ACC3201 Financial Analysis Report: West Australian Superannuation Fund

This document presents a financial analysis report on a superannuation fund, specifically focusing on the West Australian state superannuation fund for educators. It includes a memo to Ms. Anne Nolan, the Director-General of the Department of Education, outlining the analysis and its implications. The report investigates the fund's ability to meet future obligations under various scenarios: base case, worst-case (with two different rates of return), aggressive, and rescue. The analysis uses key assumptions like pension purpose salary, total teachers in the fund, contribution rates, inflation adjustments, and return on investment to calculate the Net Present Value (NPV) of the fund under each scenario. The conclusion indicates that the superannuation fund is generally well-financed, except in the most dire scenario where the rate of return drops significantly to 5.5%, resulting in a negative NPV. The report utilizes a Microsoft Excel decision support system to model these scenarios, demonstrating the impact of different parameters on the fund's ability to meet future commitments.

Running head: ACCOUNTING FINANCIAL ANALYSIS REPORT
Accounting Financial Analysis Report
Name of the Student:
Name of the University:
Authors Note:

1ACCOUNTING FINANCIAL ANALYSIS REPORT
Accounting Information Systems
Name of the Student:
Name of the University:
Authors Note:

2ACCOUNTING FINANCIAL ANALYSIS REPORT
MEMO
To: Ms Anne Nolan.
From: Student’s Name (………..)
Date: October 25, 2018.
Place: Perth, West Australia.
Subject: Providing choice emotionally supportive network in regard of superannuation
Administration by West Australian state for benefits store of the educators.
Respected Mam,
With the target of furnishing you with all essential data in a spread sheet that enables you to roll
out vital improvements to see the effect of various degree of profitability and other such
parameters on the subsidizing ability of the reserve to meet the future commitments towards the
educators that have resigned and will resign later on (Arnold, Bateman, Ferguson & Raftery,
2014).
In order to investigate the ability of a superannuation fund to meet all future obligations in
respect of pensions to the retiring employees it would be beneficial to the management of such
superannuation fund to measure the impact of all possible scenarios on the fund and its ability to
discharge the obligations in the future (Cummings, 2016).
Right off the bat, the conceivable situations have been isolated into base, most exceedingly
terrible (with two separate rates), forceful and protect. Utilizing the suitable suppositions under

3ACCOUNTING FINANCIAL ANALYSIS REPORT
various situations as made reference to over an itemized estimation will be useful in surveying
the assets capacity to satisfy its future commitments (Tan & Cam, 2015).
Base case scenario and NPV of the fund:
Before getting into the particular count for the superannuation store of West Australian state for
instructors it is just normal to investigate the suspicions to be considered for base case situation.
Here are the rundown of presumptions under base case situation:
Most expected scenario
Pension purpose salary 96,975.00
Total teachers in West Australian State Superannuation
fund
47433
Teachers' contribution in the fund 9.5% of their salaries
Contribution by West Australian State 2.5 times of teachers'
contributions
Annual inflation adjustment 3%
Return on investment of superannuation fund 7.50%
On the off chance that the above conditions appear the parity in the superannuation store would
be affected in the accompanying way:

4ACCOUNTING FINANCIAL ANALYSIS REPORT
Particulars Amount ($) Amount ($)
Each teacher's accumulated fund over the entire employment period 2,406,765.1
0
Number of teachers in total 47,433.0
0
Available funds in the superannuation to meet the future obligations of
pension
114,160,088,791.7
4
Obligation for total costs ( Working Note 1) 74,636,704,488
.62
Annual retirement obligation's present value 13,219,336,618
.77
87,856,041,107.3
9
Net present value 26,304,047,684.3
5

5ACCOUNTING FINANCIAL ANALYSIS REPORT
Working Note 1:
Note 2
Particulars Amount ($)
Present value of liability to meet the pension obligation of a
teacher
611,946.2
0
Number of teachers in total (B) 47,433.0
0
Total obligation of payment of pension to the teachers (A x B) 29,026,443,951.4
5
Present value of administrative costs 45,610,260,537.1
7
Obligation for total costs 74,636,704,488.6
2
The net present esteem has been featured in to show the quality of the store to meet its future
commitments as the NPV of the reserve is in positive demonstrating the over the top measure of
reserve in state benefits plan than the measure of commitment later on (Watson, Delaney,
Dempsey & Wickramanayake, 2016).

6ACCOUNTING FINANCIAL ANALYSIS REPORT
The NPV of the reserve under base case situation is $26,304,047,684.35.
Negative scenario I:
Negative or worst case scenarios have been further classified into two category. In the first
situation the rate of return on investment has been assumed to be 6.5% per annum instead of
normal rate of return of 7.5% on the superannuation funds invested in different assets. In the
second category the rate of return on investment has been reduced further to 5.5% per annum.
The impact of such changes in rate of return is calculated below.
In most noticeably awful case situation, the most fear of state superannuation finance is the rate
of return on the superannuation stores contributed in numerous resources. The West Australian
state anticipates to win 7.5% yearly rate of return on the stores contributed. Be that as it may, in
case of decrease in such return the anticipated Net display esteem of the state annuity support is
to be calculated here. The list of presumptions beneath most exceedingly bad case situation is as
taking after (Bird, Foster, Gray, Raftery, Thorp & Yeung, 2016).
Negative scenario with 6.5% return on investment
Pension purpose salary 96,975.00
Total teachers in West Australian State Superannuation
fund
47433
Teachers' contribution in the fund 9.5% of their salaries
Contribution by West Australian State 2.5 times of teachers'
contributions

7ACCOUNTING FINANCIAL ANALYSIS REPORT
Annual inflation adjustment 3%
Return on investment of superannuation fund 6.50%
The impact on the superannuation fund for teachers due to the decrease in rate of return form
7.5% per annum to 6.5% per annum is documented below:
Particulars Amount ($) Amount ($)
Each teacher's accumulated fund over the entire employment
period
2,060,338.
79
Number of teachers in total 47,433.
00
Available funds in the superannuation to meet the future
obligations of pension
97,728,049,950.
52
Obligation for total costs ( Working Note 1) 74,636,704,488.
62
Annual retirement obligation's present value 13,219,336,618.
77
87,856,041,107.
39
Net present value 9,872,008,843.

8ACCOUNTING FINANCIAL ANALYSIS REPORT
14
Working note 1:
Particulars Amount ($)
Present value of liability to meet the pension obligation of a
teacher
611,946.2
0
Number of teachers in total (B) 47,433.0
0
Total obligation of payment of pension to the teachers (A x B) 29,026,443,951.4
5
Present value of administrative costs 45,610,260,537.1
7
Obligation for total costs 74,636,704,488.6
2
Indeed, even under most dire outcome imaginable if the superannuation subsidize acquires just
6.5% of yearly profit for the measure of superannuation finance contributed then likewise the
superannuation reserve will be said to be all around supported to make instalments later on (Earl,
Gerrans, Asher & Woodside, 2015). As can be seen that even with 6.5% return on

9ACCOUNTING FINANCIAL ANALYSIS REPORT
superannuation finance the NPV is featured in green demonstrating positive esteem (Cummings,
2016).
Negative or worst case scenario II:
Most dire outcome imaginable with even lower profit of 5.5% for the measure of speculation
mind the rundown beneath giving every one of the insights about the presumptions for the count
(Galagedera & Watson, 2015).
Scenarios
Negative scenario with 5.5% return on investment
Pension purpose salary 96,975.00
Total teachers in West Australian State Superannuation
fund
47433
Teachers' contribution in the fund 9.5% of their salaries
Contribution by West Australian State 2.5 times of teachers'
contributions
Annual inflation adjustment 3%
Return on investment of superannuation fund 5.50%
Expected net present estimation of the state benefits subsidize under the above conditions is
recorded beneath.
Particulars Amount ($) Amount ($)

10ACCOUNTING FINANCIAL ANALYSIS REPORT
Each teacher's accumulated fund over the entire employment period
1,769,208.46
Number of teachers in total
47,433.00
Available funds in the superannuation to meet the future obligations of
pension 83,918,864,882.27
Obligation for total costs ( Working Note 1)
74,636,704,488.6
2
Annual retirement obligation's present value
13,219,336,618.7
7
87,856,041,107.39
Net present value
(3,937,176,225.12)
Working Note 1:

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Particulars Amount ($)
Present value of liability to meet the pension obligation of a
teacher 611,946.20
Number of teachers in total (B)
47,433.00
Total obligation of payment of pension to the teachers (A x B)
29,026,443,951.45
Present value of administrative costs
45,610,260,537.17
Obligation for total costs
74,636,704,488.62
In the event that the rate of return decreases to 5.5% from 7.5% yearly then the NPV of the store
would be negative, shown in red. In this manner, plainly the dread of West Australian State
Government that decrease consequently on speculation would fundamentally hamper the annuity
instalment to the instructors later on is quite obvious from the above computation (Rozanov,
2015).
Positive scenario:
In forceful situation, it has been expected that the greater part of the paradigms will be agreeable
to the administration of West Australian State Superannuation finance. All the conceivable rules