FNSACC504 Assessment Workbook V: Corporate Financial Reports

This assessment workbook, designed for the FNSACC504 unit, focuses on preparing financial reports for corporate entities. It includes written questions covering fundamental concepts like advantages and disadvantages of corporate entities, characteristics of public and private companies, and regulatory authorities such as ASIC. The workbook also features exercises and a case study to test analytical skills in financial reporting, including topics like reporting obligations of small and large proprietary companies and subsidiary companies. The assessment covers the skills and knowledge required to prepare, document, and manage budgets and forecasts, encompassing forecasting estimates and monitoring budgeted outcomes, ensuring students gain a comprehensive understanding of financial reporting practices. The workbook emphasizes competency-based assessment, requiring students to demonstrate their ability to perform tasks to workplace standards.

Prepare Financial Reports for Corporate Entities
This course is based on the nationally recognised unit of competency:
● FNSACC504 Prepare Financial Reports for Corporate Entities
It covers the skills and knowledge required to prepare, document and
manage budgets and forecasts, and encompasses forecasting estimates
and monitoring budgeted outcomes.
ASSESSMENT WORKBOOK
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Assessment Workbook V: Prepare Financial Reports for Corporate Entities
Assessment Workbook V
Prepare Financial Reports for Corporate Entities
V1.0
Produced 1 February 2016
Copyright © 2016
All rights reserved. No part of this publication maybe reproduced or distributed in any form or by
any means, or stored in a database or retrieval system other than pursuant to the terms of the
Copyright Act 1968 (Commonwealth).
Date Summary of Modifications
Made
Version
1/02/16 Version 1 produced following
assessment validation
V1.0
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Assessment Workbook V: Prepare Financial Reports for Corporate Entities
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Assessment Workbook V: Prepare Financial Reports for Corporate Entities
Getting Started
Instructions
This workbook contains one (1) assessment comprised of:
● Written Questions – A set of generic questions testing the student’s
general knowledge and understanding of the general theory behind
the unit.
● Exercises - A set of exercises to test the student’s knowledge,
analytical skills in problem solving and performing numerical
calculations.
● Case Study – A hypothetical exercise to test the student’s knowledge,
analytical skills in problem solving and performing numerical
calculations.
Requirements for satisfactory completion
For a ‘satisfactory’ result in this task, all questions must be answered to a
‘satisfactory’ standard. At Certificate IV level this means that:
● Provide responses using complete sentences, making direct
reference to the question.
● Specifically address all parts of the question providing examples
where appropriate.
Instructions for how to proceed in each component of the
assessment can be found at the start of each section.
Competency Based Assessment
Competency based assessment focuses on whether you are able to
perform the task to the standard expected in the workplace. It relies on
you providing evidence that supports your claim of competence. This
evidence is in the form of your completion of the assessments set for each
unit.
Once you have submitted your completed assessments, your instructor will
assess your submission to determine your competence. To be deemed
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Assessment Workbook V: Prepare Financial Reports for Corporate Entities
competent in each course, you are required to achieve a satisfactory result
for all of the assessment components that make up that unit. Where a ‘not
yet satisfactory’ judgement is made, you will be given guidance on steps to
take to improve your performance and provided the opportunity to re-
submit evidence to demonstrate competence. Once a ‘satisfactory’
judgement has been made on all components for a unit, you will be
deemed ‘competent’ in that unit.
Submission
Only submit your workbook once all activities inside are complete. Should
you have any questions regarding your assessments, or not understand
what is required for you to complete your assessment, please feel free to
ask your instructor.
Keep your answers succinct and make sure you are answering the
question. Re-read the question after you have drafted up your response
just to be sure you have covered all that is needed.
Your final assessment result will either be ‘Competent’ or ‘Not Yet
Competent’.
When submitting your assessments please ensure that
1. All assessment tasks within the workbook have been completed
2. You have proof read your assessment
Candidate Declaration
Submission of this workbook means you agree to abide by the terms of the
candidate declaration below.
By submitting this work, I declare that:
● I have been advised of the assessment requirements, have been
made aware of my rights and responsibilities as an assessment
candidate, and choose to be assessed at this time.
● I am aware that there is a limit to the number of submissions that I
can make for each assessment and I am submitting all documents
required to complete this Assessment Workbook.
● I have organised and named the files I am submitting according to
the instructions provided and I am aware that my assessor will not
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Assessment Workbook V: Prepare Financial Reports for Corporate Entities
assess work that cannot be clearly identified and may request the
work be resubmitted according to the correct process.
● This work is my own and contains no material written by another
person except where due reference is made. I am aware that a false
declaration may lead to the withdrawal of a qualification or
statement of attainment.
● I am aware that there is a policy of checking the validity of
qualifications that I submit as evidence as well as the
qualifications/evidence of parties who verify my performance or
observable skills. I give my consent to contact these parties for
verification purposes.
Written Questions
The following questions are divided into two categories.
The first set of questions cover generic underpinning knowledge of basic
project management terms and concepts. These questions are all in a short
answer format. The longer questions requiring creative thought processes
are covered in the case studies assessment. You must answer all
questions using your own words.However you may reference your
learner guide, and other online or hard copy resources to complete this
assessment.
The second set of questions cover processes you would be likely to
encounter in a workplace. Ideally you should be able to answer these
questions based on the processes that are currently in place in your
workplace. If this is not the case, then answer the questions based on
processes that should be implemented in your workplace.
If you are currently working in an accountancy role, you may answer these
questions based on your own workplace. Otherwise consider what you
should do if you were working.
Generic Questions and Calculations
VQ1: Describe two (2) advantages of trading as a corporate entity as
opposed to a partnership. What is one (1) main disadvantage?
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Assessment Workbook V: Prepare Financial Reports for Corporate Entities
The two advantages of trading as a corporate entity as opposed to a
partnership are as follows:
(i) Liability Protection: One of the biggest advantage a corporation
provides over the other business frameworks is the protection of
liability. The shareholders do not risk of losing their personal
assets due to the debt of the firm, as the organizations are
regarded as legal entities from the people who own them. The
partnership owners and the sole proprietors on the other hand
are held accountable for all the company debts and the legal
accountabilities and are subject to losing the personal assets of
the firm goes bankrupt or is caught up in expensive legal
situations.
(ii) Tax Benefits: The corporations enjoy certain tax advantages that
sole proprietorships and partnerships do not. The corporations
must file the taxes separately from the shareholders. The
owners of the corporation pay taxes on their salaries, dividends
and bonuses which they earn from the corporation. On the other
hand, there are loopholes are are existent that eases the burden
of the paying the taxes as an individual shareholders and as a
corporation. A corporation is not needed to pay tax on the
earnings as a paid compensation to the shareholders and the
employees and it can subtract the payments as a business
expenditure. The corporate tax rate is generally lower than the
personal rate of income tax. The owners of the sole
proprietorships and partnerships pay the income taxes at
general rates on the profits which they gain from their firms.
The main disadvantage is as given below:
Costs: One of the primary disadvantages of a corporation is the costs
associated with functioning a corporate business. It costs the money
to implement with the state where the business functions. After the
initial fees of incorporation, the corporate firms even has ongoing fees
related with it. The annual report fee can range up to $150 a year for
every year the corporation exists after the initial incorporation filing.
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Assessment Workbook V: Prepare Financial Reports for Corporate Entities
VQ2:
VQ2A List the three (3) characteristics that identify a small private
company from a large private company.
VQ2B How does a small proprietary company differ from a large
proprietary company with respect to its reporting obligations?
VQ2A
The three characteristics that identify a small private company from a
large private company are as follows:
(i) Employees: Small private companies have the benefit of smaller
teams of employees than the firms that function on a larger
scale. The smallest businesses are functioned entirely by single
individuals or the small teams. A larger small scale business can
often get away with engaging fewer than one hundred
employees by relying on the kind of business.
(ii) Revenue and profitability: The small scale business revenue is
usually lower than the firmsthat function on a larger scale. Small
business are considered as the firms that bring in less than a
distinct amount of revenue by relying on the kind of business.
The maximum revenue allowance for the small business
designation is set at $21.5 million per year for the service
businesses. The lower amount of revenue does not necessarily
interpret the lower profitability. The established small scale
businesses often own their equipment and facilities outright
which furthermore to the other factors aids in keeping the costs
lower than the more leveraged businesses.
(iii) Market Area: The small scale businesses function at a smaller
area than the corporations and large private organizations. The
small scale businesses serve as single communities like the
convenience store in a rural township. The definition of small
scale restricts the firms from serving areas much larger than a
local area since growing beyond that would increase the scale of
the operations of the small business and push it into a new
classification.
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Assessment Workbook V: Prepare Financial Reports for Corporate Entities
VQ2B
The difference between the small proprietary business and the large
proprietary firms with respect to their reporting obligations explain that
large proprietary firms requires to lodge and prepare the financial report
and a director’s report for each of the financial year. The accounts must
be audited unless ASIC grants relief.
On the other hand, it has been observed that the small proprietary firms
have to lodge financial reports in certain situations.
VQ3:
VQ3A Describe three (3) features of a public company.
VQ3B Name the regulatory authorities listed and unlisted
companies are required to report to.
VQ3A
The features of a public company are as follows:
(i) Board of directors: The public limited companies are headed by
the board of directors. The composition of the board of directors
is set out in the articles of association of a firm. Generally it
consists of a minimum number of two members and a maximum
of 12. These are elected from the shareholders by the
shareholders during the annual general meeting. They act as an
agent of the shareholders in the management of the company.
(ii) Limited Liability: The shareholder liability for the losses of the
firm is restricted to their share contribution only. This is what it
makes them as a separate entity from their shareholders. The
business can be sued on its own and may not include their
shareholders. The firm does not belong to any person since one
individual can own only a part of it.
(iii) Transferable shares: The shares of a public limited company are
purchased and sold in a stock exchange market. They are
transferrable freely among their members and the individuals
who are trading in the stock exchange.
VQ3B
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Assessment Workbook V: Prepare Financial Reports for Corporate Entities
The regulatory authorities the listed and the unlisted companies are
required to report is the Australian Securities and Investments
Commission (ASIC), Australian Securities Exchange, Financial Reporting
Panel, Australian Accounting Standards Board and Australian Taxation
Office
VQ4: Subsidiary companies are companies controlled by another entity.
Describe two (2) main features of a controlling entity and its reporting
obligations.
The two main features of a controlling and its reporting obligations include:
 Accurately record and define its transactions and financial condition and
performance
 Enable fair and true financial statements to be constructed and audited.
VQ5: Provide in your own words a brief description of the following
regulatory authorities and the role they play with respect to the reporting
obligations of corporate entities:
VQ5A Australian Securities and Investments Commission (“ASIC”);
Under the ASIC Act 2001, the ASIC took over the corporate law roles of
the State Corporate Affair Commissions. The ASIC Act provides the ASIC
body corporate consisting of three to eight members and is supervised by
a full time chairperson. The powers and functions of the ASIC are
consulted on it by the Corporations Act and the ASIC Act. The ASIC is the
regulator of the Australian financial and market service regulators and its
function is to make sure that the financial market of Australia are fair and
true.
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Assessment Workbook V: Prepare Financial Reports for Corporate Entities
VQ5B Australian Securities Exchange (“ASX”);
The role of the ASX is to unite in one market place, the investors who
give out capital and organizations that need capital. The ASX facilitates
this capital formation procedure by giving out a well regulated secondary
trading market. The ASIC has a contract with the ASX to share data and a
supervisory role as the ASX is a listed company. The listed companies
have reporting obligations under the ASX Listing Rules.
VQ5C Financial Reporting Panel (“FRP”);
The FRP is a statutory body constructed to ascertain the contested issues
between the ASIC and entities who are concerned with the application of
accounting standards and the true and fair view need in the financial
reports. The FRP plays an independent third party which permits disputes
between the ASIC and entities constricting the financial reports which is
to be resolved without the cost of the proceedings of the court.
VQ5D Australian Accounting Standards Board (“AASB”).
The AASB is a corporate body with everlasting succession. Their roles are
given in S277 of the ASIC Act. These roles are inclusive of:
● To construct a conceptual model for the intention of assessing the
proposed accounting and international standards;
● To construct accounting standards with respect to S334 of the
Corporations Act;
● To participate in and to contribute towards the enhancement of a
single set of accounting standards for global use.
AASB101 provides the requirements in accordance to the presentation of
financial reports.
VQ6:
VQ6A What legislation governs the preparation of financial reports?
VQ6B List four (4) entities that are required to prepare financial
reports.
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Assessment Workbook V: Prepare Financial Reports for Corporate Entities
VQ6A
The Section 292 of the Corporations Act 2001 is the legislation that
governs the the preparation of the financial reports.
VQ6B
The four entities that are required to prepare the financial report are:
 Australian Accounting Standards Board (AASB).
 Australian Securities and Investments Commission (ASIC)
 Australian Securities Exchange (ASX)
 Financial Reporting Panel (FRP)
VQ7: After 1 July 1998, under the Corporations Act, a company’s internal
management system or rules may be governed by a constitution,
replaceable rules or a combination of both. List three (3) entities that are
required to adopt a constitution under the Corporations Act and the ASX
Listing Rules.
The three entities that are required to adopt a constitution under the
Corporations Act and the ASX Listing Rules are:
 No liability companies
 Companies that are limited by guarantee that wants to be
registered without the word “Limited” in the name;
 Public companies that are listed on the ASX.
VQ8: Name the nine (9) components of a financial report required under
ss295 t0 308 of the Corporations Act 2001 (Cth).
The nine components of a financial report required under ss 295 to 308 of
the Corporations Act 2001 are as follows:
 Statement of financial position as at the end of the year (if
consolidated accounts are not required) of 295 (2) and 296 (1)
 Statement of comprehensive income for the year (if consolidated
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