Please answer all of the situation-required questions and then present the written work by specifically listing the headings as Case Study 1- Answer (a), Case Study 1 - Answer (b), etc.
Word limit: 2,000 words
CASE STUDY 1
CASE STUDY 2
ETHICS AND GOVERNANCE THE IMPACT OF A BONUS INCENTIVE SCHEME ON THE FINANCIAL STATEMENTS by an international car firm. Her manager. Fredat Chuse, is paid a bonus depending on the profitability of the company. If Vroom Ltd makes $1 million profit, Freda receives a bonus of $20000 that increases progressively to $30000 for a $3 million profit. If the profit of Vroom Lid exceeds $3 million, fired $100000 per year to employ and train apprentice mechanies. At the end of May, it appears that Vroom Ltd will make a profit of approximately $3.5 million for the year ending 30 June 2019 . Freda approached Lucia and said that if the company made too much profit then the government may stop paying Vroom Ltd the grant for training apprentice mechanics, and it would lose the $100000 tax-free cash inflow. Freda instructed Lucia to find ways of deferring recog nition of as much revenue as possible until the following financial year, for which the forecasts for the industry were quite poor, and to accrue as many expenses as possible at the end of the current accoumting period when it came to making the end-of-period adjustments. Although Lucia was not happy with this instruction, she did not want to risk her own opportunities for promotion by upsetting her managet. Required (a) Who are the stakeholders in this situation? (b) Why do you believe Freda asked Lucia to do this? (c) What are the ethical issues involved? (d) Can Lucia defer revenues and accrue as many expenses as possible and still be ethical? FINANCIAL ANALYSIS Refer to the income (revenues) and expenses as shown in the notes in the latest financial report of JB Hi-Fi Limited on its website, www, jbhifi.com.au, and answer the following questions. 1. Which of these items, if any, would have been affected by adjusting entries for deferrals? 2. Which of these items, if any, would have been affected by adjusting entries for accruals? 3. What is the total amount of expense for depreciation of plant and equipment? ACKNOWLEDGEMENTS Photo: @ goir/Shutterstock.com Photo: () Andrey_Popov / Shutterstock.com Business insight: Medlin, J 2016, based on Australian Taxation Office, 'Choosing an accounting method', 17 June 2015, www.ato.govau/Business/GST/Accounting-for-GST-in-your-business/ Choosing-an-accounting-method/. Business insight: ABC News Case study: (C) CPA Australia first published in The Accountant http://www.theaccountant-online.com/ features/comment-is-financial-reporting-suffering-from-hamster-wheel-syndrome-4816848/ (1) 2016 Australian Accounting Standards Board AASB. The text, graphics and layout of this publication are protected by Australian copyright law and the comparable law of other countries. No part of the publication may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AASB except as permitted by law. For reproduction or publication permission should be sought in writing from the Australian Accounting Standards Board. Requests in the first instance should be addressed to the Administration Director, Australian Accounting Standards Board. PO Box 204, Collins Street West, Melbourne, Victoria, 8007. COMPUTERISED SHIPPING DOCUMENTS Fremantle Fisheries (FF) operates a fleet of fishing boats out of three ports in Western Australia Fremantle, Bunbury and Geraldton. Each port has its own fishing fleet and all seafood caught is sold through the Fish Marketing Board, a board established by the state government. The accounting procedures for all sales to the Board are centralised and handled by a computerised accounting system at FF's head office in Perth. The majority of the company's employees work on the fishing boats, and are paid bonuses from head office, depending on the volume, type and quality of seafood caught. This means that head office must be able to identify the source of each shipment sent to the Board. John Dorey, who was originally based in Geraldton and handled the accounting procedures at Geraldton before computerisation, is now based in Perth as manager of the computerised accounting system. His father and two sisters are still based in Geraldton and work for the company on the fishing boats, as do many friends of the family. Shipping documents are sent to the Perth head office from all three ports, and the source of the shipment is clearly marked in the top right-hand corner of the documents. Occasionally, however, details of the source are missing, and it is not easy to trace the source quickly. Dorey, in his capacity as manager of the system, is keen to keep the system fully operational and up to date, and has instructed the keyboard operator to insert any one of three Geraldton source codes, namely those of his father and two sisters, whenever the source code is missing from the shipping document. The keyboard operator knows that the codes given are those belonging to his boss's family, but nevertheless complies with the request for fear that non-compliance may lead to his own dismissal. Required (a) Who are the stakeholders in this situation? (b) What are the ethical issues involved here as a result of Dorey's request and the action taken by the keyboard operator? (c) If you were the keyboard operator, what action (if any) would you take to prevent this situation occurring? Why? ETHICS AND GOVERNANCE THE IMPACT OF A BONUS INCENTIVE SCHEME ON THE FINANCIAL STATEMENTS by an international car firm. Her manager. Fredat Chuse, is paid a bonus depending on the profitability of the company. If Vroom Ltd makes $1 million profit, Freda receives a bonus of $20000 that increases progressively to $30000 for a $3 million profit. If the profit of Vroom Lid exceeds $3 million, fired $100000 per year to employ and train apprentice mechanies. At the end of May, it appears that Vroom Ltd will make a profit of approximately $3.5 million for the year ending 30 June 2019 . Freda approached Lucia and said that if the company made too much profit then the government may stop paying Vroom Ltd the grant for training apprentice mechanics, and it would lose the $100000 tax-free cash inflow. Freda instructed Lucia to find ways of deferring recog nition of as much revenue as possible until the following financial year, for which the forecasts for the industry were quite poor, and to accrue as many expenses as possible at the end of the current accoumting period when it came to making the end-of-period adjustments. Although Lucia was not happy with this instruction, she did not want to risk her own opportunities for promotion by upsetting her managet. Required (a) Who are the stakeholders in this situation? (b) Why do you believe Freda asked Lucia to do this? (c) What are the ethical issues involved? (d) Can Lucia defer revenues and accrue as many expenses as possible and still be ethical? FINANCIAL ANALYSIS Refer to the income (revenues) and expenses as shown in the notes in the latest financial report of JB Hi-Fi Limited on its website, www, jbhifi.com.au, and answer the following questions. 1. Which of these items, if any, would have been affected by adjusting entries for deferrals? 2. Which of these items, if any, would have been affected by adjusting entries for accruals? 3. What is the total amount of expense for depreciation of plant and equipment? ACKNOWLEDGEMENTS Photo: @ goir/Shutterstock.com Photo: () Andrey_Popov / Shutterstock.com Business insight: Medlin, J 2016, based on Australian Taxation Office, 'Choosing an accounting method', 17 June 2015, www.ato.govau/Business/GST/Accounting-for-GST-in-your-business/ Choosing-an-accounting-method/. Business insight: ABC News Case study: (C) CPA Australia first published in The Accountant http://www.theaccountant-online.com/ features/comment-is-financial-reporting-suffering-from-hamster-wheel-syndrome-4816848/ (1) 2016 Australian Accounting Standards Board AASB. The text, graphics and layout of this publication are protected by Australian copyright law and the comparable law of other countries. No part of the publication may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AASB except as permitted by law. For reproduction or publication permission should be sought in writing from the Australian Accounting Standards Board. Requests in the first instance should be addressed to the Administration Director, Australian Accounting Standards Board. PO Box 204, Collins Street West, Melbourne, Victoria, 8007. COMPUTERISED SHIPPING DOCUMENTS Fremantle Fisheries (FF) operates a fleet of fishing boats out of three ports in Western Australia Fremantle, Bunbury and Geraldton. Each port has its own fishing fleet and all seafood caught is sold through the Fish Marketing Board, a board established by the state government. The accounting procedures for all sales to the Board are centralised and handled by a computerised accounting system at FF's head office in Perth. The majority of the company's employees work on the fishing boats, and are paid bonuses from head office, depending on the volume, type and quality of seafood caught. This means that head office must be able to identify the source of each shipment sent to the Board. John Dorey, who was originally based in Geraldton and handled the accounting procedures at Geraldton before computerisation, is now based in Perth as manager of the computerised accounting system. His father and two sisters are still based in Geraldton and work for the company on the fishing boats, as do many friends of the family. Shipping documents are sent to the Perth head office from all three ports, and the source of the shipment is clearly marked in the top right-hand corner of the documents. Occasionally, however, details of the source are missing, and it is not easy to trace the source quickly. Dorey, in his capacity as manager of the system, is keen to keep the system fully operational and up to date, and has instructed the keyboard operator to insert any one of three Geraldton source codes, namely those of his father and two sisters, whenever the source code is missing from the shipping document. The keyboard operator knows that the codes given are those belonging to his boss's family, but nevertheless complies with the request for fear that non-compliance may lead to his own dismissal. Required (a) Who are the stakeholders in this situation? (b) What are the ethical issues involved here as a result of Dorey's request and the action taken by the keyboard operator? (c) If you were the keyboard operator, what action (if any) would you take to prevent this situation occurring? Why
