Imagine Education

Student Assessment Cover

Sheet

Course Code FNS50217 Course Name Diploma of Accounting

Unit Code FNSACC511 Unit Name Provide financial and business performance
information

Due Date Assessment Name Accounting Portfolio

Part A: Short answer questions
Part B: Case Study
Part C: Project

Student No. 167494 Student Name Aline Lins Pita

Student Phone 0424612405 Student Email aline.pita@outlook.com

Student Declaration
I declare that this assessment is my own work and where my work is supported by documents from my workplace
placement/employer permission has been granted.

Note: Filling out this coversheet as part of an electronic submission and approving the above information will operate in
the same way as physically signing this cover sheet.

Student name or signature: Aline Lins Pita

Office Use Only

Date/s Received: 19/06/19 16/07/19 ___/___/___

Date/s Assessed: 10/07/19 29/07/19 ___/___/___

Result of Assessment: NYS NYS ___________

Entered on Training Plan Moderation Signature

Note for Assessors: Filling out the above Office Use Only section as part of an electronic submission will operate in the
same way as physically signing this cover sheet. If not physically signed, Assessor must print their name in signature box

J:\VET\Business\Diploma of Accounting\FNSACC501\STUDENT ASSESSMENT GUIDE\Student Asssessment v1.1.doc

 Imagine Education
Assessment Questions
Part A

Course Code and Name: FNS50217 – Diploma of Accounting

Unit Code: FNSACC511
Unit Title: Provide financial and business performance information

For this assessment you are required to answer all of the questions. You are permitted to research the
answers by reading your text book, theory notes and accessing the internet. If more room is needed
label each task with the question number and use headings or dot points to make your work clear for
your trainer and assessor.
Please follow the Referencing Guide contained on your Course handbook.
Please attach a student assessment cover sheet to each unit submission. You must complete the cover
sheet in full detail.

Question 1

Please give a brief understanding of the Australian legislation:

a) Corporations law, Its legal structure now consists of a single, national statute, the Corporations
Act 2001. The statute is administered by a single national regulatory authority, the Australian
Securities and Investments Commission. √

b) Legislative protection for consumers, the Australian Consumer Law sets out consumer rights that
are called consumer guarantees. These include your rights to a repair, replacement or refund as
well as compensation for damages and loss and being able to cancel a faulty service. √

https://www.accc.gov.au/consumers/consumer-rights-guarantees

c) Contract law, covers general standards of business conduct, prohibits unfair trading practices,
regulates specific types of business-to-consumer transactions, provides basic consumer
guarantees for goods and services , and regulates the safety of consumer products and product-
related services. It also includes any laws or regulations directed toward enforcing certain
promises. In Australia contract law is primarily regulated by the 'common law', but increasingly
statutes are supplementing the common law of contract - particularly in relation to consumer
protection. √

https://www.australiancontractlaw.com/

d) Privacy Act, includes thirteen Australian Privacy Principles (APPs), which apply to some private
sector organisations, as well as most Australian and Norfolk Island Government agencies. These
are collectively referred to as ‘APP entities’. The Privacy Act also regulates the privacy component

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 of the consumer credit reporting system, tax file numbers, and health and medical research,
setting up who’ll be able to access them and how the information should be managed. √

https://www.oaic.gov.au/privacy-law/privacy-act/

e) Taxation legislation, Individuals and companies in Australia may be required to pay taxes or
charges to all levels of government: local, state, and federal governments. Taxes are collected to
pay for public services and transfer payments. The key taxes affecting businesses in Australia are
Company (income) Tax, Capital Gains Tax (CGT) and the Goods and Services Tax (GST). These taxes
are all set by the Australian Government. √

https://www.austrade.gov.au/International/Invest/Guide-to-investing/Running-a-
business/Understanding-Australian-taxes/Australian-business-taxes

Question 2

a) When conducting initial consultation with the client how can you clarify the expectations and
objectives of the client to ensure a mutual understanding of their goals?

● Assist client to identify their own needs and rights and to determine if their rights are
being infringed or are not being met;
● Assisting a client to identify their needs and rights;
● Undertake an assessment with the client, and if necessary with significant others and
colleagues to identify client’s ability to advocate for self;
● Provide client with information about available options for meeting their needs and assist
them to identify their preferred option, and to make contact and negotiate with relevant
people and agencies where appropriate;
● Ensure information provided to clients about client rights and responsibilities is
researched, relevant and timely. √

http://lrr.cli.det.nsw.edu.au/web/11236/lo/8597/8597_00.htm

b) What tools can we use to ensure that we have determined and confirmed the clients
requirement

The main tools that could be used in order to confirm and ensure compliance with clients requirements,
are:

➔ Key performance indicators (KPIs) and metrics

➔ Seek performance appraisals
➔ Seek 360 degree feedback
➔ Implement the management by objectives (MBO) √

https://www.linkedin.com/pulse/20140522054403-64875646-the-5-most-popular-tools-to-manage-
performance-good-news-and-cautionary-tales

Question 3

Explain the key requirements of taxation legislation relating to deductions, allowances and charges
J:\VET\Business\Diploma of Accounting\FNSACC501\STUDENT ASSESSMENT GUIDE\Student Asssessment v1.1.doc
Tax deductions reduce your taxable income. You can claim tax deductions for most costs you incur in
running your business. On the other hand, the concessions, offsets and rebates can reduce your tax
payable. You may be eligible for a range of these. You must keep accurate and complete records of all
your assessable income and the deductions you claim. Some usual types of tax deductions, are:
➔ Interest on bank savings;
➔ Equity saving schemes;
➔ Long term infrastructure bonds√
https://www.ato.gov.au/Business/Income-and-deductions-for-business/

Question 4

List the key areas that can cause significant taxation issues

Valuation allowance (VA) - is recorded against the deferred tax asset (DTA) to report the DTA that is more
likely than not to be realized.

Purchase Accounting - There are many income tax accounting issues a company needs to consider
including adjustments to the deferred tax assets and liabilities, impact on the valuation allowance, and
applicable footnote disclosure.

Stock Based Compensation - If a company has equity incentive plans, it should consider the impact on its
income tax provision. How the plan is structured impacts the income tax consequences and causes
variations in the related income tax accounting treatment.

Provision to Return Differences - It is important for companies to analyze provision to return (PTR)
differences. Since the income tax provision is an estimate, differences often exist when comparing the
taxes reported in subsequently filed tax returns. Companies should account for these differences when
preparing the following year’s income tax provision.

Financial Statement Presentation and Disclosure - The income tax provision can impact several areas of
the financial statements, including the balance sheet, income statement, statement of cash flows and
footnote disclosures. A company should focus on appropriately including the required presentation and
disclosures in its financial statements

Some areas that could result in inaccuracies or inadequate reporting to the ATO, are: poor record keeping
practices, financial performance not correlating to other entities in the industry, etc. √

http://holtzmanpartners.com/5-key-income-tax-provision-issues-for-businesses/

Question 5

Compare and contrast forecasting techniques

Forecast can be long-term or short-term. The Techniques may be grouped into two categories: Qualitative
or quantitative. Qualitative consists primarily of personal opinions or inputs quite difficult or impossible
to quantify. Examples of qualitative forecasting method: Consumer survey (sample of consumer opinion),
sales based or contact with a customers and market research.

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Quantitative forecasting consists in analysing objective data and they may be subdivided: 1) Time series,
where future values are estimated from past values of the series. This technique is based on past data, is
very simple technique that has basically no cost, quick and easy to prepare. 2) Casual models, which
normally uses linear regression technique. Quantitative forecasting tends to circumvent personal biases,
which are often times sources of contamination on qualitative method. √

Question 6

Identify and explain the key features of government financial policy and secretary’s financial management
instructions

ASIC
ASIC is Australia's integrated corporate, markets, financial services and consumer credit regulator.
We are an independent Commonwealth Government body. We are set up under and administer the
Australian Securities and Investments Commission Act 2001 (ASIC Act), and we carry out most of our work
under the Corporations Act 2001 (Corporations Act).
We are an independent Commonwealth Government body. We are set up under and administer the
Australian Securities and Investments Commission Act 2001 (ASIC Act), and we carry out most of our work
under the Corporations Act 2001 (Corporations Act).

https://asic.gov.au/about-asic/what-we-do/our-role/ √

ASX
ASX is a multi-asset class, vertically-integrated exchange group whose activities span primary and
secondary market services, including the raising, allocation and hedging of capital flows, trading and price
discovery; central counterparty risk transfer; and securities settlement for both the equities and fixed
income markets.
ASX functions as a market operator, clearing house and payments system facilitator. It also oversees
compliance with its operating rules, promotes standards of corporate governance among Australia’s listed
companies and helps to educate retail investors.
The domestic and international customer base of ASX is diverse. It includes issuers (such as corporations
and trusts) of a variety of listed securities and financial products; investment and trading banks; fund
managers; hedge funds; commodity trading advisers; brokers and proprietary traders; market data
vendors; and retail investors.
Confidence in the operations of ASX is reinforced by the market supervision and regulatory role undertaken
by the Australian Securities and Investments Commission (ASIC) across all trading venues and clearing and
settlement facilities, as well as through the Reserve Bank of Australia's oversight of financial system
stability. ASIC also supervises ASX’s own compliance as a listed public company.

https://www.asx.com.au/about/asx-group.htm √

Question 7

Explain the key requirements of relevant corporations and consumer legislation

J:\VET\Business\Diploma of Accounting\FNSACC501\STUDENT ASSESSMENT GUIDE\Student Asssessment v1.1.doc
 ➔ The Corporations Act 2001 is an Act of the Commonwealth of Australia which sets out the laws
dealing with business entities in Australia at federal and interstate level. It is the primary basis of
Australian corporations law.
➔ ACCC is an independent authority of the Australian government. It was created in 1995 with the
merger of the Australian Business Practices Commission and the Price Supervision Authority to
administer the Business Practices Act of 1974.
➔ The Australian Securities and Investments Commission (ASIC) is an independent Australian
government body that acts as Australia's corporate regulator. ASIC's role is to enforce and regulate
company and financial services laws to protect Australian consumers, investors and creditors.

http://consumerlaw.gov.au/files/2015/06/ACL_framework_overview.pdf √

Question 8

Describe a range of methods for presenting and formatting financial data

1. Display either the balance sheet or the income statement.

2. Display the financial statement you did not start with in Step 1. For example, if you started with the
income statement, then display the balance sheet.
3. Present the cash-flow statement. The cash-flow statement shows how cash moved during the year.
4. Present the statement of stockholders' equity. The statement of stockholders' equity gives an in-
depth look at the stockholders' equity section of the balance sheet, so the statement will have the
changes in ownership and any other transactions related to stockholders' equity
5. Close with the notes to the financial statements. The notes to the financial statements will always
come last.

http://smallbusiness.chron.com/proper-way-present-financial-statement-3778.html

Question 9

Identify and explain the key principles of cash flow and budgetary control

Budgetary control is a system of controlling costs which includes the preparation of budget,
coordinating the departments and establishing responsibilities, comparing actual performance with that
budgeted and acting upon results to achieve maximum profitability. Principles of budgetary control:
establish a plan or target of performance which coordinates all the activities of the business; record the
actual performance; compare the actual performance with that planned and calculate the differences or
variances, and analyse the reasons for them. √
Cash flow statements tell you where you spent your money. About cash flow forecasting it is a
mistakes, such as ignoring it or confusing it with profits, are among the deadliest and most common
errors startups make. Some principles are: Be Realistic or even pessimistic. It is about discovering
potential pitfalls; Plan Multiple Scenarios; Remember the Definition of Income and Cost; Include Every
Item; Factor in Fixed and Variable costs and Plan for seasonality.
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http://www.accountingnotes.net/cost-accounting/budgetary-control/budgetary-control-principles-
merits-and-objectives/4797

https://collectivehub.com/2016/06/6-principles-of-accurate-cashflow-forecasting/

Question 10

Identify and categorise sources of information on financial products and markets

Capital Markets - This type of market is composed of both the primary and secondary markets. A capital
market is one in which individuals and institutions trade financial securities. Organizations and
institutions in the public and private sectors also often sell securities on the capital markets in order to
raise funds.

● Stock Marketsv – This allow investors to buy and sell shares in publicly traded companies. They
provide companies with access to capital and investors with a slice of ownership in the company
and the potential of gains based on the company's future performance.
● Bond Markets – It is a debt investment in which an investor loans money to an entity (corporate
or governmental), which borrows the funds for a defined period of time at a fixed interest rate.
Bonds are used by companies, municipalities, states and U.S. and foreign governments to finance
a variety of projects and activities. Bonds can be bought and sold by investors on credit markets
around the world.

Money Market - In the cash market, goods are sold for cash and are delivered immediately. By the same
token, contracts bought and sold on the spot market are immediately effective. Prices are settled in
cash "on the spot" at current market prices.
Derivatives Markets - Its value is derived from its underlying asset or assets. A derivative is a contract,
but in this case the contract price is determined by the market price of the core asset.
Forex and the Interbank Market - The interbank market is the financial system and trading of currencies
among banks and financial institutions, excluding retail investors and smaller trading parties
Primary Markets vs. Secondary Markets - A primary market issues new securities on an exchange.
Companies, governments and other groups obtain financing through debt or equity based securities.
The OTC Market - Is a secondary market known as a reseller market. The term "over-the-counter" refers
to stocks that are not trading on a stock exchange. usually this means that the shares are traded on the
pink sheets. OTCBB and pink sheet companies have far fewer regulations to comply with than those that
trade shares on a stock exchange. Most securities that trade this way are penny stocks or are from very
small companies.
Third and Fourth Markets - These don't concern individual investors because they involve significant
volumes of shares to be transacted per trade. These markets deal with transactions between broker-
dealers and large institutions through over-the-counter electronic networks. The third market comprises
OTC transactions between broker-dealers and large institutions. The fourth market is made up of
transactions that take place between large institutions.

Overall, you must always seek information of these markets on an expert, such as an accountant,
financial advisor, websites, etc. √

https://www.investopedia.com/walkthrough/corporate-finance/1/financial-markets.aspx

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Question 11

Outline a range of risks and contingencies and risk management options relating to financial and business
performance

Risk assessment and contingency planning is the process of determining the risks a business faces and
what it must do if those risks are realized.

Risk Forecasting – it is necessary to assess and determine the risks and the quantity thereof. it is also
important to assess the damage that these threats can cause to the company.There are several
techniques for identifying risks including group brainstorming, interviews, surveys, root cause analysis,
review of past accident reports, SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis and
diagramming. √
Composite Risk Index - The standard formula for risk assessment is that risk equals the probability of an
event multiplied by the cost of the event. Each identified risk can be rated on a scale of one to five, with
one being the least likely to occur and causing the least damage and five being the most likely to occur
and causing the most damage.
Risk Option Evaluation - Once identified, a business can decide what it will do with the risk it faces. The
four basic approaches to risk are: risk avoidance (Give up the project that will bring the business in contact
with risk, risk reduction (perform procedures that reduce the likelihood of such risk occurring or lessen
the harm that the risk may cause), risk sharing (involves buying insurance to cover losses) or transfer, and
risk retention (it is the process of accepting the possibility of loss and budgeting to cover the risk). √
Contingency Plan Creation - If a business decides to mitigate or accept the risk, it will benefit from
having a contingency plan in place to deal with the situation should it occur. √
Plan Evaluation – Businesses should evaluate their plans after an emergency occurs to ensure that the
plan worked the way it was supposed to and to make any needed adjustments. √

The main categories of risks impacting the business finances, are:

- Market risks: involves the risk of changing conditions in the specific marketplace in which a
company competes for business.
- Credit risks: is the risk businesses incur by extending credit to customers. It can also refer to the
company's own credit risk with suppliers. A business takes a financial risk when it provides
financing of purchases to its customers, due to the possibility that a customer may default on
payment.
- Liquidity risks: includes asset liquidity and operational funding liquidity risk. Asset liquidity refers
to the relative ease with which a company can convert its assets into cash should there be a
sudden, substantial need for additional cash flow.

http://smallbusiness.chron.com/risk-assessment-contingency-planning-20948.html

https://www.investopedia.com/ask/answers/062415/what-are-major-categories-financial-risk-
company.asp

Question 12

Outline client rights and responsibilities.

Here are some examples of rights to receive a service:

J:\VET\Business\Diploma of Accounting\FNSACC501\STUDENT ASSESSMENT GUIDE\Student Asssessment v1.1.doc
● have their individual needs met;
● be valued;
● complain if they are unhappy with the service
● have access to records
● have privacy and confidentially maintained
● have access to the services they need
● be part of the community in which they live

Rights in relation to the law:

● the right to personal safety

● the right to freedom from abuse and harassment
● rights relating to property damage
● statutory obligations
● rights in relation to involuntary/voluntary admissions
● rights in relation to restraining orders, child protection, and family law court requirements.

Responsibilities

1. Respect as individuals everyone involved in the service.

2. Respect the rights of others including their rights to confidentiality and privacy
3. Inform staff of support needs
4. Read, understand and agree to the house rules and case management agreement before signing
5. Let the service know if they are not available for an appointment.
6. Act in a way which respects the rights of other clients and staff.
7. Take responsibility for the results of any decisions they make.
8. Seek a fair resolution of any complaints. √

https://etraining.communitydoor.org.au/mod/page/view.php?id=71
http://www.mapl.com.au/policy/examples/tp5_ex11A.htm

Question 13

From the following information for Ella’s Fruit Factory:

Prepare the bank reconciliation statement as at 31 March 2016

Bank Statement Ella’s Fruit Factory

Date Particulars Debit Credit Balance
March 1 Balance 650 CR
2 Dep 732 1382 CR
5 Dep 726 2108 CR
Dividend(ASL) 550 2658 CR
150 290 2368 CR

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 8 Dep 930 3298 CR
151 495 2803 CR
Bank Charges 33 2770 CR
10 152 600 2170 CR
Dep 440 2610 CR
13 Dep 780 3390 CR
15 Cheque Book 22 3368 CR
154 506 2862 CR
18 155 275 2587 CR
Dep 308 2895 CR
Dividend 150 3045 CR
21 156 935 2110 CR
Dep 297 2407 CR
24 Dep 890 3297 CR
27 682 3979 CR
158 682 3297 CR
31 159 1430 1867 CR
160 275 1592 CR
Bank Charges 110 1482 CR

Cash Receipts Journal

Date Particulars Rec Gst Disc Debtor Sales Gst Sundrie Bank
No adj Allo s Payabl s
w e
2/3 Sales 320 32
AN Field 202 2 20 380 732
5/3 Sales 660 66 726
8/3 R Maine 203 1 10 490
Sales 400 40 930
10/3 Sales 400 40 440
13/3 V Park 204 2 20 780 780
18/3 Sales 280 28 308
J:\VET\Business\Diploma of Accounting\FNSACC501\STUDENT ASSESSMENT GUIDE\Student Asssessment v1.1.doc
 21/3 Sales 270 27 297
24/3 Sales 250 25
PGoodinso 205 2 20 615 890
n
27/3 Sales 620 62 682
31/3 Sales 720 72 682
Dividend BS5 550 550
ASL
Dividend BS5 150 150
BPZ
7 70 2265 3920 392 700 7177

Cash Payments Journal

Date Particulars Chq ITC Disc Creditor Purc ITC Wage Sun Bank
No adj Rec s h s d
2/3 T Dell 150 1 10 290 290
5/3 Purchases 151 450 45 495
6/3 Wages 152 600 600
9/3 C Ground 153 1 11 300 312
10/3 Purchases 154 460 46 506
14/3 Rent 155 25 250 275
19/3 Purchases 156 850 85 935
22/3 S Andrews 157 220 367
24/3 Advertisin 158 62 620 682
g
27/3 Purchases 159 1300 130 1430
28/3 Rent 160 25 250 275
30/3 Purchases 161 1000 100 1261
31/3 Bank BS5 33 33
Charges
Chq Book BS5 22 22
Bank BS5 110 110
Charges
2 20 810 4060 518 600 128 7273
5

General Ledger

Date Particulars Journal Debit Credit Balance

Reference
01/03 Balance 650 CR
31/03 Receipts 7277 7927 CR
Payments 7273 654 CR
J:\VET\Business\Diploma of Accounting\FNSACC501\STUDENT ASSESSMENT GUIDE\Student Asssessment v1.1.doc
Ella’s Fruit Factory

Bank Reconciliation Statement as at 31 March 2016

Balance as per bank statement 1482

Add deposits not yet credited 792

2274

Less unpresented Cheques Cheque No : Cheque Amount

153 300

157 220

161 1100 1620

Balance as per Cash at Bank 654

account

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 Imagine Education
Assessment Case Study
Part B

Course Code and Name: FNS50217 – Diploma of Accounting

Unit Code: FNSACC511
Unit Title: Provide financial and business performance information

Scenario:

Your firm has been approached by Fosters management for possible engagement of accounting and
business services.

1. You are required to create a letter of engagement including a cover letter discussing Fosters needs
including;
● Reviews of progress plans against agreed criteria and how/when they will be communicated
● The monitoring of objectives to identify changes if any
● Obtainment of feedback and how/when any shortfalls in customer service will be identified and
addressed.

Attached.

Your firm is now required to analyse financial data. (For this case study, students should refer to the
Fosters 2011 Annual Report Fosters Annual Report 2011.pdf). Students must complete the following:

2. Detail what authorities / personnel / sources you would have to consult with to ensure the financial
data provided is accurate and complete. Give a thorough explanation how you would reconcile the
financial data to confirm accuracy.
● You can take as a basis the principles and recommendations of the Australian Securities
Exchange (ASX) Corporate Governance Board (ASX guidelines).
● Clarify the doubts with the auditors they give support to the shareholders.
● I would consult source documentation. √

3. Undertake both a vertical and horizontal analysis of the Fosters consolidated income statements for
the years ending 30 June 2010 and 30 June 2011

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 Attached.

4. Complete a Profit and Loss report for year ending 30 June 2011 as well as a debt-to-equity ratio for
the 2011 financial year.
Attached.

5. Utilising appropriate models and financial and quantitative data from the Annual Report provide an
environmental and further financial analysis of Fosters Group – any suspected problem areas should
be highlighted.
Nil problem areas. √

6. Assess the Statement of Cash Flows in the Annual report – explain why there was a significant decrease
in cash at the end of the year ending 30 June 2011 compared with the previous financial year.
At the meeting of the scheme of April 29, 2011, the shareholders approved the arrangement scheme for
the spin-off of Treasury Wine Estates Limited. Foster's entered with the orders of the Victoria Supreme
Court to the Australian Securities and Investments Commission and the Treasury Wine Estates business
was effectively split up on May 9, 2011 and is reported as a discontinued operation.
Shareholders' equity was reduced by US $ 2,174.7 million, recognized as a capital reduction of US $
1,248.2 million in relation to equity contributed, with a balance of US $ 926.5 million against the
demerger.
The financial data presented are for the period from July 1, 2010 to May 9, 2011 (column 2011) and the
full year ended June 30, 2010. Presented the effect of the equity split on 9 May 2011 and an updated
balance sheet as of June 30, 2010. The wine business was excluded for comparative purposes. √

7. Based on the above analyses, comment on the financial performance of Fosters in the last financial
year – specifically on the following aspects:
● Profitability
● Financial Stability
● Efficiency
● To Reverse Performance Foster's group limited addressed key business challenges and laid a solid
foundation for future growth. These initiatives have brought better execution, cost efficiency and a
stabilization of market share during the year as benefits.
● Foster’s reported earnings before interest and tax and before material items of $816.7 million, an
8% decrease on the prior year. The decrease reflects a 6% decline in Australian beer category
volume and higher corporate costs relative to the prior year.
● CuB's eBit fell 6.2%, according to the decline in the Australian beer category. However, improved
cost efficiency can be used to increase company profits and increase to 4%.
● Cash flow from continuing operations before interest and taxes was $ 872.7 million and cash
translation was 100.4%.
● The final dividend declared by Foster's for 2011 was 13.25 cents per share. The total dividend for the
2011 tax was 25.25 cents, representing a payout ratio of 83% on net income after discontinued
operations. √

8. If the objective of Fosters management was to consolidate their earnings and post a moderate
increase in the previous year’s profit, have they achieved this? Has the above analyses demonstrated
this information – if not, undertake a further analysis of the statements to determine this.
J:\VET\Business\Diploma of Accounting\FNSACC501\STUDENT ASSESSMENT GUIDE\Student Asssessment v1.1.doc
 No, they couldn’t achieved that, because of the demerger of treasury wine estates.
Foster announced a net profit from continuing operations (before material items) of $ 494.9 million,
a decrease of 8.7% over the previous year. Continuing operating income per share (before material
items) was 25.6 cents per share, down 8.9%.
There was a 5.2% drop in Foster and net sales revenue declined 5.0%. eBit declined 8.0% to $ 816.7
million. √

9. Lastly, assess the financial potential of Fosters Group Ltd. Using the financial data provided in the 2011
financial report. Discuss what funding requirements would be required in the future to continue the
same rate of growth over the last financial year. Also list the statutory obligations of the company.
Foster announced a net profit from continuing operations (before material items) of $ 494.9 million,
before material items, a decrease of 8.7% over the previous year. Continuing operating income per
share (before material items) was 25.6 cents per share, down 8.9%.
There was a 5.2% drop in Foster and net sales revenue declined 5.0%. Impelled by the lower volume of
the Australian beer category (down 6% in the year), eBit declined 8.0% to $ 816.7 million.
Foster's had net spending of $ 105.9 million. The cost of capital of CuB was $ 65.1 million and was
slightly below the expected $ 70-80 million provided at the beginning of the year due to some projects
in fiscal year 2012. Foster continues to maintain a high base of efficient assets. Depreciation and
amortization amounted to US $ 52.9 million, representing only 2.3% of net sales revenue. Foster's net
capital expenditure in fiscal year 2012 is expected to be in the range of $ 120-130 million. √

Students must undertake the above analysis tasks in accordance with standard accounting techniques.
Spreadsheet or appropriate accounting software must be used – hand written analyses will not be
accepted.

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 Imagine Education
Assessment Project
Part C

Course Code and Name: FNS50217 – Diploma of Accounting

Unit Code: FNSACC511
Unit Title: Provide financial and business performance information

Please read the following project and answer all of the questions:

Students are to utilise the analyses completed in the case study for Fosters. For this project, students
must prepare detailed written advice to the Management of Fosters regarding the following:

1. Include all the relevant analyses in the case study to compose a detailed written report on financial
performance for the year ending 30 June 2011.
The main relevant points, are:
- Foster's reported earnings before interest and tax and before material items of$816.7
million, an 8% decrease on the prior year
- The decrease reflects a 6% decline in Australian beer category volume and higher
Corporate costs relative to the prior year which included one time benefits
- CuB’s eBit declined 6.2%/, in line with decline the Australian beer category. However,
improved cost efficiency mitigated the impact on CuB earnings and allowed Cub to increase
advertising and promotion by more than 4%
- Operating cash flow from continuing operations before interest and tax was$872.7 million
and cash conversion was 100.4%
- Earnings per share from continuing operations before material items fell 8.9% to 25.6 cents
- Foster's declared a final dividend for fiscal 2011 of 13.25 cents per share. The total dividend
for fiscal 2011 was 25 25 cents, representing an 83% payout ratio net profit after
discontinued operations but before material items

2. Make sure in addition to the financial analysis, you include the following in your report:
- Discuss compliance protocols in place – are they sufficient to meet statutory requirements?
Do they meet all the Corporate Governance principles?
➔ Foster's Group is a premier global beverage company delivering an expansive portfolio of beer,
wine, spirits, cider and non-alcohol beverages. Listed as one of australia's Top 20 companies, the
group has /operations in the United Kingdom Europe, the United States and Asia Pacific, with
product distribution spanning more than 150 countries worldwide.
➔ More than 60 percent of Fosters staff regularly use an expense management process and
therefore efficiency, accuracy and clear visibility of spend are of key importance to the business
➔ They are committed to delivering best practice in corporate governance and transparency in
reporting the information required by the corporate governances.
➔ The foster's Board is responsible for the overall corporate governance of the Company. the Board
Charter sets out the following objectives of the Board to provide strategic guidance for the
Company and effective oversight of management; to optimize Company performance and
shareholder value within a framework of appropriate risk assessment and management; and to
recognize the company's legal and other obligations to a legitimate stakeholders

- Outline reporting and lodgement timeframes for the 2009 business year
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New accounting standards and interpretations: AASB 2009-5 "Further Amendments to Australian
Accounting Standards arising from the Annual Improvements Project: AASB 2009-8 "Amendments to
Australian Accounting Group cash-settled share-based Payment Transactions": AASB 2009-
10"Amendments to Australian Accounting Standards- Classification of Rights Issues", AASB Interpretation
19"Extinguishing Financial Liabilities with Equity instruments and AASB 2009-13"Amendments to Australia
Accounting Standards arising from Interpretation 19’.
As was disclosed in the demerger Booklet, the Foster,s Board at that time determined that the 2009 Itip
grant and the 2010 ltip grant held by continuing foster's executives would continue on foot and be
adjusted in accordance to the timeframes required by the financial statements, auditing and annual
taxation - end of financial year.

3. Research and comment on the following

- What are the financial risks that should be considered – e.g. Debtor default, stability of
global economy, operating costs etc
Investment risk
The risk of capital recovery
Liquidity risk
Financing risk
Interest rate risk
https://www.investopedia.com/terms/f/financialrisk.asp
- For the above risks, outline options for contingencies – e.g. Insurance options, investment
options etc.
Some options for contingencies, would be:
➔ Investment risk can be defined as the probability or likelihood of occurrence of losses relative to
the expected return on any particular investment.
➔ Stating simply, it is a measure of the level of uncertainty of achieving the returns as per the
expectations of the investor. It is the extent of unexpected results to be realized.
➔ The risk of capial recovery is the earning back of the initial funds put into an investment. Capital
recovery must occur before a company can earn a profit on its investment. A euphemism for
debt collection. Capital recovery companies obtain overdue payments from individuals and
businesses that have not paid their bills. Upon obtaining payment and remitting it to the
company to which it is owed, the capital recovery company earns a fee for its services.liquidity
risk refers to the possibility that the assets of the enterprise cannot transfer cash in a normal and
certain manner or that the corporate debt and payment obligations cannot be performed
normally.
➔ Liquidity risk is the risk that stems from the lack of marketability of an investment that cannot be
bought or sold quickly enough to prevent or minimize a loss. Liquidity risk is typically reflected in
unusually wide bid-ask spreads or large price movements.
➔ Financial risk is the type of specific risk that encompasses the many types of risks related to a
company's capital structure, financing and the finance industry. These include risks involving
financial transactions, such as company loans and exposure to loan default.
➔ The interest rate risk is the risk that an investment's value will change due to a change in the
absolute level of interest rates, in the spread between two rates, in the shape of the yield curve,
or in any other interest rate relationship. Such changes usually affect securities inversely and can
be reduced by diversifying (investing in fixed-income securities with different durations) or
hedging (such as through an interest rate swap).

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 4. Give advice on how Fosters can ensure they do not have another similar loss of cash at the end of
the next financial year
Review the credit terms:
If the company is already experiencing a strain on cash flow, it may want to review its credit terms as this
influences when the company receive the money owed to it. Extending credit to the customers is always
a good idea to expand the business, but it if the terms are too long; this means the company is not getting
paid for longer.

The company can also implement a similar policy when it comes to paying your own bills- negotiate a
payment plan with your suppliers to avoid paying in one hit particularly for a big job, which can
significantly reduce your liquidity. Instead, you can try paying in installments to ensure that the gap
between your accounts receivable and accounts payable is not overly large√

Minimise bad debts:

Bad debts are inherently bad for business. Bad debts refer to amounts that cannot be collected and have
to be written off as a loss or expense to the business, which can have a severe impact on cash flow

To ensure that your customers pay on time, you may want to institute an early payment discount or some
other reward as an / incentive. Alternatively, a punishment' can work as well, such as charging interest on
outstanding payments after a set period√

5. Include a detailed section on the rights and obligations of the client – ensure you include:
- All relevant laws, i.e. corporation law, legislative protection, contract law, privacy law,
taxation legislation etc.
➔ The Directors have been given the declarations required by section 295A of the Corporations Act
2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30
June 2011
➔ The directors of the company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001
➔ The Privacy Act 1988
➔ Taxation legislations, such as: income tax, excise duties, customs duties, goods and services tax,
fringe benefits tax, luxury car tax, wine equalisation tax and other indirect taxes

6. Conclude with a list of alternative sources of short and long term investment, giving a brief
description of each.
Short term:

The Fosters senior management Short term incentive plan (Stip)rewards the CEO and executives for
performance against a pre-determined scorecard of measures linked to Fosters short- term business
performance(12 months) and individual performance. It would be applicable once that a short-term
investment is an investment you expect to hold for 3 years or less, then sell and/or convert to cash.
Examples of short-term investments include money market funds, certificates of deposit, and short-term
bonds. While many people like to play the market or speculate with day trading, it's a risky business and
you should educate yourself and do plenty of research before you try short-term investing. For most
people, it is easier and safer to plan on long-term investments.

Long term:

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Eligible executives are granted rights(performance rights) to acquire foster's shares subject to satisfying
certain performance conditions upon vesting, each performance right entitles the participant to acquire
one Share.

The CEO the kmp executives and other selected senior executives who have the greatest influence over
the underlying performance conditions and shareholder value are eligible to participate in the Itip. in the
year ended 30 June 2011, Itip offers were made to six current executives. It would be applicable, as long-
term investments are vehicles that you can expect to pay off after holding them for a period of several
years. When investing long-term, you can be more aggressive because you have a longer time horizon, so
you could opt to invest in an aggressive mutual fund to get the highest rate of return. You can approach
long-term investing by determining the rate of return you want, then looking for a mutual fund that
averages that rate of return over a five to 10-year period. When you invest for the long-term you must
not panic when a stock's value drops and avoid selling just because the market looks bad.

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