Research on a topical accounting issue (Leases) for Pact Group holdings LTD

ACF5956 Advanced financial accounting
Research Assignment Assessment Requirements: Semester 2 2015

Weighting: 23% (marked out of 100)
Due Date: End of Week 10 (4.00 pm Friday 9 October 2015)
Word Limit: The business report should be a maximum of 1,500 words (excluding executive summary, references and any appendices)
The media release should be a maximum of two pages.
Learning objectives assessed:
This assessment task is designed to test your achievement of learning objectives 1, 2, 4 and 5.
This is an individual assessment task not a group project
It is designed to assist you in demonstrating your knowledge of, and ability to critically assess influences on a contemporary issue in financial reporting, disclosure and/or governance. It also provides you with an opportunity to further enhance your research, judgement and written communication skills.
Issue to be investigated: Accounting for leases
You have recently been appointed as a graduate accountant in a company listed on the Australian Stock Exchange Top 200 (ASX200), and are currently reporting to the Chief Financial Officer (CFO). (Note: you will be assigned your specific company by the beginning of Week 3).
The International Accounting Standards Board (IASB), in conjunction with the Financial Accounting Standards Board (FASB), is currently undertaking a project to develop a new Leases standard. Under existing accounting standards, a lessee classifies their leases as either finance leases or operating leases. A lessee is required to recognise a lease asset and lease liability in their statement of financial position for finance leases only, with information on operating lease commitments disclosed in the notes to the financial statements. Due to these requirements, the IASB has expressed concern that operating leases act as a form of off-balance sheet financing that understates a lessee’s long-term liabilities. Under the proposed new Leases standard, lessees would be required to recognise lease assets and lease liabilities in their statement of financial position for all leases.
The CFO has asked you to research the issues surrounding the new Leases standard, with a particular emphasis on any potential financial statement effects for your company. With this in mind, you are to research the issue, investigate the implications for your company and present your findings in two documents:
1. A business report to update the CFO and the Board of Directors fully on the proposed changes to accounting for leases, the potential effects of these proposed changes on your company’s financial statements, and whether a reassessment of your company’s financing strategies is necessary due to these proposed strategies; and
2. Prepare a two-page media release outlining the potential impact of the proposed changes on your net profit, net assets, and key financial statement ratios, as well as discussing your company’s response to the proposed changes.

Your business report needs to be concise and informative. In preparing your report, you should investigate a range of issues:
i. Provide a brief background on the existing accounting treatment of leases, tailored to the context of your company;
ii. Outline the proposed changes to accounting for leases, once again tailored to the context of your company. In doing so, refer to IASB pronouncements including the current exposure draft on leases and any project updates;
iii. Analyse the financial statement effects of the proposed changes based on your current lease arrangements. This can include quantifying the estimated impact of the proposed changes on your company’s net profit and net assets, and highlighting changes in key financial statement ratios;
iv. Recommend changes (if any) needed to your company’s financing strategies in response to the proposed new Leases standard.
A two-page media release. The media release should outline the impact of, and the company’s response to, the proposed new Leases standard in plain language suitable for non-accounting experts. In writing the media release, you should be mindful of the influence media releases have on the perceptions of key stakeholders of your company, including investors.
How to present your work:
Your report for the CFO should be presented as a formal business report. When writing your report, you should assume the audience (the CFO and the Board of Directors) are all financially literate and have a good understanding of accounting and finance concepts and terminology. You should rely on a range of academic and professional journal articles to support your views and recommendations.
Your two-page media release should be written in such a way as to provide information to an audience who are not accounting and finance experts.
For more information on appropriate report writing, formatting and referencing, you should refer to the Q Manual at the following site:
Justification for Selection of this Assessment Task:
In addition to the development of knowledge of a contemporary area impacting accounting, this task is also designed to develop the following generic skills:
• Research skills
• Judgement
• Written communication skills, aimed at both accountants and non-accountants
The research assignment is designed to broaden your understanding and application of theoretical knowledge gained in one major topic in the unit. Research skills, which involve the synthesis of information and communication of research findings through a business report, are essential skills that our graduates are required to demonstrate to employers.

This assignment is designed to further develop these valuable skills and attributes. The issue addressed is a contemporary issue in the business and accounting arena, and one that you need to be aware of. As future accountants it is essential you understand the impact of accounting regulatory changes on the organisation.
It is also designed to enable you to demonstrate your written communication ability – a skill that is deemed by your future employers to be essential for graduates. In the most recent Graduate Outlook survey accounting and finance employers rated good communication skills as their number one priority when hiring graduates (Graduate Careers Australia, 2011).
All higher education providers of accounting degrees in Australia are required to provide evidence that their accounting graduates have achieved common national minimum threshold learning outcomes (TLOs) at the time of graduation. These TLOs were developed collaboratively with input from the professional accounting bodies, various business practitioners and accounting academics. Five TLOs were developed for the accounting discipline of which both the judgement and communication standards are relevant for this assignment. These standards requires that an accounting graduate of a masters degree must demonstrate:
“Exercise judgement under supervision to solve routine accounting problems in diverse contexts using social, ethical, economic, regulatory and global perspectives.”
“Justify and communicate accounting advice and ideas in diverse collaborative contexts involving both accountants and non-accountants.”
Please keep this TLO in mind when preparing your assignment, as this is the basic benchmark against which your assignment submission will be assessed. These standards have been incorporated into the marking rubric.
Additional Information:
A signed cover sheet must accompany your assignment.
In addition, you are to include, as an attachment, an extract of your company’s statement of financial position and statement of financial performance for the most recent reporting period, as well as note disclosures related to leases.
Your assignment is to be submitted online to Moodle. It must be lodged by 4pm on Friday October 9 2015. Assignments will be returned to you, together with both general and specific feedback, in week 12 seminars.
Assessment Criteria:
A matrix outlining the assessment criteria and how your work will be assessed against these criteria will be provided on Moodle.
Traits and Assessment criteria Exemplary Satisfactory Unsatisfactory
Business Report
Research and information gathering
Selection of relevant academic and professional articles and resources; Integration of sources 10 Well-selected resources and evidence of wide reading. Clear engagement with academic & professional sources, including journals and websites. Skilful engagement and deployment of sources to enrich discussion and evaluation. Academic and professional sources are used appropriately to support position but they may be limited in scope and quality.
Little or no evidence of relevant research and/or poor use of sources. May make significant reliance on textbooks, rather than primary sources. References selected may be inappropriate and/or poorly integrated.
Academic integrity
Citing and referencing sources of information 10 Citing and referencing is appropriate and accurate. Appropriate use of others’ work, acknowledged via in-text citations Sources appear to be acknowledged, but not consistent. Some errors in citing and referencing may persist. Referencing may be uniformly poor. Few, if any, in-text citations to acknowledge sources of ideas.
Analysis and synthesis
Communicates ideas clearly; includes appropriate concepts, models and theories; integrates them effectively; demonstrates knowledge of the issues; draws appropriate conclusions. 40 Ideas are all relevant and clearly stated. Appropriate concepts and theories included. Demonstrated knowledge of the key issues; appropriate conclusions drawn. Ideas are mostly relevant and clearly stated. Most concepts included but some key areas missing or lack integration. Some evidence of knowledge of key issues; ideas related to conclusions. Ideas are inadequate; arguments disjointed and logical inconsistencies. Work is missing or lacking integration of most key concepts or theories. Fails to demonstrate adequate knowledge of the issues; ideas not linked to conclusions.
Writing style
Cohesion e.g. use of linking; accurate, concise language. Plans information to flow logically through the written work. Presents work in a professional way. Appropriate length
20 Work is easy to read, logical and flows smoothly from issues to conclusions. Work presentation of a high quality and spelling and/or grammatical errors virtually non-existent. Work generally flows smoothly but was a bit brief (or ‘wordy’) in places. Work presentation is satisfactory. Only minor spelling and/or grammatical errors. Ideas and paragraphs disjointed and do not flow smoothly. Work suffers from frequent grammatical and spelling errors. Not presented as a professional business report.
Media Release


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