ACCT 1077Financial Accounting Theory,Semester 2, 2015
WIL Report B

The following assessments involve Work Integrated Learning (WIL) activities. The focus of RMIT’s WIL policy is for you to ‘learn by doing in context and with feedback’ in realistic contexts. This assessed WIL experience makes a significant contribution to development of your work-readiness capabilities by deepening your knowledge of, and skills at, core accountancy practices concerning the practical application of contemporary financial accounting regulation in the workplace.

Background Information and Reporting Task
You are a junior accountant with Factional Ltd, a large, publicly-listed company operating in the high-tech sector. Factional Ltd has recently appointed a new chief Executive Officer (CEO), Mr Magnus Bouche, who is due to take up his appointment very shortly. Last night, at the invitation of a friend, you attended a prestigious charity function which, coincidentally, was also attended by Mr Bouche. At one point during the night, you found  yourself standing quite close to (but unobserved by) Mr Bouche and overheard a part of his conversation with friends, including his comment that the first thing he intended to do as CEO of Factional Ltd was to “take a bath”.
You are not sure of what it means to “take a bath”, but the conspiratorial tone of the conversation and the fact that one of Mr Bouche’s friends responded to the comment by asking about the likely impact on Factional Ltd’s share price, while another laughed and said something (which you couldn’t quite hear) about Mr Bouche’sput options in Factional Ltd shares, have aroused your suspicions.
This morning, you spoke confidentially to your supervisor in the accounting department of Factional Ltd, Ms BettaGolightly, telling her about the overheard conversation and asking her whether she knew what it meant to “take a bath”. She replied that she had heard of the Big Bath Hypothesis and knew that it related to earnings management, but confessed that she didn’t know about any likely capital markets impacts. She then asked you to conduct some research and prepare a report for her, outlining the following:
i.    Possible motivations for an “earnings bath”
ii.    How an “earnings bath” may be achieved
iii.    Whether an “earnings bath” has implications for a firm’s share price
iv.    Whether an “earnings bath” has implications for the value of a firm’s stock options.
Your report will provide the basis for Ms Golightly’s decision on whether the matter should be brought to the attention of Factional Ltd’s audit committee (a sub-committee of Factional Ltd’s board of directors).

Report Requirements:
Report Format:Your report must conform to ‘Basic Report’ structure – see ‘Business Report Handout’ on Blackboard. You should keep in mind that your report is intended to be submitted to the audit committee of Factional Ltd.
Referencing:Your report must be fully referenced in-text and also include a list of references. The ‘RMIT Business’ version of Harvard referencing is required.  For details of this referencing system go to https://www.dlsweb.rmit.edu.au/bus/public/referencing/index.html.
Word Limit:1,000 words (not including reference list).
Weighting:25%
Submission:Your report must be lodged electronically via the course Blackboard site (includes automatic submission to Turnitin). Note that your report must be submitted as a Word document.Ensure you obtain a Turnitin receipt and note its number. In rare instances, problems can occur during the electronic submission process. In the event of a dispute over whether your report was lodged correctly or on time, your Turnitin receipt can provide evidence of this. Without a receipt, you have no evidence!!  (Hard copy submissions are not required.)
Marking:You should refer to the marking rubric, on page 4 of this document, which indicates the criteria upon which your report will be marked.All reports will be marked electronically, and marks and comments made available to you electronically upon completion of the marking process.
Due Date:Week 11, by midnight on Sunday 11 October 2015.

Extensions and Late Submissions:
If you wish to apply for an extension of time (7 days or less) for submission of a WIL assignment report you must email the course coordinator BEFORE the due date. You must include in your email a completed Application for Extension of Time for Submission of Assessable Work form, and supporting documentation. If you are seeking an extension of more than 7 days, then you must apply for Special Consideration via the formal online process (NOT to the course coordinator).
Further information can be found at the following web address: http://www1.rmit.edu.au/students/assessment/extension.
All WIL assignment reports will be marked as if submitted on time, then the mark awarded will be reduced by 10% for each day (or part of a day) that the report is late.  For example, if an assignment is worth 25 marks and is submitted 2 days late then you will be penalised 2 x 10% of 25 marks, which is 5 marks. These 5 marks will be subtracted from the assessed mark.
WIL assignment reports that are late by 7 days or more will not be marked and will be awarded zero.
Please note that extensions are normally only granted in cases of exceptional and genuine hardship. This does not include inconvenience, poor planning, pressure from work or work commitments.

Report Marking Rubric
Scoring level    Depth and quality of  research undertaken     Application of research to the task
Ability to apply appropriate accounting theories to the context of the task    Ability to synthesise information into a coherent and engaging report
Ability to correctlyacknowledge sources using the RMIT Business Harvard Referencing system    Score

6 marks    6 marks    6 marks    4 marks    3 marks
Accomplished

(High Distinction)    •    Materials referred to are relevant and
•    References are drawn from a wide variety sources and
•    References support the arguments presented and
•    Research is current and from a reliable source

5-6 marks    •    The report discussion clearly addresses the issues raised in the task and
•    The report is highly relevant to the needs of the client and
•    The report clearly outlines the major findings of the investigation and the impact of these findings on the client

5-6 marks    •    Your report makes clear links between your research and current accounting theories and
•    Your report explains these links with clarity and applies these links to the task

5-6 marks    •    The report is professionally presented and
•    All grammar and punctuation is correct and
•    The report is written in a style appropriate for the client and
•    The report is highly engaging and easy to read and
•    All sections of the report have been included and correctly constructed

4 marks    •    TheRMIT Business Harvard referencing system has been used to clearly and accurately record all cited sources in the report and
•    A list of references has been provided which is correctly formatted in the RMIT Business Harvard style

3 marks
Highly Competent

(Distinction/
Credit)    •    Most of the materials referred to are relevant
•    References are drawn from a good range of sources
•    References generally support the arguments presented
•    Research is mostly current and from a reliable source

4 marks    •    The report discussion addresses most of the issues raised in the task
•    The report is mostly relevant to the needs of the client
•    The report outlines the major findings of the investigation and the impact of these findings on the client

4 marks    •    Your report makes links between your research and current accounting theories but at times these links lack clarity
•    Your reportmostly manages to explain these links and apply these links to the task

4 marks    •    The report is professionally presented
•    The majority of the grammar and punctuation is correct
•    The report is written in a style appropriate for the client
•    The report is engaging and fairly easy to read
•    All sections of the report have been included and correctly constructed

3 marks    •    The RMIT Business Harvard referencing system has been used to clearly and accurately record all cited sources in the report
•    A list of references has been provided which is correctly formatted but
•    Some minor errors in the citations and/or list of references
2 marks
Satisfactory

(Credit/Pass)    •    Some of the materials referred to are relevant
•    References are drawn from a limited range of sources
•    There is a lack of cohesion between the references cited and the topic being discussed
•    Research is mostly current and from a reliable source

3 marks    •    The discussion addresses most of the issues raised in the taskbut lacks some clarity
•    The report at times lacks relevance and/or some of the conclusions drawn are erroneous
•    The report outlines the major findings but lacks clarity in linking these findings to the client’s needs

3 marks    •    While some attempts have been made to link accounting theories to your discussion these links lack clarity
•    Your reportdoesnot manage to explain these links clearly and apply these links to the task

3 marks    •    Improvement is needed in the report presentation
•    There are some errors in grammar and punctuation
•    The report is mostly written in a style appropriate for the client
•    The report is not engaging and/or is not easy to read
•    All sections of the report are included but there are some errors in these sections

2 marks    •    The RMIT Business Harvard referencing system has been used to record cited sources in the report but there aresome major errors in these citations and/or
•    A list of references has been provided but there are errors in the construction of this list(not all sources are cited)

1 mark
Unsatisfactory    •    There is a lack ofevidence of relevant research
•    The research presented is too narrow
•    The research presented does not support the topic

0-2 marks    •    The report discussion fails to address most of the issues raised in the task and the discussion lacks clarity
•    The report discussion lacks relevance and/or most of the conclusions drawn are erroneous
•    The report does not outline the major findings

0-2 marks    •    Little or no attempt has been made to link accounting theories to the discussion and /or the links made are incorrect
•    Your reportdoes not manage to explain these links and apply these links to the task

0-2 marks    •    Major improvements in the presentation of the report are needed
•    There are many errors in grammar and punctuation which need correction
•    The report is written in a style that is inappropriate, the report is not engaging and/or is not easy to read
•    Not all sections of the report have been included

0-1 marks    •    The RMIT Business Harvard system has not been used to record cited sources in the report and/or
•    No List of references or serious errors in the construction of this list

0 marks
Total                        /25

Background Information and Reporting Task
You are a junior accountant with Factional Ltd, a large, publicly-listed company operating in the high-tech sector. Factional Ltd has recently appointed a new chief Executive Officer (CEO), Mr Magnus Bouche, who is due to take up his appointment very shortly. Last night, at the invitation of a friend, you attended a prestigious charity function which, coincidentally, was also attended by Mr Bouche. At one point during the night, you found yourself standing quite close to (but unobserved by) Mr Bouche and overheard a part of his conversation with friends, including his comment that the first thing he intended to do as CEO of Factional Ltd was to “take a bath”.
You are not sure of what it means to “take a bath”, but the conspiratorial tone of the conversation and the fact that one of Mr Bouche’s friends responded to the comment by asking about the likely impact on Factional Ltd’s share price, while another laughed and said something (which you couldn’t quite hear) about Mr Bouche’s put options in Factional Ltd shares, have aroused your suspicions.
This morning, you spoke confidentially to your supervisor in the accounting department of Factional Ltd, Ms Betta Golightly, telling her about the overheard conversation and asking her whether she knew what it meant to “take a bath”. She replied that she had heard of the Big Bath Hypothesis and knew that it related to earnings management, but confessed that she didn’t know about any likely capital markets impacts. She then asked you to conduct some research and prepare a report for her, outlining the following:
i. Possible motivations for an “earnings bath”
ii. How an “earnings bath” may be achieved
iii. Whether an “earnings bath” has implications for a firm’s share price
iv. Whether an “earnings bath” has implications for the value of a firm’s stock options.
Your report will provide the basis for Ms Golightly’s decision on whether the matter should be brought to the attention of Factional Ltd’s audit committee (a sub-committee of Factional Ltd’s board of directors).