Accounting management report writing help : ASIC

Q?? Write a report on ASIC??

Solution: Executive Summary

This report has been designed in order to highlight the article published by the ASIC. The ASIC has pointed out the number of focus regions for the directors in 30 Jun 2011 financial report after releasing the outcomes of the reviews of the financial report for financial year ended 31 Dec 2010. The reviews of the ASIC has focused on several areas such as segment reporting, asset impairment, fair value of financial assets, disclosures of financial instrument, disclosures of accounting policy and estimates judgments, accounting for the business combination and related party disclosures. Segment information represents critical information for users and investors of the financial information in recognizing the functioning of the business activity. On the other side, material disclosures are mandatory for the investors to recognize the financial performance and position of the company must be comprised in the financial reports. This comprises basic assumptions supporting values of the asset, sources of information and estimation uncertainty on complex accounting policy actions. Financial report must reveal basic constituents of the statutory profit in relation with standards of the accounting to help investors to recognize the outcome. Directors of the Company must ensure that the financial and operating evaluation for the listed company offers relevant information and alternative profits should not report in the misleading manner.Segment Reporting

The basic assumption of the accounting standard AASB 8 needs each and every listed entity to reveal segment information to make users to analyze the financial impacts of the business actions and economic environment in which it works. There are needs for searching segments which have consider to elements whose operating outcomes are consistently reviewed by the decision maker of the entity (Garvin & Hayes, 1982). It is significant to accurately search the CODM that is the function as compared to the individual with the particular title. The CODM might be a combination of executive director and others. It is viewed that the Group conducts in 4 reportable segments, based upon the factors combination comprising products, services and geography.  It is viewed that Beverages of the Australia, Indonesia, and New Zealand and PNG segments achieve their incomes from the distribution, marketing and manufacture of carbonated bulk water and soft drinks. The JV segment report CCA’s portion of results from the Pacific Beverages Limited that also distributes and sells the premium portfolio of the international distributor Beam Global Wines and Spirits. The segment of Food & services markets and processes fruit and offers equipment of the cold drink to both the segment of the Australia Beverages and outside party customers (Grove, Mock & Ehrenreich, 1977). The Group coordinates its net income taxes and finance costs on the basis of the Group. The performance of the segment is analyzed on the earnings before tax and interest basis. During the time, various units of the immaterial business were repositioned throughout the segments.Recognition and de recognition

When assets are understood initially, then they are computed at the fair value, plus if assets are not at the fair value in the income statement then assets would be straightly attributable to the transaction cost.  All routine sales and purchases of the assets are understood on the date of the trade. Trade date is the date that the CCA Group decides to buy the asset. Regular sales and purchases of the assets under the agreements which need assets delivery throughout the period are formed usually by the convention or regulation in the place of the market. It is very clear that assets are de-recognized when the delivery of the cash flows from assets has transferred or been expired. The item of the plant, equipment and property is de-recognized when no any upcoming economic benefits are expected to prevail from the constant implementation of asset.

Impairment of assets

According to the reviewed financial reports, ASIC search that write down was less than 1% of the entire value of undefined life of the intangible assets for 12months to 31 Dec 2010. For 12 months to 30 June 2010, the write down was only 6%. Various entities ignored material disclosures regarding their testing of the impairment, comprising basic assumptions, goodwill given to each generating unit of the cash and analysis of the sensitivity for alterations in basic assumptions (Grove, Mock & Ehrenreich, 1977). It is analyzed from the CCA annual report that at each and every reporting date, the CCA group evaluates whether there is the indication that the asset might be impaired. Where the impairment indicator survives or where the testing of the annual impairment for the asset is needed, the Group creates the formal estimation of recoverable amount.  In general, the loss of the impairment is acknowledged for the sum through which carrying sum of the asset go beyond the recoverable sum that is explained as greater fair value of the assets minus cost to sell or value in usage. For the objective of evaluating impairment, assets are classified at the stage for that there are identifiable cash outflows. In general, non financial asset other than the goodwill which experienced impairment are evaluated for the possible impairment reversal at each and every reporting date. It is very clear that the testing of the impairment is taken out by the CCA by evaluating the recoverable amount of the asset to its carrying sum. Usually, CCA executes its testing of the impairment on the value in utilization basis. In summation to the value in the utilization, it evaluates fair value minus cost to sell to make sure that the greater value prevailing from either base is in surplus of the carrying amount of the asset. Value in utilization is computed by using the methodology of DCF enveloping the 15 time period with the sufficient residual excellence at the period end, for each and every CGU.

Measurement

Fair value of Financial Assets

The CCA Group categorizes its assets as assets at the fair value from income statement or as receivables and loans.  The categorization relies upon the objective for which the asset was purchased. If the assets are understood initially, then assets would be measured at the fair value.  On the other side, if the assets are not at fair value in the income statement then they would be charged to transaction costs. Assets at the fair value in the income statement considered as financial assets hold for the trading. Derivative is categorized as hold for the trading unless it is designated as the hedge.  In general, assets fair value is based upon the active price of the market (Michaely, Roni & Womack, 1999). If the market for the asset is not effective, then the CCA group forms fair value by implementing techniques of the valuation. These comprise indication to fair values of current arm length deals comprising the similar instruments like analysis of DCF and models of option pricing refined to show the particular situations.

Disclosures

Disclosures of estimates and accounting policy judgments

It is viewed that few entities had not made material disclosures of relevant judgments in adopting policies of the accounting and estimation uncertainty sources. These kinds of disclosures must be particular to entities and their liabilities, income, assets, equity and expenses (Hayes & Abernathy, 1980).  The CCA Group supports the number of the plans of the superannuation which incorporate explained benefit and contribution categories. The Plans offers advantages for the employee and its dependants on resignation, death and in the kind of lump sum payment. Contribution to plans is created at stages mandatory to make sure that Plans have adequate asset to fulfill its vested benefit commitments.

Financial instrument disclosures

It is very clear that various entities have not made sufficient disclosures to enable financial report users to recognize and analyze the extent and nature of the particular market, liquidity and credit risks related with their implementation of the financial instruments. Disclosures must be relevant to users of financial report and particular disclosures must be created as compared to boilerplate disclosures (Greenwood & Jovanovic, 1990). Credit Risk referred as risk that the contracting entity shall not terminate its commitments under the financial instrument and made the CCA Group to create the financial loss. The CCA Group has the exposure to the credit risk on assets comprised in financial statements of the Group. For managing of the Credit Risk the Group has taken out the following initiatives:

The CCA Group has established the credit limits for entities it transacts with

The CCA Group might need collateral where sufficient

The CCA Group coordinates exposures to the individual entity it either deals with or enters in the derivative contract.

The CCA Group is revealed to the credit risk on derivatives and financial instruments. For purposes of the credit, contracting entity is accountable to reimburse the CCA Group in the closeout event. The CCA Group has certain policies which set restrictions as to sum of the credit disclosure for each and every financial institution. New cash and derivative transactions are restricted to the financial institutions which fulfill minimum criteria of the credit rating in relation with the policy requirements of the CCA Group (Harris & Raviv, 1979). User credit risk is coordinated by each and every business unit subjected to confirmed procedures, controls and policy associating to management of the user risk. Limits of the credit are formed for each and every customer and limits are routinely monitored. It is viewed that outstanding receivable is regularly evaluated and the need for the impairment is evaluated at each and every reporting period (Kaplan & Norton, 2008). The credit risk of the Group is mainly focused throughout the number of financial institutions and customers. It is viewed that Group is not having any significant exposure of credit risk to the group of individual institutions or customers.

Liquidity Risk

Liquidity Risk comprises the risk that the CCA group cannot fulfill its financial obligations as and when they become due. For minimizing the liquidity risk, the Group has taken out the following initiative:

The Group has liquidity policy which targets the least type of dedicated facilities in relative to debt.

The Group has accessible arrangements of the funding in place

The Group uses those components which are tradable in the liquid market.

The Group has staggered the maturities of the financial components.

The CCA Group monitors the estimations of the liquidity reserves on basis of estimated cash flow. The aim is to build the balance among funding continuity and the flexibility with the help of liquid components, committed credit lines and borrowings. The Group utilizes techniques of the valuation like present value in comparison to same components for which the market observe the prices prevail and other applicable models implemented by the participants of the market. These techniques of the valuation utilize both unobservable and observable market inputs.Business Combinations

With the continued enhancement in the acquisitions numbers, auditors and directors must concentrate on accounting for these dealings, comprising sufficient treatment of the reverse acquisition, ordinary control transactions and costs of the transaction and appropriateness of the allocation of the purchase price (Levine, 1991). It is viewed from the CCA annual report that, there were no as such material disposals or acquisitions of business or entity throughout the fiscal year.

Conclusion

At last it is concluded that this report signifies the importance of segment reporting, Recognition, Measurement and Disclosure of Accounting items. It is very clear that the Segment information represents critical information for users and investors of the financial information in recognizing the functioning of the business activity. The performance of the segment is analyzed on the earnings before tax and interest basis. It is very clear that various entities have not made sufficient disclosures to enable financial report users to recognize and analyze the extent and nature of the particular market, liquidity and credit risks related with their implementation of the financial instruments.

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