ACCT 2178 Contemporary Financial & Integrated Reporting
Assessment item 1 - Individual Research Article Review Assignment
You are required to analyse one research article selected by you from the list of articles supplied below – copies of the articles are on Canvas. You are required to write a critical review of this article and relate it to your conceptual learning in the course addressing the specific assignment requirements below.
The assessment is designed to test your ability to:
1. identify issues, make judgments, describe, explain and critically evaluate published research; and
2. effectively communicate your learning in the written form.
Word limit: 1,200 words
Specific Assignment Requirements:
Write a critical review of your selected article covering following issues:
a) A brief description of the objective of the article, and how it relates to the area of Integrated Reporting. You should also discuss why the article is of interest to you as a student in Contemporary Financial and Integrated Reporting.
b) The following technical issues addressed within the article: (i) research questions; (ii) research methodology used; (iii) major research findings; and (iv) limitations of the research methodology.
c) Your understanding and assessment of the implications of the major research findings of the article for the IIRC and other relevant stakeholder groups, in terms of improved (or not improved) reporting and improved (or not improved) decision making.
List of articles (choose one only)
1. Abhayawansa, S., Elijido‐Ten, E., & Dumay, J., (2019), “A practice theoretical analysis of the irrelevance of integrated reporting to mainstream sell‐side analysts”, Accounting & Finance, Vol 59, Issue 3, pp XXXXXXXXXX, Abhayawansa et el, 2019.pdf
2. Al-Htaybat, K., & Alberti-Alhtaybat, L.V., (2018), "Integrated thinking leading to integrated reporting: case study insights from a global player", Accounting, Auditing & Accountability Journal, Vol 31, Issue 5, pp XXXXXXXXXX, Al-Htaybat et el, 2018.pdf
3. Barth, M.E., Cahan, S.F., Chen, L., & Venter, E.R., (2017), “The economic consequences associated with integrated report quality: capital market and real effects”, Accounting, Organizations and Society, Vol 62, pp43-64, Barth et el, 2017.pdf
4. Briem, C.R., & Wald, A., (2018), "Implementing third-party assurance in integrated reporting: Companies’ motivation and auditors’ role", Accounting, Auditing & Accountability Journal, Vol. 31 Issue: 5, pp XXXXXXXXXX, Briem & Wald, 2018.pdf
5. Chaidali, P., & Jones, M.J., (2017), “It’s a matter of trust: Exploring the perceptions of Integrated Reporting preparers”, Critical Perspectives on Accounting, Vol 48, pp1-20, , Chaidali & Jones, 2017.pdf
6. Gibassier, D., Rodrigue, M., & Arjaliès, D.L., (2018), “Integrated reporting is like God: no one has met Him, but everybody talks about Him: The power of myths in the adoption of management innovations", Accounting, Auditing & Accountability Journal, Vol. 31 Issue: 5, pp XXXXXXXXXX, Gibassier et el 2018.pdf
7. Lai, A., Melloni, G., & Stacchezzini, R., (2017), “What does materiality mean to integrated reporting preparers? An empirical exploration”, Meditari Accountancy Research, Vol 25, Issue 4, pp XXXXXXXXXX, Lai et el 2017.pdf
8. Maroun, W., (2017), “Assuring the integrated report: Insights and recommendations from auditors and preparers”, The British Accounting Review, Vol 49, Issue 3, pp329-346, , Maroun, 2017.pdf
9. Maroun, W., (2018), "Modifying assurance practices to meet the needs of integrated reporting: The case for “interpretive assurance”, Accounting, Auditing & Accountability Journal, Vol 31, Issue 2, pp400-427, Maroun, 2018.pdf
10. McNally, M.A., & Maroun, W., (2018), "It is not always bad news: Illustrating the potential of integrated reporting using a case study in the eco-tourism industry", Accounting, Auditing & Accountability Journal, Vol. 31 Issue: 5, pp XXXXXXXXXX, McNally & Maroun, 2018.pdf
11. Melloni, G., Caglio, A., & Perego, P., (2017), “Saying more with less? Disclosure conciseness, completeness and balance in Integrated Reports”, Journal of Accounting and Public Policy, Vol 36, Issue 3, pp220-238, Melloni et el, 2017.pdf
12. Stubbs, W., & Higgins, C., (2018), “Stakeholders’ perspectives on the role of regulatory reform in integrated reporting”, Journal of Business Ethics, Vol 147, Issue 3, pp489-508, Stubbs & Higgins, 2018.pdf
Advice relating to - Assessment item 1 - Individual Research Article Review Assignment
The assignment consists of 3 questions you need to address relating to the one article, which you have chosen from the list of 12 articles. Each of the 3 questions includes 3 or 4 components which must be addressed in your assignment.
Below I will provide advice about each component of each question, and advice regarding how to prepare the assignment.
I will start by discussing Part b), then Part a), and Part c).
b) The following technical issues addressed within the article: (i) research questions; (ii) research methodology used; (iii) major research findings; and (iv) limitations of the research methodology. (8 marks)
Question 2 consists of four components:
(i) Research Questions;
(ii) Research Methodology Used;
(iii) Major Research Findings;
(iv) Limitations of the Research methodology
b) (i) Research Questions
The research questions (or problem statement) are the issues researched/examined in the research article. In articles using quantitative (statistical) research methods the research questions may be labelled as hypotheses.
Often there is more than one research question. Your assignment should describe each research question. In qualitative research there may be a number of aspects which are examined in relation to a research question. You should refer to these aspects in your assignment.
b) (ii) Research Methodology Used
The research questions identified in the research article are examined by:
(1) Collecting Data (Data Sample);
(2) Analysing the Data (Research Method)
Your discussion of the research methodology used needs to discuss both the data sample and research method.
b) (ii) (1) Data Sample
You need to describe the nature of the data used, and the sample selected.
Data used: e.g. data from annual integrated reports from XXXXXXXXXX; interview data; stock exchange price data from XXXXXXXXXXThere may be more than one set of data used.
Sample Selected: top 100 companies by market capitalisation in South Africa; 15 auditors in Germany, with experience auditing Integrated reports
b) (ii) (2) Data Analysis / Research method
You need to briefly describe the method used to analyse the data sample.
The data sample may be analysed using qualitative research methods, or quantitative research methods, or mixed methods (both qualitative and quantitative methods).
E.g. Qualitative research may entail classifying/ coding data into themes/categories (first order classification), which may be repeated by classifying first order themes/categories into broader themes/categories (second order classification). The final themes/categories are examined to draw general conclusions/ findings.
E.g. Quantitative research may entail using multiple regression analysis to examine the presence or absence of a relationship between the dependent variable (the variable being studied) and independent variables (variables which may influence the dependent variable).
When discussing the research method do not get lost in excessive detail, e.g. when discussing quantitative research, you may briefly explain how the independent variables and dependent variables are measured, but do not discuss the control variables used.
b) (iii) Major Research Findings
You should identify the major findings (conclusions) relating to each research question.
Focus on the major/overall findings/ conclusions, do not get lost in the detailed discussion of findings (e.g. discussion relating to particular parts of the data sample).
b) (iv) Limitations of the Research methodology
Limitations of the Research Methodology refers to both limitations of:
(1) the data sample used in the research; and
(2) the method used to analyse the data.
The limitations of the research methodology may, or may not, be identified in the article.
b) (iv) (1) Limitations of the Data Sample
To examine the research questions a data sample is required, but the data sample cannot cover the entire population, (e.g. all Integrated Reports; all auditors involved in auditing Integrated Reports; all users of Integrated Reports). As the sample may not representative of the entire population, the conclusions of the research study may not apply to the entire/general population.
E.g. the conclusions relating to the top 100 companies by market capitalisation in South Africa may not apply to different countries, due to different regulations and culture; may not apply to smaller firms
E.g. the conclusions relating 15 auditors in Germany may not apply to different countries, due to different regulations and culture; may not apply generally, because the sample size is quite small; does not consider the perspectives of different stakeholders involved in Integrated reporting
b) (iv) (2) Limitations of the Data Analysis
E.g. If qualitative research is undertaken by classifying data into themes/categories, the major findings / conclusions may be affected by themes/categories chosen to classify the data. If the data had been classified into different themes/ categories would the same patterns emerge, and same findings/conclusions be made?
E.g. If quantitative research is undertaken, the major findings/conclusions may be affected by the measures chosen to measure the dependent and independent variables, e.g. measurement of Integrated report quality. How well do these measures capture the variable?
a) A brief description of the objective of the article, and how it relates to the area of Integrated Reporting. You should also discuss why the article is of interest to you as a student in Contemporary Financial and Integrated Reporting. (3 marks)
Part a) consists of three components:
(i) Brief Description of the Objective of the Article;
(ii) Explain how the article relates to the area of Integrated Reporting; and
(iii) Explain why the article is of interest to you.
Part a) effectively serves as an Introduction to your Assignment.
a) (i) Brief Description of the Objective of the Article
Briefly describe what the article is about: summarise the issues being examined. Remember the article is discussed in detail in part b), so this should be brief, (and will be expanded upon in part b)).
a) (ii) Explain how the article relates to the area of Integrated Reporting
The article you chose will examine a particular aspect of Integrated Reporting, not every aspect of Integrated reporting, e.g. the application of materiality in Integrated Reporting; audit of Integrated Reports, the use of Integrated Reports by Investors.
You may start by briefly explaining what integrated reporting is, and then explain how the particular aspect of Integrated reporting examined in your chosen article fits into the “the whole” of Integrated Reporting, that is, place the issues examined in the article into context.
E.g. Explain the concept of materiality in financial reporting generally, and the role of materiality in Integrated Reporting in particular.
E.g. Explain the role of audit in financial reporting generally, and the role of audit in Integrated Reporting in particular.
E.g. Explain the use of financial information by investors generally, and the use of Integrated Reports by investors in particular.
a) (iii) Explain why the article is of interest to you.
Explain why you selected this particular article to review, rather than the other 11 articles listed in the assignment document.
Do not provide a general explanation, which could apply to any of the 12 articles: “Integrated reporting is a new development and a growing trend in financial reporting. As a future practicing accountant, it is important that I am familiar with this new area of financial reporting”
To explain why you chose the particular article, you should explain why the particular aspect of Integrated Reporting examined in the chosen article is of interest to you. This could relate to your past life experience, (e.g. you previously worked as an auditor, therefore you chose an article examining the audit of Integrated reports). Alternatively, it may be an Integrated Reporting issue that captured you interest, and you wanted to explore further, (e.g. you became interested in whether Integrated Reporting really did result in better quality decision making by users of integrated information, as claimed by the IIRC).
c) Your understanding and assessment of the implications of the major research findings of the article for the IIRC and other relevant stakeholder groups, in terms of improved (or not improved) reporting and improved (or not improved) decision making. (4 marks)
Part c) asks you to discuss the implications of the major findings/ conclusions for some of the stakeholder groups involved in Integrated Reporting.
You should select 3 or 4 particular stakeholder groups, and for each stakeholder group examine the implications of the major research findings/ conclusions for
(1) the quality of information provided by Integrated Reporting; and
(2) decision making using information provided by Integrated Reporting, or relating to Integrated Reporting.
Stakeholders involved with Integrated Reporting include preparers of Integrated Reports; regulators/ potential regulators of Integrated Reporting, (e.g. IIRC, Australian Government, via amending the Corporations Act); auditors of Integrated Reports, users of Integrated Reports / Information, (e.g. investors, creditors, customers, employees, local communities, management, because the entity’s information systems are now producing Integrated Information).
You should discuss the implications of the major findings/ conclusions for 3 or 4 particular stakeholder groups/ stakeholders. The appropriate stakeholders to choose and discuss implications for, depends upon the particular aspect of Integrated Reporting examined by your selected article.
Do not use the term “stakeholder” to discuss/ refer to a particular stakeholder group. You must identify the particular stakeholder group you are discussing, as there are many different stakeholder groups. Do not discuss the implications for stakeholders generally, as there is likely to be different implications for different stakeholders.
Quality of Information provided
The major findings/conclusions of the research article may indicate that Integrated Reporting results in improved reporting; or fails to provide improved reporting; or there is a deficiency in Integrated reporting etc.
Decision making using information provided by Integrated Reporting
If Integrated Reporting results in improved reporting, it should enable better decision making, e.g. investors/ creditors/ management can engage in integrated thinking and make better investment/ lending / management decisions. Alternatively, if Integrated Reporting does not result in improved information, it should not result in better decision making.
If there are deficiencies in Integrated Reporting, the implications for the IIRC may be to revise the IR framework; for regulators to regulate Integrated Reporting etc.
How to prepare your assignment
1) I suggest you start with the headings for each part of the three questions.
2) As you read the article, take notes under each of the headings, starting with the main points, producing a basic answer. This ensures you address each part of the assignment, and that you address the major points.
3) Re-read the article, to obtain a deeper understanding of the article, and add more detail to your basic answer, under the headings. However, you should not provide excessive detail/get lost in the detail, especially regarding the findings.
4) For Part a), especially describing how the article relates to the area of Integrated Reporting, referring the lecture slides, and the IR framework should assist.
5) For Part c), it requires some reflection upon the implications of the major findings.
Part two of assignment
On 1 July 2013, Mariza Ltd purchased a factory building for $13,500,000. Mariza Ltd depreciates buildings on a straight-line basis over 30 years, with zero residual value. Mariza Ltd measures the buildings using the cost basis of measurement.
On 1 June 2016, Mariza Ltd purchased equipment for $1,000,000 to install in its factory building. During June 2016, Mariza Ltd incurred the following costs relating to the new equipment:
· $80,000 installing the equipment in its factory building;
· $30,000 upgrading the water and electricity services to be connected to the equipment;
· $15,000 training staff to use the new equipment; and
· $10,000 testing the equipment to ensure it performed correctly.
On 1 July 2016, the equipment was ready for use, and Mariza Ltd commenced using and depreciating the equipment. Mariza Ltd depreciates equipment on a straight-line basis over 10 years, with zero residual value. Mariza Ltd measures equipment using the cost basis of measurement.
On 30 June 2018:
1) Mariza Ltd decides to adopt the revaluation model for its buildings. The fair value of the factory building is $12,500,000.
2) There is an indication that the equipment may be impaired. Mariza Ltd calculates the value in use of the equipment to be $760,000 and determines the net selling price of the equipment to be $720,000.
On 30 June 2020:
1) The fair value of the factory building is $9,200,000.
2) Mariza Ltd calculates the value in use of the equipment to be $620,000 and determines the net selling price of the equipment to be $660,000.
On 1 July 2020, the equipment was sold for $675,000.
Prepare all the journal entries relating to the factory building and equipment of Mariza Ltd, from 1 July 2017 to 1 July 2020, in accordance with the requirements of AASB 116: Property, Plant and Equipment and AASB 136: Impairment of Assets. Provide all explanations and workings necessary to support your answer.
The cost of an item of Property, Plant, and Equipment (PPE) includes:
a) the purchase price less any discounts, and all costs incurred to acquire the PPE, e.g. legal fees, taxes;
b) costs directly attributable to bringing the PPE to a location and condition ready for use; and
c) estimated costs to dismantle and remove the PPE, and restore the site where the PPE is located, if the entity incurs an obligation to do so when the PPE is acquired.
See Lecture 4, Part 4, Slides 17 to 19.
You should identify whether the particular class of PPE is measured using the cost model, or the revaluation (fair value) model.
Where the revaluation (fair value) model is used to measure a class of PPE, the carrying amount of an asset must be adjusted up or down to fair value, whenever the fair value differs from the carrying amount. See Lecture 4: Part B, Slides 5 to 26.
Where the cost model is used to measure a class of PPE, the carrying amount of an asset is only adjusted to its recoverable amount, if the asset is impaired, (that is Carrying amount > Recoverable amount). After an asset is impaired, there may be further impairments in subsequent years, or the impairment may be reversed, where the Recoverable amount > Carrying Amount. However, the reversal of the impairment must not result in the carrying amount of the asset exceeding the original cost of the asset less accumulated depreciation based upon that original cost. See Lecture 4: Part A, Slides 21 to 25; Part B, Slides 31 to38.
Where a depreciable asset has been revalued or impaired, subsequent depreciation after the revaluation or impairment must be based upon 1) the new carrying amount of the asset, (fair value or recoverable amount), and 2) the remaining useful of the asset at the time of the revaluation or impairment.
Also see Past ACCT 2178 Exam and Exam Solutions: 2017, Session 3 exam, Q2; 2017, Session 2 exam, Q1, Part D; 2018, Session 3 exam, Q1, Part C; and 2018, Session 2 exam, Q1, Part B.