Explain the importance of accurate asset valuations

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Reference no: EM131481443 , Length: word count:1200

Part I - Research based report

As a new accounting graduate you have recently joined the accounting department of an ASX listed company operating in the mining (extractive) industry.

To complete this assignment you will need to select a suitable company yourself that meets the following criteria:
- The company must be a constituent of the S&P/ASX 300 index (www.asx300list.com);
- The company must be in the ‘Materials' sector - you can identify all companies in this sector by sorting the list based on the third column of the table in the above website;
- The company must publish audited annual financial reports in English, fully complying with IFRS or AASB standards;
- The company must have a 30 June year end; and
- The company cannot be Evolution Mining Limited.

Your manager, the CFO, has sent you an email containing a Media Release (MR) from the Australian Securities & Investment Commission (ASIC) in relation to Evolution Mining Limited (Evolution Mining), a listed entity in the same industry as the company that you are employed by.

The Audit Committee is aware that as well as Evolution Mining, numerous other companies in the same industry have also recently been investigated by ASIC in relation to asset valuations.

The Audit Committee is also aware that ASIC Commissioner, John Price, was quoted as saying the following when announcing the focus areas for 30 June 2016 financial reports:

"Directors and auditors should continue to focus on values of assets and accounting policy choices. We continue to see companies use unrealistic assumptions in testing the value of assets..." (16-174MR)

To this end, the Audit Committee is keen to ensure that asset values are appropriately reflected in the 30 June 2017 financial statements of your company.

You have been asked to undertake some research and prepare a report for presentation at the next meeting of the Audit Committee, to be held on 1 June 2017. Your report must address each of the following:

a) The role of ASIC as a Corporate Regulator, specifically in relation to their Financial Reporting Surveillance Program. In your discussion provide a summary of ASIC's findings from their review of 31 December 2015 financial reports in relation to asset values and impairment testing.

b) A critical analysis of some of the complexities and key issues involved in impairment testing for mining assets. In your analysis, refer to one or more publications issued by the ‘Big 4' in relation to the mining industry.

c) Provide a detailed explanation of the impairment write-down made by Evolution Mining in the year ended 30 June 2016. Your explanation should include a discussion of the asset/s that were impaired, the amount of the impairment write-down, and relevant disclosures in the 30 June 2016 financial report in relation to impairment testing.

d) In relation to the company that you are employed by, identify five specific issues that the Audit Committee should consider when reviewing the impairment calculations that will shortly be prepared by management. For each issue identified, explain how it is specifically relevant to your company. Hint: You may wish to refer to table 3 of ASIC information sheet ‘INFO 203 Impairment of non-financial assets: Materials for directors' for a list of matters that would be relevant to the Audit Committee.

Part II - Video Oral Presentation

The CFO was impressed by your report and has asked you to prepare a video presentation to be played to the Audit Committee at the next meeting on 1 June 2017.

Your video presentation should:

a) Explain the importance of accurate asset valuations from ASIC's perspective;

b) Highlight what you believe to be the key issues in impairment testing of mining assets;

c) Identify and explain the five key issues that you believe the Audit Committee.

Reference no: EM131481443

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Reviews

len1481443

5/2/2017 5:44:08 AM

1200 words (Part 1) + some basic guidelines on how to do Part 2 (Video) as the student will do it himself Deadline - 20 hours Super Sharp Australian Client Very High-Quality Work Needed Comments from the Client: Please choose the company as required in the instructions I will be marked out of 7.5 in this 15 marks assessment as I have missed my deadline already and I am looking to get maximum marks. Do include that This is the assignment question with example of such a report.

len1481443

5/2/2017 5:43:42 AM

Explanation of impairment write-down made my Evolution Mining Explanation of impairment write-down made my Evolution Mining Identification of five issues to be considered by the Audit Committee for your selected company Writes clearly. All issues identified are relevant and all explanations are complete Document formatting and structure (including length, organisation of sections and paragraphs) Meets all the assignment requirments. Use professional, correct formatting. Clear organisation of sections and paragraphs with excellent flow. Written expression and referencing

len1481443

5/2/2017 5:42:20 AM

Explanation of the role of ASIC and summary of findings from 31 financial reports in relation to asset values and impairment testing High Distinction Writes clearly. Correctly describes the role of ASIC and all the findings with plentiful detail. Critical Analysis of complexities of testing mining assets for impairment Critical Analysis of complexities of testing mining assets for impairment

len1481443

5/2/2017 5:42:01 AM

Video format Before you start recording your video it is recommended that you view the two YouTube videos by Vlog Brothers and Idea Channel. Both of these can be accessed through the ‘Assessment Task’ folder on iLearn. Length Time limit = 4 minutes Penalties for exceeding the time limit are as follows: Time Penalty • Up to 4:29 • 4:30-5:29 • 5:30 or more • No penalty • 10% of total marks • 20% of total marks Slides The use of slides (eg Powerpoint/Prezi) is not mandatory as you will not be marked on your slides, but on your communication skills. If you do wish to use slides please use a screen capture rather than a projected image. Physical presence Students must actually appear in their video – you must be visible as well as able to be heard. Audibility It is your responsibility to ensure that we can hear your presentation clearly. If we can’t hear it then we can’t mark it! If you are recording using screen capture technology consider using speaker and headphones.

len1481443

5/2/2017 5:41:48 AM

Length Total word count limit = 1,200 words. Your word count must be included on your cover page. Penalties for exceeding the word limit are as follows: Word count Penalty • 1,201 – 1,319 words • 1,320 – 1,439 words • 1,440 or more words • No penalty • 10% of total marks • 20% of total marks Style The report must be presented as follows: Font: Times New Roman 12 point Spacing: 1.5 times line spacing Margins: not less than 2.5 cm Footer Each page must have a footer containing the following: ACCG224 S1 Your SID Page number Referencing In text referencing is required for all sources used and a complete list of references must be provided using the Harvard Referencing System. A copy of the Harvard Referencing System is available under the ‘Assessment Task’ folder on iLearn. Please note that as this is a research assignment it is not appropriate to reference to textbooks or lecture slides.

len1481443

5/2/2017 5:41:35 AM

Report Format Before you start writing your report, it is recommended that you undertake the following (both of these can be accessed through the ‘Assessment Task’ folder on iLearn): 1. Watch the e-lecture on business report writing 2. Take a look at the sample Business Research Report provided on iLearn. Structure The report must contain the following (in this order): • Report cover page • Table of contents • Executive summary • Introduction • Body • Conclusion/recommendation • Reference list • Appendix You should include relevant parts of the annual reports that you have used and referred to in your report. Do NOT attach entire annual reports.

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