Topic: Emerging Trends in Corporate Reporting

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  • 20 Marks

CR – May 2015 – L3 – Q3 – Emerging Trends in Corporate Reporting

Analyze financial statements of two companies and discuss limitations of ratio analysis.

Real Expansion Plc is a large group that seeks to grow by acquisition. The directors have identified two potential entities and obtained copies of their financial statements. The accountant of the company computed key ratios to evaluate the performance of these companies relating to:

  • Profitability and returns;
  • Efficiency in the use of assets;
  • Corporate leverage; and
  • Investor-based decisions.

The computation generated hot arguments among the directors, and they decided to engage a Consultant to provide expert advice on which company to acquire.

Extracts from these financial statements are given below:

Required:

(a) As the Consultant to the company, carry out a financial analysis on the financial statements and advise the company appropriately. (15 Marks)

(b) State the major limitations of ratio analysis for performance evaluation. (5 Marks)

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  • 20 Marks

CR – May 2017 – L3 – Q2 – Emerging Trends in Corporate Reporting

Analyze and compare the performance of Lanke Plc and its group for 2014 and 2015 using selected financial ratios.

The following figures have been extracted from the financial statements of Lanke Plc and its subsidiaries for the years ended December 31, 2014, and December 31, 2015:

The directors of Lanke Plc would like to know how the individual performance of the company and that of the group compares with each other and over the two years. In particular, they are interested in performance measures around profitability, long-term solvency, and asset utilization using only the ratios indicated below. They would also want a brief explanation of why the analysis of the performance of a single company may differ from that of a group company.

Required:

Prepare a performance report that addresses the needs of the directors of Lanke Plc for the two-year period 2014 and 2015.

Note: Limit your ratio computation to the following:

  • Return on Capital Employed (ROCE)
  • Profit Margin
  • Asset Turnover
  • Gearing
  • Interest Cover
    (Show all workings)

(Total: 20 Marks)

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  • 6 Marks

CR – May 2021 – L3 – Q3b – Emerging Trends in Corporate Reporting

Discuss limitations of IFRS-based financial reporting and how integrated reporting enhances annual report usefulness.

The Chief Executive Officer (CEO) of Agege Plc also informed you that as a member of the Institute of Chartered Accountants of Nigeria (ICAN), he recently attended the Mandatory Continuous Professional Education (MCPE) of the Institute. One of the papers presented was in the area of how to improve the quality of information that companies report at year-end.

Required:

As the financial consultant to Agege Plc., identify and discuss three limitations of financial reporting (prepared in accordance with IFRS) and the extent to which integrated reporting might improve the usefulness of the annual reports. (6 Marks)

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  • 8 Marks

CR – May 2023 – L3 – Q5a – Emerging Trends in Corporate Reporting

Discuss four financial reporting issues companies should consider due to COVID-19.

Most regulatory authorities in Nigeria, such as the Securities and Exchange Commission (SEC), Central Bank of Nigeria (CBN), and Federal Inland and State Internal Revenue Services, issued conditional relief for meeting reporting deadlines for filing annual and other returns required by law during the pandemic.

However, companies still need to monitor further reporting updates and evaluate the current and potential effects that COVID-19 could have on their financial reporting.

Required:

Discuss FOUR financial reporting issues that should be considered by companies as a consequence of COVID-19. (8 Marks)

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  • 15 Marks

CR – Nov 2022 – L3 – Q5 – Emerging Trends in Corporate Reporting

Discuss the limitations of financial-only disclosures and the value of including non-financial information in annual reports.

One of the major limitations of traditional financial statements is that they reflect only the effects of transactions that could be reliably measured in monetary terms. Many corporate organisations now include management discussion analysis in their published financial statements. At present, entities reporting under IFRS do not have to publish non-financial information. However, many useful non-financial information had been identified and disclosed by some organisations voluntarily.

Required:
a. Appraise the problems associated with the disclosure of only financial information in an annual report. (5 Marks)
b. Analyse major non-financial information that is considered useful for voluntary disclosure. (5 Marks)
c. Discuss the benefits associated with the disclosure of non-financial information in corporate annual reports. (5 Marks)
(Total 15 Marks)

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  • 20 Marks

CR – May 2015 – L3 – Q3 – Emerging Trends in Corporate Reporting

Analyze financial statements of two companies and discuss limitations of ratio analysis.

Real Expansion Plc is a large group that seeks to grow by acquisition. The directors have identified two potential entities and obtained copies of their financial statements. The accountant of the company computed key ratios to evaluate the performance of these companies relating to:

  • Profitability and returns;
  • Efficiency in the use of assets;
  • Corporate leverage; and
  • Investor-based decisions.

The computation generated hot arguments among the directors, and they decided to engage a Consultant to provide expert advice on which company to acquire.

Extracts from these financial statements are given below:

Required:

(a) As the Consultant to the company, carry out a financial analysis on the financial statements and advise the company appropriately. (15 Marks)

(b) State the major limitations of ratio analysis for performance evaluation. (5 Marks)

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  • 20 Marks

CR – May 2017 – L3 – Q2 – Emerging Trends in Corporate Reporting

Analyze and compare the performance of Lanke Plc and its group for 2014 and 2015 using selected financial ratios.

The following figures have been extracted from the financial statements of Lanke Plc and its subsidiaries for the years ended December 31, 2014, and December 31, 2015:

The directors of Lanke Plc would like to know how the individual performance of the company and that of the group compares with each other and over the two years. In particular, they are interested in performance measures around profitability, long-term solvency, and asset utilization using only the ratios indicated below. They would also want a brief explanation of why the analysis of the performance of a single company may differ from that of a group company.

Required:

Prepare a performance report that addresses the needs of the directors of Lanke Plc for the two-year period 2014 and 2015.

Note: Limit your ratio computation to the following:

  • Return on Capital Employed (ROCE)
  • Profit Margin
  • Asset Turnover
  • Gearing
  • Interest Cover
    (Show all workings)

(Total: 20 Marks)

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  • 6 Marks

CR – May 2021 – L3 – Q3b – Emerging Trends in Corporate Reporting

Discuss limitations of IFRS-based financial reporting and how integrated reporting enhances annual report usefulness.

The Chief Executive Officer (CEO) of Agege Plc also informed you that as a member of the Institute of Chartered Accountants of Nigeria (ICAN), he recently attended the Mandatory Continuous Professional Education (MCPE) of the Institute. One of the papers presented was in the area of how to improve the quality of information that companies report at year-end.

Required:

As the financial consultant to Agege Plc., identify and discuss three limitations of financial reporting (prepared in accordance with IFRS) and the extent to which integrated reporting might improve the usefulness of the annual reports. (6 Marks)

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  • 8 Marks

CR – May 2023 – L3 – Q5a – Emerging Trends in Corporate Reporting

Discuss four financial reporting issues companies should consider due to COVID-19.

Most regulatory authorities in Nigeria, such as the Securities and Exchange Commission (SEC), Central Bank of Nigeria (CBN), and Federal Inland and State Internal Revenue Services, issued conditional relief for meeting reporting deadlines for filing annual and other returns required by law during the pandemic.

However, companies still need to monitor further reporting updates and evaluate the current and potential effects that COVID-19 could have on their financial reporting.

Required:

Discuss FOUR financial reporting issues that should be considered by companies as a consequence of COVID-19. (8 Marks)

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  • 15 Marks

CR – Nov 2022 – L3 – Q5 – Emerging Trends in Corporate Reporting

Discuss the limitations of financial-only disclosures and the value of including non-financial information in annual reports.

One of the major limitations of traditional financial statements is that they reflect only the effects of transactions that could be reliably measured in monetary terms. Many corporate organisations now include management discussion analysis in their published financial statements. At present, entities reporting under IFRS do not have to publish non-financial information. However, many useful non-financial information had been identified and disclosed by some organisations voluntarily.

Required:
a. Appraise the problems associated with the disclosure of only financial information in an annual report. (5 Marks)
b. Analyse major non-financial information that is considered useful for voluntary disclosure. (5 Marks)
c. Discuss the benefits associated with the disclosure of non-financial information in corporate annual reports. (5 Marks)
(Total 15 Marks)

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