Reference no: EM131302657

Format: Three Sections, A, B and C.

Section A: Multiple Choice - 10 Marks (1 Mark each)

Section B: Essay (1000-1500 words, +/- 5%) - 20 Marks

Section C: Short Answer/Research and Analysis - 20 Marks

 

SECTION A - Multiple Choice

1 The Virgin annual financial report shows in 2014, the auditors

a) KMPG charged $344,000 in audit service fees

b) KPMG received $1,652,000 in fees

c) KMPG charged $734,000 in non-audit service fees

d) KPMG charged $157,000 in extra fees not related to audit

2 The Virgin 2014 annual financial report shows that the 3 largest shareholders hold _______percent of the issued shares

at the end of September 2014.

a) 70.05

b) 0.705

c) 70.06

d) None of the above

3 Virgin show in their 2014 Annual report that liquidity risk is managed by:

a) Checking interest rates regularly and negotiating the best rates with their bank

b) Maintaining adequate banking facilities

c) Hedging limits for financial risk as documented in the Treasury Risk Management Policy

d) Making sure they have a good reputation so the bank will lend them money

4 The domestic segment of Virgin operations in the 2014 annual report_

a) Is the most unprofitable area of the business

b) Incurred 57% of total capital expenditure

c) Earned $3,156, 800,000

d) All of the above

5 In regards to intangible assets Virgin 2014 annual report shows that:

a) Patents and trademarks are amortised at 33.3%

b) Goodwill is measured at replacement cost

c) Software amortisation is measured at 31.3%

d) All of the above

6 The CEO of Virgin Australia for 2014 was

a) Richard Branson

b) John Branson

c) John Borghetti

d) Richard Borghetti

7 The Audit and Risk Management Committee of Virgin Australia is responsible for

a) Reviewing earnings management activities and making sure the external auditor approves actions as they are

paid high audit fees.

b) Recommending the external auditors terms of engagement

c) Ensuring that external auditors are aware of financial policies not being adopted by the CEO

d) All of the above

8 Earnings Management in practice found in Virgin 2014 annual report_

a) Can be seen with the voluntary disclosure of remuneration of company directors

b) Is illustrated with the disclosure of the program Virgin has entered into with Tiger Air to sell more flights to

Singapore

c) The disclosure of the increased cost of loyalty programs

d) None of the above

9 Good corporate governance in the Virgin 2014 annual report

a) Is shown with the disclosure that the auditors are no longer independent as there are only non-executive

directors on the audit committee

b) Is shown with the disclosure that there are policies and restrictions in the trading of securities prior to the

release of results for executives and staff

c) Is demonstrated as there are no independent directors and this is important as all executives need to be

intimately involved in the running of the business for it to be successful

d) None of the above

10 As shown in the Virgin 2014 annual report, the Board has established an Audit and Risk Management Committee

whose roles is to:

a) Provide oversight to external and internal audit functions

b) Review effectiveness of internal control systems

c) Ensure compliance with regulatory requirements

d) All of the above

SECTION B -Essay

Students are required to write a short essay of 1000-1500 words (+/- 5%) on the following topic:

"Virgin Australia Holdings have poor corporate governance practices and they disclose little in their 2014 Annual Report" Discuss your agreement or disagreement with this statement. Provide examples where appropriate.
(In-text and end-text referencing for this question is required and end-text references should be included at the end of Section B).

SECTION C
Short Answer/Research and Analysis

Question 1 (6 marks)
Using disclosures made in the Virgin 2014 Annual Report identify and provide 2 examples where Virgin is addressing attributes related to "Stakeholder Theory".
(Answers must be explained in full and the link of the 2 examples to stakeholder theory must be clear).
Students are required to answer question 1 in a structured organised format in up to 300 words (+/- 5%).
(In-text and end-text referencing for this question is required and end-text references should be included
at the end of Section C).

Question 2 (14 marks)
Using Examples from the Virgin Australia 2014 Annual Report discuss how Agency Costs are or may be being addressed by the management of Virgin Australia.
Students are required to answer question 2 in a structured organised format in up to 1000 words. (+/-5%)
(In-text and end-text referencing for this question is required and end-text references should be included at the end of Section C).