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Topic: Financial reporting for business

ASSIGNMENT QUESTION
A potential investor in The Unite Group plc does not understand the performance and position of the business as shown in its Financial Statements for the year ended 31 December 2018. You have been approached for the following advice:
a) Calculate ratios for profitability, liquidity, efficiency and gearing for the years 2018 and 2017. Please find attached the calculation of the ratios.
b) Analyse the performance and position of The Unite Group plc base d on the above ratios. (900 words)
c) Critically analyse the change in Lease accounting rules from IAS 17 Leases to IFRS 16 Leases. 750 words
POINTS TO CONSIDER
In part a) above:
The calculation of ratios must be shown, not merely the result.
In part b) above:
Stating that a ratio has increased or reduced attracts no marks.
Stating that a ratio has improved or worsened attracts marks but not a pass mark.
Listing generic causes of ratio changes unrelated to Unite is worthy only of a basic pass mark.
Identifying specific causes and effects of ratio changes for Unite attracts a good mark.
Precise analysis of issues in depth, placing ratios in context with one another and identifying which issues are significant and which are insignificant attracts an excellent mark.
The comments made should demonstrate an understanding of accounting standards.ie; show how accounting standards requirements have contributed to the ratio figure s.
In part c) above:
Critically analysis involves exploring, understanding and comparing relationships.
Discuss the difference in requirements between IAS 17 and IFRS 16.
Comment on the advantages and disadvantages of the new IFRS 16 approach.
Use information from Unite Group plc to support your comments.
The financial statements of Unite are on pages 108 to 155 of its annual report for the year ended 31 December 2018. Information on other pages of the annual report is not relevant to this assignment. Sections particularly relevant to part c) of the requirements are accounting note 1 on pages 114 to 116, note 3.1 on page 128 and note 4.6 a) & b) on page 145. For all sections , use figures for the group, not merely the parent company.
To achieve a pass level mark you must consider approximately 10 ratios spread across the areas of profitability, liquidity and gearing. You must show the calculation of your ratios, not merely the result, including for any earnings per share figure you may choose to calculate. Analysis of ratios should not only compare the ratio for 2018 and 2017 but also suggest valid causes and effects for changes in ratios. You should describe and explain how accounting policies used by Unite affect the performance and position of Unite as shown by the accounting ratios. This will require secondary research.
To achieve higher marks, in addition to the requirements to achieve a pass mark, you will need to move beyond generic comments when analysing ratios and identify with greater accuracy the specific issues within Unite relevant to the ratios calculated. Greater placing of facts in context is required. Additionally, you must evaluate knowledge gathered from a range of academic sources to evaluate Unite compliance with both accounting standards and the Framework, illustrating your points with examples of actual reporting practice at Unite . Secondary research will therefore be required.
ASSESSMENT CRITERIA
Task b) assessment criteria:
Knowledge and understanding of the financial reporting requirements for figures within a Statement of Profit and Loss and Other Comprehensive Income, together with Statement of Financial Position and Statement of Changes in Equity.
Ability to analyse the financial performance and position of the London Stock Exchange quoted public limited company stated within the assignment question.
Task c) assessment criteria:
Knowledge and understanding of the accounting standard stated within the assignment question and the Conceptual Framework.
Ability to evaluate the compliance of the London Stock Exchange quoted public limited company financial reporting with the accounting standard stated within the assignment question and with the Conceptual Framework.
You must be mindful that marks will be allocated based on your knowledge, understanding, ability to define, explain, apply, analyse and evaluate the key concepts.
would be 30.
Recommended Reading:
Unite Group Plc Annual Reports 2018
Atrill, P and McLaney, E (2016) Accounting and Finance for Non – Accounting Specialists (10 th edition), Pearson,
Melville, A (2017) International Financial Reporting a practical guide , 6 th edition, Pearson
Elliott, B and Elliot J (2015) Financial Accounting and Reporting , Pearson
IFRS 16 Leases,
IFRS 16 Basis for Conclusions,
IFRS 16 Effects analysis,
Deloitte Guide to IFRS 16,
KPMG guide to IFRS 16,
Leases one year on article, Jan 2017,
https://primo.anglia.ac.uk/primo-explore/fulldisplay?docid=TN_proquest838989787&context=PC&vid=ANG_VU1&lang=en_US&search_scope=CSCOP_APU_DEEP&adaptor=primo_central_multiple_fe&tab=default_tab&query=sub,contains,Financial%20Reporting,AND&sortby=rank&mode=advanced&p filter=pfilter,exact,books,AND&offset=0
The Accounting Entity, Relevance, and Faithful Representation: Linking Financial Statement N otes to the FASB and IASB Conceptual Frameworks, Issues in Accounting Education, Nov 2013, Vol.28,issue 4,pg 1009 – 1029
Helfert, E (2011) Financial Analysis tools and techniques: a guide for managers , McGraw – Hill
https://primo.anglia.ac.uk/primo – explore/fulldisplay?docid=44APU_ALMA5163062560002051&context=L&vid=ANG_VU1&lang=en_US&search_scope=CSCOP_APU_DEEP&adaptor=Local%20Search%20Engine&is Frb r=true&tab=default_tab&query=sub,contains,Ratio%20analysis,AND&sortby=rank&mo de=advanced&pfilter=pfilter,exact,books,AND&offset=0
Fridson, M and Alvarez, F (2011) Financial Statement Analysis, a practitioner’s guide , Wiley
https://primo.anglia.ac.uk/primo – explore/fulldisplay?docid=44APU_ALMA5163062730002051&context=L&vid=ANG_VU1&l ang=en_US&search_scope=CSCOP_APU_DEEP&adaptor=Local%20Search%20Engine&is Frbr=true&tab=default_tab&query=s ub,contains,Ratio%20analysis,AND&sortby=rank&mo de=advanced&pfilter=pfilter,exact,books,AND&offset=0
Bauer, A, O’Brien, P and Umar, S Reliability Makes Accounting Relevant: A comment on the IASB Conceptual Framework Project, Accounting in Europe, 3 July 2014, Vol.11 (issue 2) page 211 – 217
https://primo.anglia.ac.uk/primo – explore/fulldisplay?docid=TN_tayfranc10.1080/17449480.2014.967 789&context=PC&vid= ANG_VU1&lang=en_US&search_scope=CSCOP_APU_DEEP&adaptor=primo_central_mult iple_fe&tab=default_tab&query=any,contains,IASB%20Accounting%20Framework,AND&s ortby=rank&mode=advanced&pfilter=pfilter,exact,articles,AND&offset=0

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