Assessment 1

Steps 2-6

Course: Accounting, Learning & Online Communication

Student Name: YinMin Swe

Student ID: s0204439

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Step 2:

Moodle Profile Link:

https://moodle.cqu.edu.au/user/profile.php?id=42416

Blog Link:

https://accounting134.wordpress.com/

Engagement on the blogs of peers:

Danielle Bradley (https://daniellecqu.wordpress.com/2017/03/29/sickness-has-taken-a-hold-of-me-but-i-still-smile-cause-steps-3-6-are-done-and-dusted/comment-page-1/#comment-210)

Nicole Song (https://nicolesongblog.wordpress.com/2017/04/01/the-queen-of-updating/comment-page-1/#comment-62)

Katrina Brown (https://farmherandaccounting.wordpress.com/about/comment-page-1/#comment-64)

Engagement on the blog of Martin:

https://thefinalaccountdown.wordpress.com/2016/03/11/hamburger-trust-metaphor/comment-page-1/#comment-201

Step 3:

Background Information – Global Construction Services (GCS):

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Company Name Global Construction Services LimitedIndustry Construction

Headquarters Redcliffe, Perth, Western AustraliaStaff Members 198

Stock Exchange Ticker Symbol GCSRevenue (AUD million) 185.2

Website http://www.gcs-group.com.au/

Link to Company Annual Report: http://www.gcs-group.com.au/investors/reports-and-presentations/

The company provides on-site services and products as per needs. Services are provided in industrial, residential, commercial and oil sectors with regard to the construction industry. Sales services are provided related to material hoists, scaffolding, site accommodation and formwork. The business operations are spread all over Australia. The 2026 revenues have increased 23.1% over that in 2015. The three business segments of the company include:

Resource, Industrial Commercial & Residential Oil & Gas

Through the acquiring of Security Scaffolding, GCS was established. Major products include fencing, plant hire, power tools, loafers and excavators. The services provided include equipment erection as well as dismantling, formwork & scaffolding, as well as design and engineering. The project expertise and the multi-disciplined capabilities are the strengths of the company.

The stock price history of GCS is shown in the figure above. The stock price has varied between 35 cents and 62 cents in the last one year. The initial public offering of the company occurred in 2007. Some of the acquisitions include CASC Constructions, Bayswater Scaffold Hire and Budget Portables. The company also has a 51% stake of the organisation Podium Glazing. The strategic priority is to assess and explore East coast consolidation and expansion opportunities.

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Comments/KCQs:

Overview:

Initially when I went through the annual report I was having difficulty as was not familiar with accounting information prior to this course. However after spending sometime on it, understanding the report has become easier. I also found it difficult as GCS is in the construction industry and I do not have much earlier knowledge about this industry. I had to search for the meanings of technical words such as scaffolding, formwork, excavators and compaction equipment. I also wonder that safety may be an issue in the construction industry and how difficult it is for workers. In the consolidated statement of financial position, there are intangible assets mentioned in the non-current assets section. I wonder what the types of intangible assets are in the construction industry. I am also unable to understand the fair value measurement as mentioned in the notes to the financial statements. I feel the process of asset impairment and the measurement of depreciation every year is a very difficult task.

The areas of the company that are critical include the strong a balance sheet that it has along with refinancing of debt facilities. There is also a capital management strategy which is disciplined. There is more reliance on construction related work in Western Australia. I feel a critical factor is that the national presence of the company allows it to provide high quality equipment along with multi-disciplined labour anywhere in Australia. The strengths of the company are its project expertise as well as multi-disciplined capabilities. Furthermore, the Australian construction industry has a positive outlook and this can lead to an increase in sales.

Challenges & Strategy:

The key challenges for GCS include lower availability of skilled professionals. This can lead to the construction projects being delays. The workforce is also aging. There is too much reliance on the Western Australian market. There is intense competition with regard to price, customer service, brand and the quality of services. Price wars have led to lower profit margins for companies. There is threat from competitors such as Setlow Constructions and Waco International.

The company is making an effort to meet these challenges and for that the strategy is of diversifying revenue sources so that there is a lower level of risk. Instead of mainly focussing on Western Australia, the company is increasing its presence on the east coast and getting involved in a large number of construction projects. The evidence of this is a binding term sheet for acquiring a specialist services contractor that has operations in the Eastern region of the nation. The company ensure that prices charged are competitive in the market and its product as well as service quality is as per industry standards. The company still has scope for improvement to meet all of its challenges.

Questions:

I wonder what kind of intangible assets there are in the construction industry? Maybe this involves the product knowledge and technical expertise of the company employees. It could

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also be the goodwill of customers. I found understanding this concept a little difficult as goodwill can change over time. Then how do we measure this?

Another question is what is the value of the plant over the years and how do we measure it? I feel this is an incredibly difficult question as there is depreciation in the value of the plant and how are the accountants going to include this in the calculation? I feel they can get close to the correct answer but it will be very difficult to be accurate.

I also have question about at what time revenue should be recognised? If goods are sold then should revenue be recognised when the customer makes the purchase or should it be recognised when the goods are delivered to customers? This can have an impact on the income statement.

Favourite Blogs:

Number 1:

Danielle Bradley

I like Danielle’s blog as it is so well written. Even after having a child she is being able to have time work on the course material. This is commendable. She has mentioned the information the detail in her assignment which is well organised. The questions that she has regarding the annual report are clearly stated. I liked this as it gave me a number of ideas and assisted me with regard to the assignment work.

Number 2:

Katrina Brown

Katrina’s blog is the one I liked second best. She has related farming to accounting information. The blog provides information that is easily readable and organised. She has a lot of beautiful pictures on the blog. In her assignment also Katrina has written in detail about the blogs she likes. This provides other students information about what they can include in their blogs. Sharing of information is leading to more learning.

Number 3:

Nicole Song

Nicole has also done a good job with her blog. I will be reading the blog posts during the semester and I hope we can all learn a lot of information about accounting. It is interesting that she says that most of the questions she had were resolved after going through the study guide. I like this blog because Nicole has told us about her personal experience while doing the assignment and we can all learn from this.

Step 4:

Please refer to the spreadsheet.

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Step 5:

Chapter 2:

I find it interesting that there are so many different stakeholders who are interested in the business operations of a company. I feel this is because they all have different interests. As I reflect on this I can understand how important it is for these stakeholders to be provided accurate financial information. For example, how would an investor know if he should invest in the company if he is unaware of the amount of debt the company has. What would happen if certain financial information is not disclosed by management? As I reflect on this I feel this would be unethical as it may lead to investors making losses. The author is trying to say that due to these issues of information being concealed there are regulatory requirements about what information has to be provided. The author says that we have to consider if accounting can involve manipulation of numbers within the rules. I feel there should be strict regulations that prevent accountants from engaging in such practices. I begin to wonder if the accountant has some self interest in the provision of financial statements then it could impact the accuracy of the numbers provided. I also feel certain managers can get involved in earnings management practices to make the numbers during their tenure appear to be better. I feel they could be doing this for meeting bonus targets but this is harmful. I feel if this happens common investors will lose faith in the financial statements and this can be harmful for the accounting community.

The author says that banks are providing loans to companies and can hence demand to look at a lot of financial information. I feel the company could have the inclination to lower their current debt numbers in the financial statement as this would increase the likelihood of obtaining the loan from the bank. I feel there is a critical need for professional ethics in the accounting industry. I find it interesting that the author says that although a company has just one set of accounting information, yet there are different ways of presenting it. I feel accounting numbers can have a far reaching effect on multiple stakeholders and any element of personal bias can be detrimental. I feel management accounting is more beneficial as it is focussed on the future and will assist in decision making. Financial accounting on the other hand is based on the past information. I feel it is quite exciting how a manager would be using this information to make decisions that affect future business operations of a company. They are probably under tremendous pressure. Another question I have is that there are different regulatory bodies in different nations all over the world. So does this impact the structure of the financial statements? Can different forms of financial reports be compared to each other? I feel there is more information available about the public companies that have to adhere to legislative regulations while the private firms do not have to follow several rules. I have already learned a lot about accounting numbers and regulations while doing this assignment and this has been an enriching experience.

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Chapter 3, Section 3.1:

The author states that the annual reports have optimistic comments that are provided by the Managing Director and Chairman. I feel it is possible that a more rosy picture of the company may be presented than the actual situation. I feel if a Managing Director says that the sales of a company will increase over the next three years, it is very difficult for the common man to understand if something like this will actually happen. The common man does not have the necessary industry knowledge and will have to end up trusting the information provided. I feel if companies provide true information then they will develop a positive image and people will know that the company can be relied upon. I really found reading the annual report complicated with the income statement, balance sheet as well as statement of changes in equity. I feel it is incredible that people can keep track of so many numbers. I feel the footnotes about the balance sheet items are important. Reading the disclosure section is also required as it may contain information which can significantly impact the future course of action of the company. I also found it interesting that a parent company can control several subsidiary firms. There are really so many different combinations about how organisations can be structured. I feel the balance sheet items have to be monitored as the financial situation of the company is constantly changing.

Chapter 3, Section 3.2:

The author says that companies are fast moving and they are looking to provide value for the equity investors. I feel generating shareholder returns is essential as it will lead to more financial institutions to invest with the company. Individual investors will also be satisfied. I feel if the company does not keep pace with changes in the marketplace, then it will fall behind the competition. Organisations are concerned with profit maximisation without regard for the environment. I feel solely focussing on profits in unethical as there should be corporate social responsibility. Large firms can improve their public image if they get involved with environmental development programs. I found the statement of changes in equity more difficult to understand. If we were given financial numbers and asked to make the balance sheet of a company I think it would be difficult. I think if it is difficult when the financial statements involve a number of subsidiaries. If it is related to one company it is much easier. I understand that companies need to have cash on hand for different financial situations.

There is a level of trust with regard to financial statements. The assets indicate that they should be generating future returns for the company. I feel if this does not material in the future there is a loss if trust. From a private equity standpoint, if high net worth individuals have invested in organisations where the debt situation is understated, there may not be sufficient returns generated. This brings to light why understanding the business and economic reality of an organisation is critical.

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Step 6:

The draft of the assessment is on the blog.

I found the feedback received from student very helpful. Talking with student face to face during class was the most beneficial. On discussion forums we could share ideas with a number of students and see the work that everybody was doing. The blogs were very helpful as we could learn from each other. I feel accounting is a subject that requires a lot of discussion and interaction. I have really gained a lot of knowledge in this course.

Feedback has been provided to three students as shown below:

Jacob: https://moodle.cqu.edu.au/mod/forum/discuss.php?d=206612

PEER FEEDBACK SHEET: ASS#1

Feedback From: YinMin Swe

Feedback To: Jacob Williams

My Comments

Step 1

KCQs

You have done Step 1 quite well and the manner in which you have discussed about double entry accounting. It is good that you have been able to learn from the exemplar blogs that have been provided.

Step 2

Introductory words in Description box

Photo and description Link to your blog/Set up blog

Step 3

Background information on company

Comments/KCQs

Comments on other’s blogs

You can state in detail the particular areas of the financial statements that you found difficult to understand.You can also make a list of the business departments at the company. Instead of writing in paragraph format a table would be beneficial for organising the information and would be easier to read.The business challenges should be addressed in the order of priority. Potential solutions can be suggested.The similarities and differences between the company statements should be written in tabular form.

Step 4

Input company’s financial statement

The balance sheet and income statement information are well organised.

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Step 5

KCQs

I also find that the history about financial statements is interesting and how it has changed over the years. You have properly discussed what you have learned. The key areas of learning such as cash flow statements, accrual accounting can be written in bold so that they are distinguished form the other text.

Step 6

Feedback to others

Overall ASS#1

Overall I feel you have made a good draft of the assignment. You have analysed the financial statements and the challenges faced by the company. I wish you all the best for the assignment.

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Kaylee Baldwin: https://moodle.cqu.edu.au/mod/forum/discuss.php?d=205273

PEER FEEDBACK SHEET: ASS#1

Feedback From: YinMin Swe

Feedback To: Kaylee Baldwin

My Comments

Step 1

KCQs

The concepts have been stated in detail.

Step 2

Introductory words in Description box

Photo and description Link to your blog/Set up blog

Very impressed with your blog and the information in it.

Step 3

Background information on company

Comments/KCQs

Comments on other’s blogs

Well organised with the table and I feel it is a great idea to include a picture. You could also include product information in another table. It is a good idea to use the bullets and it keeps the information organised.Yes, the financial statement s in Australia will be similar to that in New Zealand. If you have any difficulty this can be resolved during the class.Challenges have been stated in detail.

Step 4

Input company’s financial statement

Good job on the financial statement, need to check the accuracy of the information.

Step 5

KCQs

Yes, I agree that confidentiality is a key issue in accounting. It is good you have tried to distinguish between Management and Financial Accounting. I feel Management Accounting is more beneficial as it focuses on the future while Financial Accounting is based on past information.

Step 6

Feedback to others

Good feedback provided for other students.

Overall ASS#1

I am really impressed with the level of detail and organisation in your work.

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Montana: https://moodle.cqu.edu.au/mod/forum/discuss.php?d=202612

PEER FEEDBACK SHEET: ASS#1

Feedback From: YinMin Swe

Feedback To: Montana Baker

My Comments

Step 1

KCQs

Step 1 is very detailed in thorough. You are correct that it is difficult to make financial reports a hundred precent accurate. You could have heading for some more paragraphs that show what it will be discussing.

Step 2

Introductory words in Description box

Photo and description Link to your blog/Set up blog

Step 3

Background information on company

Comments/KCQs

Comments on other’s blogs

The company Imugene has been described in detail. It is already very good but you could make a list of products or put it in a table.I really like how much into detail you have gone with regard the challenges and opportunities.The information related to the issues at the company that have led to financial risk and losses is interesting. You can suggest how the situation can be improved.

Step 4

Input company’s financial statement

Well organised spreadsheet, need to complete the work related to the ratios

Step 5

KCQs

The questions are in detail and show the amount of time you have spent on this task .Congratulations.

Step 6

Feedback to others

The feedback provided is excellent and helpful for other people who are making a blog.

Overall ASS#1

You have done really well and it is good that you have completed your work earlier. One of the best blogs that I have seen.

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References:

Global Construction Services (2017). Retrieved from:

http://www.gcs-group.com.au/investors/reports-and-presentations/

MarketLine (2017) Global Construction Services. Retrieved from www.marketline.com

MorningStar (2017) Global Construction Services. Retrieved from

http://www.morningstar.com.au