Your research project is designed to assist you in demonstrating your knowledge of, and ability to critically assess influences on a contemporary issue in financial reporting, disclosure and/or governance. It also provides you with an opportunity to further enhance your research, judgement and written communication skills.

Issue to be investigated: Recent and proposed amendments to the remuneration report The Australian Government has embarked on a program to ‘cut red tape’ through reducing regulation (refer to the Government’s online deregulation resource page: https:// www.cuttingredtape.gov.au). The Group of 100 (G100) and the Business Council of Australia have both provided submissions to this process, identifying regulation of remuneration reporting as one of the areas needing attention due to their increased complexity. There has also been much discussion about executive pay and whether it was a contributing factor to the global financial crisis (GFC).

Following the GFC a range of regulatory reforms took place, aimed at strengthening corporate governance in this area. Further amendments have recently also been made to accounting standards governing remuneration reporting in audited financial statements.

You have recently been appointed as a graduate accountant in a company listed on the ASX200, and are currently working under the direction of the Chief Financial Officer (CFO). COMPANY ASSIGNED IS LEIGHTON HOLDINGS LIMITED AUSTRALIA.

The CFO has asked you to investigate the issue of executive remuneration reporting with the view to the company making a submission to the government deregulation process, and to also guide future remuneration reporting by the company.

Your research has two aims:

1. Update the CFO and the Board of Directors on recent and proposed amendments to executive remuneration reporting regulations, including a critical analysis of these proposals, and an assessment of the complexity and adequacy of the company’s current remuneration disclosures; and

2. Prepare a media release outlining the company’s proposed responses to remuneration reporting changes.

Accordingly, the CFO would like you to prepare two separate documents:

A business report presented to the CFO and the Board of Directors. Your business report needs to be concise and informative. In preparing your report, you should investigate a range of issues:

i. summarise recent changes, and proposed amendments to accounting standards and legislation governing reporting of executive remuneration;

ii. critically analyse the response of industry groups, including the G100 and Business Council of Australia (but not limited to these bodies) to the Government’s agenda relating to deregulation of remuneration reporting. In doing so, you should analyse the views of these organisations from a theoretical perspective (link to theories you have examined in the first five weeks of the unit).

iii. Undertake a critical assessment of the company’s remuneration disclosures in terms of their complexity and adequacy;

iv. Provide recommendations to the CFO and the Board of Directors relating to improvements that could be made to company remuneration reporting; and the view the Board of Directors should present in a submission to the government’s regulatory agenda.

A two-page media release. The media release should outline the company’s view on the future direction of remuneration reporting, and the basis of its submission to government.

How to present your work:

Your report for the CFO should be presented as a formal business report. When writing your report, you should assume the audience (the CFO and the Board of Directors) are all financially literate and have a good understanding of accounting and finance concepts and terminology. You should rely on a range of academic and professional journal articles to support your views.

Your two-page update should be written in such a way as to provide information to an audience who are not accounting and finance experts.

Justification for Selection of this Assessment Task:

In addition to the development of knowledge of a contemporary area impacting accounting, this task is also designed to develop the following generic skills:

Research skills

Judgement

Written communication skills, aimed at both accountants and non-accountants

The research assignment is designed to broaden your understanding and application of theoretical knowledge gained in one major topic in the unit. Research skills, which involve the synthesis of information and communication of research findings through a business report are essential skills that our graduates are required to demonstrate to employers.

This assignment is designed to further develop these valuable skills and attributes. The issue addressed is a contemporary issue in the business and accounting arena, and one that you need to be aware of. As future accountants it is essential you understand the impact of accounting regulatory changes on the organisation.

It is also designed to enable you to demonstrate your written communication ability – a skill that is deemed by your future employers to be essential for graduates. In the most recent Graduate Outlook survey accounting and finance employers rated good communication skills as their number one priority when hiring graduates (Graduate Careers Australia, 2011).

All higher education providers of accounting degrees in Australia are required to provide evidence that their accounting graduates have achieved common national minimum threshold learning outcomes (TLOs) at the time of graduation. These TLOs were developed collaboratively with input from the professional accounting bodies, various business practitioners and accounting academics. Five TLOs were developed for the accounting discipline1 of which both the judgement and communication standards are relevant for this assignment. These standards requires that an accounting graduate of a masters degree must demonstrate:

“Exercise judgement under supervision to solve routine accounting problems in diverse contexts using social, ethical, economic, regulatory and global perspectives.”

“Justify and communicate accounting advice and ideas in diverse collaborative contexts involving both accountants and non-accountants.”

Please keep this TLO in mind when preparing your assignment, as this is the basic benchmark against which your assignment submission will be assessed. These standards have been incorporated into the marking rubric.

 

The company chosen is LEIGHTON HOLDINGS LIMITED AUSTRALIA

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