using a simple interface.
Damien Lister, Financial Controller for Cockatoo Ridge Wines, says the main challenge was the amount of time it took to analyze and report on the business.
"We were always on the back foot because our knowledge of our position was limited," he says.
"It also created a processing backlog because the system needed to stop collecting data until month-end reporting was complete. Once this month-end reporting was finalized, all the data for the current month then needed to be manually re-entered once the system was back online."
Cockatoo Ridge wanted a faster system that allowed all reporting to be done while the next month's data was being collected. To achieve its goal of taking a lead position in the wine industry, the company needed to employ a market-specific solution.
"The collection of data needed to address our financial and sales areas, including our budget forecasting, as well as our cellar-door and point of sales process management," says Lister.
Based on the above case study;
- Identify and explain organisational requirements
- Describe the specific accounting solutions that the company requires
- Describe basic requirements of the accounting application/module based on principles and practices of budgetary control
- Identify and list legislative requirements (e.g. taxation, reporting) that the company must maintain in any solution
- Establish expected outcomes - what the solution will entail
- Research and suggest an appropriate system that fits the requirements
- Describe system features and processes in detail based on your research in Assessment Task 1
- Describe minimum system requirements for implementation
- Describe employee training requirements for implementation
- Develop an implementation checklist that list all the critical steps required in implementation of a new system, including data security measures
- Describe a procedure for testing the system prior to implementation
- Provide an approximate cost estimate based on your research on the system
- List expected benefits against the cost incurred and justify the costs
- Suggest an implementation timeline
This document should be prepared in a needs analysis format with a basic cost-benefit analysis included for review by the management. The document should be word processed and written in a formal style appropriate for business presentation. All external sources must be cited using the Harvard referencing system.
Assessment Task 3:
Description:
This assessment task is continuation of Assessment Task 2. Considering the complexity of the task, this project is given as a team project to be undertaken by a team of two (2) students. In this task, your team will be required to develop and present an ERP Project Plan for the case organisation. Team members will need to choose one of the project implementation solutions and time lines developed in Assessment Task 2.
A project plan will encompass project details, background to the problem, goals and objectives, key strategies and a comprehensive implementation schedule. Particular focus of this project is to implement a new ERP system within the organisation based on the needs analysis conducted in Assessment Task2. Most importantly, you and your team member will need to download and install a trial/evaluation copy of the ERP solution recommended and process a few mock transactions as samples.
This task has three parts; 1) Written project plan; 2) System installation; and 3) Presentation.
Part A:
Your team project plan will include (but not limited to;
Executive summary Background (Case study) Project goals and objectives
Key stakeholders and consultation process
The solution (including input and output of data and reporting features)
Compliance Features (how it meets transaction, record and reporting requirements)
Key implementation strategies (including change management) Implementation schedule
Internal control processes and likely impact of ERP Data migration process
Cost-benefit analysis
Staff training requirements
Support documentation requirements (download a copy of the system manual and attach with the plan) IT support requirements
Perceived risks and a contingency plan
The above can be used as suggested headings in the plan. However, the teams may develop their own structure incorporating above areas/topics.
The plan must be written in your own language and reflect both originality and inventiveness of the solutions proposed. The report must be written a formal business document for presentation to the senior management. There is no word limit. However, it is expected that you will contain your report within ten (10) single-sided A4 sheets with single spacing. All external sources must be cited using the Harvard referencing system.
Internal controls assist an organisation's policies and procedures to safeguard its assets, check accuracy and reliability of data, promote operational efficiency, and encourage adherence to sound management practices. In your plan, outline if implementation of ERP will have any impact on internal control processes.
Part B:
Assuming that you have obtained the necessary approvals and permissions from the management for your implementation plan, download and install a trial version of the system/package on your computer. You must also obtain necessary permissions from your trainer, assessor or college's IT department. If your suggested vendor does not allow for a trail copy, you may install any other package as an examples and present to the class.
Assume that the company has three fundamental internal control requirements;
1. Effectiveness and efficiency of operations;
2. Reliability of financial reporting; and,
3. Compliance with applicable laws and regulations
Once installed, enter and process some different types of transactions (invoice, payment, sales order, purchases, expenses etc.); in line with the organisational requirements as established in Assessment Task 2. Save and backup the system file. Print the transaction records and reports relevant to transactions based on system/application features.
Write a brief report on how the intended solution/product will align with the internal control processes.
Part C:
Present a summary of your project plan and the recommended ERP system to the class, assuming the class audience as senior management audience.
Your presentation should be well structured, aesthetically appealing and prepared using Microsoft PowerPoint or a similar application.