Prepare Financial Reports to Meet Statutory Requirements

This assessment tool covers the principles of assessment, rules of evidence, and resources required for FNSORG505 unit of FNS50215 Diploma of Accounting. It includes questions and answers related to financial reporting, comprehensive income statement, and treatment of expenses. The assessment submission checklist is also provided.

V2018.T2. 1.1
FNS50215 - Diploma of Accounting / FNSORG505 / 2018/ T2/ Assessment Tool Page 1 of 10
Module 4 Week 3
Term and Year Term 2 2018
Assessment Type Questions and answers
Student Name: Syed Jaffar Abbas
Student ID No: V20170604
Qualification : FNS50215 - Diploma of Accounting
Unit Code: FNSORG505
Unit Title: Prepare financial reports to meet statutory requirements
Assessor’s Name Ada Du
Student Declaration: I declare that this work has been completed by me honestly and with integrity. I understand that the
Elite Education Vocation Institute’s Student Assessment, Reassessment and Repeating Units of Competency Guidelines
apply to these assessment tasks.
Student Name: Syed Jaffar Abbas
Student Signature: Date:
Assessment submission (new) requirements
Please save this file as PDF format (include your name to the filename) before uploading onto Moodle.
Assessment deadlines penalty
It is expected that unless a simple extension, special consideration or disability services adjustment has been granted,
candidates will submit all assessments for a unit of study on the specified due date. If the assessment is completed or
submitted within the period of extension, no academic penalty will be applied to that piece of assessment.
If an extension is either not sought, not granted or is granted but work is submitted after the extended due date, the late
submission of assessment will result in a late penalty fee of AUD$50/- per assessment.
Assessment/evidence gathering conditions
Each assessment component is recorded as either Satisfactory (S) or Not Yet Satisfactory (NYS). A student can only achieve
competence when all assessment components listed under procedures and specifications of the assessment section are
Satisfactory. Your trainer will give you feedback after the completion of each assessment. A student who is assessed as NYS
is eligible for re-assessment. Should the student fail to submit the assessment, a result outcome of Did Not Submit (DNS) will
be recorded.
Principles of Assessment
Based on Clauses 1.8 – 1.12 from the Australian Standards Quality Assurance’s (ASQA) Standards for Registered Training
Organizations (RTO) 2015, the learner would be assessed based on the following principles:

V2018.T2. 1.1
FNS50215 - Diploma of Accounting / FNSORG505 / 2018/ T2/ Assessment Tool Page 2 of 10
Fairness - (1) the individual learner’s needs are considered in the assessment process, (2) where appropriate, reasonable
adjustments are applied by the RTO to take into account the individual leaner’s needs and, (3) the RTO informs
the leaner about the assessment process, and provides the learner with the opportunity to challenge the result of
the assessment and be reassessed if necessary.
Flexibility – assessment is flexible to the individual learner by; (1) reflecting the learner’s needs, (2) assessing competencies
held by the learner no matter how or where they have been acquired and, (3) the unit of competency and
associated assessment requirements, and the individual.
Validity – (1) requires that assessment against the unit/s of competency and the associated assessment requirements
covers the broad range of skills and knowledge, (2) assessment of knowledge and skills is integrated with their
practical application, (3) assessment to be based on evidence that demonstrates tat a leaner could demonstrate
these skills and knowledge in other similar situations and, (4) judgement of competence is based on evidence of
learner performance that is aligned to the unit/s of competency and associated assessment requirements.
Reliability – evidence presented for assessment is consistently interpreted and assessment results are comparable
irrespective of the assessor conducting the assessment
Rules of Evidence
Validity – the assessor is assured that the learner has the skills, knowledge and attributes, as described in the module of
unit of competency and associated assessment requirements.
Sufficiency – the assessor is assured that the quality, quantity and relevance of the assessment evidence enables a
judgement to be made of a learner’s competency.
Authenticity – the assessor is assured that the evidence presented for assessment is the learner’s own work. This would
mean that any form of plagiarism or copying of other’s work may not be permitted and would be deemed strictly
as a ‘Not Yet Competent’ grading.
Currency – the assessor is assured that the assessment evidence demonstrates current competency. This requires the
assessment evidence to be from the present or the very recent past.
Resources required for this Assessment
 All documents must be created using Microsoft Office suites i.e., MS Word, Excel, PowerPoint
 Upon completion, submit the assessment via the student learning management system to your trainer along with the
completed assessment coversheet.
 Refer the notes on eLearning to answer the tasks
 Any additional material will be provided by Trainer
Instructions for Students
Please read the following instructions carefully
 This assessment is to be completed according to the instructions given by your assessor.
 Students are allowed to take this assessment home.
 Feedback on each task will be provided to enable you to determine how your work could be improved. You will be
provided with feedback on your work within 2 weeks of the assessment due date.
 Should you not answer the questions correctly, you will be given feedback on the results and your gaps in knowledge.
You will be given another opportunity to demonstrate your knowledge and skills to be deemed competent for this unit of
competency.
 If you are not sure about any aspect of this assessment, please ask for clarification from your assessor.

V2018.T2. 1.1
FNS50215 - Diploma of Accounting / FNSORG505 / 2018/ T2/ Assessment Tool Page 3 of 10
 Please refer to the College re-assessment and re-enrolment policy for more information.
1. When reviewing the financial statements and supporting notes of a reporting entity, is it possible to
find out about all the individual types of expenses and income that the entity has incurred or received?
If not, how does management determine which expenses and income should be disclosed?
The financial statements of any entity, whether profit making or not, small or big and dealing
in any industry are guided and are being prepared in accordance with the Internation
Financial Reporting Standards and the local Generally Accepted Accounting Principles. While
reviewing the financial statements, it is very much possible to identify the individual types
of incomes and expenses that pertain or accrue to the entity. The notes to account that
generally are the detailed version of the headings on the consolidated profit and loss account
and the statement of financial position have all the detailed information. For example in the
below screenshot, the extract of the annual report one of the major companies in USA
Samsung Electronics has been attached (Jefferson, 2017). This shows the view of the
consolidated profit and loss account.
In this there are several notes like 32, 24, 25, 12, 27, 28, etc which will show the detailed
information of the incomes and expenses as contained in the profit and loss account. In case
note 32 is analysed, we find that that the individual types of incomes are being classified on
the basis of the operating segments which are CE, IM, Harman, semiconductors, DP and many
others. The company has also shown the revenue that is being earned in various regions or
geographies.

V2018.T2. 1.1
FNS50215 - Diploma of Accounting / FNSORG505 / 2018/ T2/ Assessment Tool Page 4 of 10
Similarly, the expenses are also grouped based on the nature of the expenses like the cost
of goods sold, the purchases, the wages and salaries of the employees, the pension, the
depreciation and amortization expenses, welfare, commissionand service charges,
advertising and sales promotion expenditure and others which are very small in amount.

V2018.T2. 1.1
FNS50215 - Diploma of Accounting / FNSORG505 / 2018/ T2/ Assessment Tool Page 5 of 10
Similarly, there is also a break up given for selling and administrative expenses like
transportation, warranty, packaging, etc. IN this way, expenses can be determined and
recognisedin the financial statementshowever not all of them are reported. The
management of the company first determines the materiality level and the cut off amount
beyond which the individual expenses and incomes should be reported in the financial
statements. Rest all the other incomes and expenses which are below the given value limit
or below materiality are classified under the head “Others”. The materiality limit is generally
determined as a percentage of the sales or the profitability and then the management reports
all the critical and significant heads of expenses and incomes in the notes to accounts leaving
the rest to the accounted under the head others (Dichev, 2017).

V2018.T2. 1.1
FNS50215 - Diploma of Accounting / FNSORG505 / 2018/ T2/ Assessment Tool Page 6 of 10

V2018.T2. 1.1
FNS50215 - Diploma of Accounting / FNSORG505 / 2018/ T2/ Assessment Tool Page 7 of 10
2. Does the statement of comprehensive income provide a reconciliation of opening and closing retained
earnings? If not, where can such a reconciliation be found?
The statement of comprehensive income or the consolidated profit and loss account does not
gives the opening and closing balances of the retained earnings and does not gives any sort
of reconciliation. Retained earnings is a part of the equity or the profit that has been earned
by the company over the period of time and which has not been distributed but retained in
business for further reinvestment. The only change in it year on year is the adjustment of
the profit earned or loss incurred during the year. The profit after distribution of dividend is
added back and the loss incurred is deducted from the prior year’s balance (Alexander, 2016)
Since this is part of the equity or the owner’s capital, the same is shown in the consolidated
statement of changes in equity.
From the above statement, it can be found that the entire reconciliation has been given. The
opening balance was $ 170710 Mn, the profit for the year was $ 36553Mn, the divide
distributed and the retirement of the treasury stock was $5965 and $ 10496 Mn which makes
the closing balance of the retained earnings to be $ 190801 Mn.

V2018.T2. 1.1
FNS50215 - Diploma of Accounting / FNSORG505 / 2018/ T2/ Assessment Tool Page 8 of 10
3. When is it permissible for a reporting entity to treat expenses directly as a reduction to retained
earnings, rather than including them as part of the period's profit or loss?
The accounting standards do give a note and way out to deal with the expenses relating to
the prior period if it has been missed out in the previous year of reporting by the reporting
entity. As the prior period item cannot be directly adjusted in the profit and loss account of
the entity in the current year, AASB 108 gives the way forward. It requires that all the prior
period errors can be corrected by directly adjusting the same against the balance of the
retained earnings that has been carried forward from the last year and by reinstating the
comparative information in the current year reporting (Goldmann, 2016).
This is also a general statement or a guideline in the accounting standard which states that
when the entity applies accounting standard for the first time, then any retrospective change
should be made through adjustment in the retained earnings and not the profit and loss
account simple because of the reason that the adjustments pertain to the last or prior years
and it should not have an impact on current year’s profitability or else it would lead to
misrepresentation of the facts.

V2018.T2. 1.1
FNS50215 - Diploma of Accounting / FNSORG505 / 2018/ T2/ Assessment Tool Page 9 of 10
References
Alexander, F. (2016). The Changing Face of Accountability. The Journal of Higher
Education, 71(4), 411-431.
Dichev, I. (2017). On the conceptual foundations of financial reporting. Accounting and
Business Research, 47(6), 617-632. Retrieved from
https://doi.org/10.1080/00014788.2017.1299620
Goldmann, K. (2016). Financial Liquidity and Profitability Management in Practice of Polish
Business. Financial Environment and Business Development, 4, 103-112. Retrieved
from https://doi.org/10.1007/978-3-319-39919-5_9
Jefferson, M. (2017). Energy, Complexity and Wealth Maximization, R. Ayres. Springer,
Switzerland . Technological Forecasting and Social Change, 353-354.

V2018.T2. 1.1
FNS50215 - Diploma of Accounting / FNSORG505 / 2018/ T2/ Assessment Tool Page 10 of 10
Assessment Submission Checklist to be completed by the Trainer/Assessor
Unit name: FNSORG505- Prepare financial reports to meet statutory requirements
Assessment: Week 3
Did the student complete and provide evidence for the following (please  ): Yes No
1.1 Identify, interpret and comply with statutory requirements and information
1.2 Accurately analyse data and information for reports
1.3 Prepare and consolidate well-written reports in required format.
Has the learner proven they can (please  ): Yes No
1.1 Outline key information required, common financial report formats and typical quality indicators
1.2 Explain financial services industry codes of practice
1.3 Describe key requirements of organisational policy and procedures relevant to financial reporting
1.4 Identify and describe key requirements of relevant legislation and regulations relevant to financial
reporting.
Feedback and result outcome: Yes
Satisfactory
Not Yet Satisfactory
Re-assessment required
Trainer/ Assessor’s declaration: I hereby certify that the above student has been assessed by myself and all assessments are carried out as
required by the Principles of Assessments (Clause 1.8 of the Standards for RTO 2015).
Trainer/ Assessor’s Initials Date