ACC 5502 Technological Process

Executive officials: The company executives need to know about the techniques to supervise the managers.

Management: It is necessary for them to be informed of the various natures of the machines and the technologies to get effective results.

Contributors: They are needed to be aware to the process of automation so that the working becomes smooth and regulated.

Part 2

1.Regulatory influence on external reporting

Regulatory obligation on public companies depends on the type of the company that is whether the entity is –

• Not disclosing company nor limited by company company
• Limited by guarantee company
• Not disclosing company (gov.au 2018)

Not disclosing company nor limited by company –

Companies fall under this category shal prepare their annual report in accordance with Corporation Act 2001, Chapter 2M. In addition to that –

• The report shall be audited
• It must be filed with ASIC within a period of 4 months from the closing of the financial year.
• Must be sent to members of the company within 21 days prior of holding next AGM or within a period of 4 months from the closing of the financial year, whichever comes 1^st.

Limited by Guarantee Company –

If it is directed by any ASIC member or company, then the company must –

• Prepare the annual financial statements
• Prepare the directors report with required disclosures complied with the Corporation Act, Section 300B.

Further, the company must inform its members about the annual statements.

Not disclosing company –

The companies those fall under this category are not required to comply with Corporation act, Section 2M.3 if all the required conditions as per ASIC Corporations Instrument 2016/785 has been complied with and the company is not –

• A license for the financial services
• A borrowing company
• A guarantor for such borrowing

It is applicable for the companies –

• Those are wholly owned
• Signed up the cross guarantee deed with other company (gov.au 2018)

2.Virgin Australia – Consolidated financial report

Answer (a) – accounting equation

Assets = Liabilities + Equities

Accounting equation at beginning –

Total assets = Liabilities + Equities

$ 6040.8 m = $ 5142 m + $ 898.8 m

Accounting equation at closing –

Total assets = Liabilities + Equities

$ 6355.8 m = $ 4782 m + $ 1573.8 m

Answer (b)

For the financial year ending on 30^th June 2017, Virgin Australia’s financial statement was audited by KPMG. As per the opinion of the auditor –

• The report was prepared as per the requirement of AAS (Australian accounting standards) and Corporation Act 2001
• The report presents true and fair view of the financial position as well as the financial performance of the company dated on 30^th June 2017 (Virgin Australia 2018)

Answer (c)

In addition with offering the audit services, KPMG also offers some non-audited services to the company that includes –

• Taxation services
• Assurance services associated with the debt transactions, service level compliance and assurance services for non-financial statements
• Other services like services and due diligence related to capital restructure, accounting advices, divestments and various other agreed upon procedures (Svanström 2013).

Answer (d)

As per the annual report of the company the largest non-current asset is plant, property and equipment. Opening book value of this asset is $ 2827.8 million whereas the closing book value of the asset is $ 2916.6 million. Asset is valued at cost less accumulated depreciation and impairment loss, if any (Virgin Australia 2018).

Answer (e)

Company charged the depreciation as per straight line method on plant, property and equipment.

Answer (f)

Largest revenue source for Virgin Australia is from Airline Passenger and the revenue is amounted to $ 4257.30 million in total revenue amounting to $ 5,403.70 million.

Company’s other ancillary revenue includes –

• Credit voucher redemption revenue after completion of carriage or it is established that the credit voucher will not be redeemed
• Revenue generated from providing airline services like on-board sales, charter revenue, freight and product revenue (Virgin Australia 2018).

Answer (g)

The company’s finance cost for the year closed on 30^th June 2017 amounted to $ 184.70 million. The amount went up to $ 184.70 million from $ 181 million for the year closed on 30^th June 2016.

Answer (h)

For the year ended on 30^th June 2017, Virgin Australia did not have any contingent liabilities

Answer (i)

During the year ended 30^th June 2017 Virgin Australia issued shares amounted to $ 4,400.60 million. Issue of the shares increased the capital of the company by the amount of $ 943.30 million (Virgin Australia 2018).

Answer (j)

Net cash flow from operating activities for the year ended 30^th June 2017 for Virgin Australia amounted to $ 273.90 million whereas the net loss of the company for the same period amounted to $ 185.80 million. Hence, it can be observed that the amount of cash flow from operating activities is larger as compared to net loss of the year (Abeysekera 2013). The amount is different as the net income is calculated by deducting the COGS, interest, depreciation, various other operational expenses and tax expenses from net revenue whereas, operating cash flow is calculated by considering the net income, non-cash expenses and changes in the amount of working capital.

Answer (k)

Virgin Australia reported the following items under liabilities as unearned revenue for the year ended 30^th June 2017 –

• Credit vouchers for $ 13.5 million
• Unearned loyalty program revenue for $ 412.8 million
• Unearned passenger revenue for $ 647.7 million
• Other unearned revenue for $ 0.2 million

This is expected for any company under this industry as the unearned revenue is related to the ticket sales to the passenger and requires various estimates and judgements. Further, it also requires judgements regarding the non-attendance of passengers and the probability that the passengers will exercise their contractual obligation.

Answer (l)

Director’s declaration states their opinion regarding whether the company’s consolidated financial statement prepared in compliance with the Corporation Act 2001. It further states the declaration whether requirement of Corporation Act, Section 295 or not. Moreover, it states whether the entity is efficient to meet its obligations or not.

Director’s report on the other hand, states the information of the directors as well as alternate directors like their qualification, name, special responsibilities and experience. It also gives information of the director’s interest, director’s meeting, review of financial as well as operating performances, KMP, remuneration report, remuneration overview of the executives and details regarding the share options.

Both director’s declaration and director’s report is necessary as the declaration states regulation compliance and report states detail information about the directors.

Answer (m)

Half year’s report is necessary to comment if there is any material events or transaction is there under the period and its impact on the financial status of the company (Weygandt, Kimmel & Kieso 2015).

Half year reports are prepared for the period from 1^st July 2016 to 31^st December 2016

3.Ratio calculation

Reference

DosterB.A Helak D.A Reed D C& Smith, M.D., International Business Machines Corp, 2016. ‘Intelligent inclusion/exclusion automation’. U.S. Patent 9,384,044.

Teigland R van der ZandeTeigland & Siri S 2018. The Substitution of Labour: From Technological Feasibility to Other Factors Influencing Job Automation.

Willcocks LLacity M & Craig 2017. Robotic process automation: strategic transformation lever for global business services?. ‘Journal of Information Technology Teaching Cases 7’ pp.17-28.

Abeysekera I 2013. A template for integrated reporting. ‘Journal of Intellectual Capital’ Vol - 14(2), pp.227-245.

Asic.gov.au 2018. Reporting obligations for public companies | ASIC - Australian Securities and Investments Commission. [online] Available at: https://asic.gov.au/regulatory-resources/financial-reporting-and-audit/preparers-of-financial-reports/reporting-obligations-for-public-companies/ [Accessed 14 Apr. 2018].

Chui Manyika J & Miremadi M 2015. Four fundamentals of workplace automation. ‘McKinsey Quarterly’, 293 pp.1-9.

Svanström T 2013. Non-audit services and audit quality: Evidence from private firms. ‘European Accounting Review’ Vol - 22(2), pp 337-366.

Virgin Australia 2018. Virgin Australia | Book flights & holidays with Virgin Australia. [online] Available at: https://www.virginaustralia.com/au/en/ [Accessed 19 Apr. 2018].

Weygandt J J Kimmel P D & Kieso D E 2015. Financial & managerial accounting. John Wiley & Sons.

Krishnan & Ravindran 2017 June. IT service management automation and its impact to IT industry. In ‘Computational Intelligence in Data Science ICCIDS 2017 International Conference’ pp. 1-4. IEEE.