Assessment Task 1: Policy and Standards Review

Description:

The Australian Accounting Standards Board (AASB) is the Australian Government agency responsible for developing, issuing and maintaining accounting standards that apply under Australian company law. The Board's functions and powers are set out in the Australian Securities and Investments Commission Act 2001 (AASB). The AASB makes Australian Accounting Standards, including Interpretations. Under the Australian Corporations Act 2001, many entities are required to apply Australian Accounting Standards when preparing their financial statements.

In this assessment task, you will be required to review a financial reporting policy of an ASX listed public company. The example below is of one of the largest mining companies in Australia (and the world). The following policy statement was published by Rio Tinto in its 2010 annual report;

http://www.riotinto.com/annualreport2010/governance/financial_reporting.html Review the policy and complete the following tasks;
1. Summarise the policy in your own words
2. List and briefly describe all the legislative instruments mentioned in the policy
3. Research and locate AASB Framework: Framework for the Preparation and Presentation of Financial Statements
4. Review and summarise reporting requirements and standards for preparing and publishing "General Purpose Financial Statements"

Prepare your answer in a word-processed document, appropriately structured under headings and sub- heading to organise the information. You may attach the relevant pages of standards and legislations as annexures to your document.

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.

- Used an appropriate policy document/statement of an ASX listed public company relevant to financial reporting
- Summarised the policy and identified legislative and regulatory requirements for preparation of general purpose financial statements
- Researched, collated and summarised information from a range of sources (citations and copies of reference documents)
- Summarised the policy document in own words
- Downloaded and reviewed AASB Framework for the Preparation and Presentation of Financial Statements
- Found relevant sections and standard for preparing and publishing general purpose financial statements
- Summarised the relevant standards in own words
- Cited all external sources using an appropriate referencing system

Assessment Task 2: Group Project

Description:

This assessment task is given as a group project to be undertaken by a group of up to four learners. Ideally, the groups should be formed at the begging of the term. The groups, in consultation with their trainer/assessor must understand the context and complexities of the task involved; and accordingly plan their project with appropriate delegation of tasks and responsibilities to group members. This project can be completed as a progressive task over the duration of the term.

Task:

In this assessment task, your group will be given financial statements of two major health care companies, Sonic Health Care and Healthscope Ltd. Sonic Healthcare has recently proposed acquisition of Healthscope as part of its strategic and growth plan to expand its operations and enhance its market share. Annual reports of both the companies will be provided to your group. Your group will be required to;

- Analyse each annual report and write brief summaries
- Summarise all references to AASB standards in the notes
- Calculate Valuation Ratios
- Research and suggest two valuation methods that Sonic Health Care can use in valuing Healthscope
- For sample purpose (what the data might look like after the acquisition), merge 2011 financial statements of both the companies and prepare consolidated statements: Balance sheet, Income statement, and Cash Flow
- Prepare notes to the financial statement as per the AASB requirements and standards
- Research and identify possible taxation implications of acquisition for Sonic Health Care (based on the consolidated statement)
- Create graphs to show Sonic Health Care's key financial positions before and after consolidation You may obtain additional information from ASX and company's respective websites.
Background:

Sonic Healthcare is one of the world's largest medical diagnostics companies, providing laboratory and radiology services to medical practitioners, hospitals, community health services, and their collective patients. Sonic Healthcare was listed on the Australian Securities Exchange (ASX) in 1987 and, following reconstitution of the Board in 1992, has experienced exceptional growth. Since 1993, our annual revenues have risen from A$25 million to over A$3 billion. We have progressed to become one of the top 100 companies listed on the ASX.

Since its inception in 1985 Healthscope has grown to become Australia's largest provider of integrated healthcare. Healthscope provides private hospital, medical centre and pathology services in every state and territory of Australia. Healthscope also operates an expanding network of pathology services in New Zealand, Malaysia, Singapore and Vietnam.

The consolidated statements must conform to AASB standards and prepared using MS Excel. You will need to submit a copy of the Excel file for assessment along with your written analysis.

As part of assessment criteria for this task, equal and active participation from all groups will be required. Each group will need to submit a group statement, signed by all group members, outlining their respective role and contribution in the project. Any problems or non-contribution from ant group members should be reported to the trainer/assessor at the earliest.

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.

- Successfully formed the group
- Assessed available skills and knowledge of each group
- Defined roles and responsibilities of each group member
- Identified and itemised project tasks
- Delegated tasks to group members based on their skill and knowledge sets
- Obtained and used appropriate company annual reports and financial statements for the task
- Summarised each of the reports in own words and understanding
- Report summary highlights key performance and growth areas of respective companies
- References to AASB standards are identified, reviewed and summarised
- Relevant legislative references are noted and summarised
- Valuation ratios are calculated to determine true value of the companies in relation to its share prices
- Obtained and used current share prices from ASX
- Used historical data where appropriate in calculations
- Calculated Price to earnings ratio (PE)
- Calculated Price/earnings to growth ratio (PEG)
- Calculated dividend yield
- Researched and suggested two commonly used company valuation methods (e.g. Asset Valuation Method, Market Valuation Method, Price Earnings Multiple Valuation)
- Suggested valuation methods are appropriate for the proposed merger
- Appropriate references are provided to support the suggested valuation methods
- Prepared a consolidated (2011) balance sheet
- Prepared a consolidated (2011) income statement
- Prepared a consolidated (2011) cash flow statement
- Financial data is accurate and represents accurate consolidated value
- Financial statements are appropriate structured and presented as formal documents
- Financial statement formats conform to the common Accounting Standards (AASB) for reporting entities
- Financial statements are supported by explanatory notes in compliance with AASB standards
- Illustrated company's financial positions using graphs and/or charts
- Graphs draw data from within the worksheets
- Graphs are appropriately titled and labelled
- Taxation implications are researched and summarised for reference purpose
- Maintained a group portfolio and kept records of group meetings and communications