ACC5502 Accounting and Financial Management

Assignment 1
S3 2019
Due date: 30 December 2019

This Assignment is designed to give you an opportunity:

 demonstrate applied knowledge of the accounting regulatory environment
(Objective 1)
 apply financial statement analysis (Objective 2)
 apply and use financial statement analysis…and provide solutions to real world
problems (Objective 4)
 appreciate ethical frameworks and codes of practice and their application to
accounting and finance outcomes to help comprehend and address complex ethical
dilemmas (Objective 5)

Part One (50 Marks)

You are an accountant in a large accounting firm. A senior partner at your firm is concerned about the
ethical issues which have been raised by the anti-money laundering breaches made by Westpac. The
senior partner is convinced that regulating corporate governance would not alleviate the ethical issues
that exist within the banking industry. You have been asked to prepare a report for the senior partner
evaluating the advantages and disadvantages of increased corporate governance regulation. Your
report should discuss the following issues in forming your conclusion:

1. Identify the main ethical issues raised by the anti-money laundering breaches made by Westpac.

2. Identify the stakeholders affected by the anti-money laundering breaches. Describe each
stakeholder, their probable concerns and how they are likely to be affected.

3. Provide a summary of relevant existing regulatory frameworks and evaluate their effectiveness
in the context of the banking industry.

4. Ensure your report includes your evaluation of the disadvantages and advantages of increased
corporate governance regulation and provides a recommendation to your senior partner.

Please consider the following article which discusses ethical issues raised by the anti-money
laundering breaches by Westpac and use this as a starting point for your research for your report to
the senior partner.

https://www.abc.net.au/news/2019-11-20/westpac-to-face-fines-anti-money-laundering-terrorism-
breaches/11720474

(Note: You are required to research the ethical issues surrounding the banking industry and use
relevant sources to help prepare your report. You should use a mixture of academic, newspaper
articles and other relevant financial commentary.)
Part Two (50 Marks)

You are a Senior Accountant at Air-USA, a large international airline, which is looking to expand into
the Australian market. The CEO of Air-USA has asked you to complete a full review of Virgin Australia
Group by analysing current and previous financial statements. The CEO is interested to know about
the regulatory processes in Australia, and some key financial information about Virgin Australia Group
(soon to be a major competitor). You are required to prepare a report for the CEO covering the
following:

1. Provide a brief discussion of the various regulatory influences on external reporting for public
companies in Australia; (5 marks)

2. Advise the CEO on various key aspects of Virgin Australia Group by referring to the 30 June
2019 financial statements; (20 marks)

a) In addition to releasing an annual report, Virgin Australia Group released a half-year report.
Why does the company release both half-year and annual accounts? What period do the half-
year accounts cover?
b) Compare the director’s report and director’s declaration. What are the key features of each
of these? Why are both reports required?
c) Which accounting firm audited the financial statements and what opinion was issued?
d) Did the auditor provide any other services to Virgin Australia Group during the year?
If so, provide specific details of what these services were.
e) What is the largest non-current asset the company owns and state its opening and closing net
book value? What valuation method is used for this asset? What depreciation method is used
for the company’s property, plant and equipment?
f) According to the financial statements what is the largest source of revenue for Virgin Australia
Group? What does the “loyalty program revenue” relate to?
g) How much did Virgin Australia Group recognise as an expense for finance costs during 2019.
Has this increased or decreased since 2018?
h) Have the directors identified any contingent liabilities for the group? If so what are they and
how have these been disclosed?
i) Compare the net profit with the net cash flows from operating activities. Which amount is
larger? Provide an explanation for this.
j) Virgin Australia Group has reported unearned revenue as a current liability. Provide an
explanation as to what this represents.
3. Using the following financial ratios, critically analyse Virgin Australia Group’s liquidity,
profitability and financial flexibility over the past three years (30 June 2017 – 30 June 2019).
Your critical analysis should include a comparison of the ratios over the three year period, an
analysis of how they have changed over that period, and a discussion on what that means for
the company. (25 marks)

a) return on equity
b) return on assets
c) profit margin ratio
d) asset turnover ratio
e) current ratio
f) debt to equity ratio
g) interest coverage ratio
h) debt coverage ratio
i) price earnings
j) dividends per share
General Requirements:

1. Part one of this assignment requires you to apply elements of ethical decision making models to
a contemporary corporate issue. This section of the assignment will be marked based on the
quality of your discussion and research. Refer to the marking rubric for details as to how your
answer will be assessed.
2. Answer each question using a heading within the report indicating the question number. Part one
and part two of the assignment should be answered within the same word document.
3. Full referencing is required in accordance with the USQ preferred Harvard Referencing style.
https://www.usq.edu.au/library/referencing
4. The maximum page limit for this assignment is ten 1.5 spaced A4 pages (12 point font) pages.
However, be as concise and efficient in your writing as possible.
5. Assignment extensions will only be granted if there are extenuating circumstances. University
policy provides that the maximum extension is 5 business days.
6. The assignment is to be submitted electronically. Submit the assignment using the link on the
study desk. File types allowed include doc and docx. Only one file will be accepted. If more than
one file is uploaded, only the first file listed will be marked. Do not submit a cover sheet.
7. This assignment is to be your own individual work.
https://www.usq.edu.au/library/referencing/plagiarism
8. The university applies severe penalties for academic misconduct. Please ensure you are familiar
with the university policy: https://policy.usq.edu.au/documents/14727PL
9. The Learning Centre at USQ, offers students online and face-to-face access to academic support,
advice and guidance.
https://www.usq.edu.au/learningcentre

(Sources withheld: Questions for this assignment are taken from other sources. Details of this source
have been withheld for assessment purposes. This material is reproduced under the provisions of
the Section 200 (1) (b) of the Copyright Amendment Act 1980.)