This is a team assignment where you are required to form a team of 3-4 students to work collectively on a team report. The objective of this assignment is to assist you to develop effective written communication skills, analysis skills and the ability to work as an effective member of a team. The Australian Securities and Investment Commission (ASIC) undertakes a regular financial reporting surveillance program. In late 2017/early 2018, ASIC raised concerns with the ASX listed company Premier Investments Limited (Premier, ASX code: PMV) about the value of some brand name assets in Premier’s financial report for the year ended 29 July 2017. Specifically, ASIC had raised concerns about the reasonableness and supportability of assumptions used in testing brand name assets for impairment. Premier wrote down the value of its casual wear brand name assets by $30 million in its financial report for the year ended 28 July 2018. Assignment 2 is a team assignment. There has been a discussion board Team formation - Assignment 2 set up for you to form teams. Make sure you assign yourself to team early in the teaching period. You and each of your team members will need to: Assume that you are a summer vacation intern at the Melbourne office of an international accounting firm and that along with some fellow interns you have been assigned to work on a team project to produce a report on Premier Investments Limited (Premier). Your team report to the shareholders of Premier should include: some background material about Premier the identification of the questioned accounting treatment of some brand name assets an examination of the basis of the accounting treatment adopted by Premier in its financial report for the year ended 27 July 2017 and the basis of the concerns raised by ASIC a discussion of the response from Premier in its financial report for the year ended 28 July 2018, including the identification of any other possible approaches available to Premier to address the concerns raised by ASIC a discussion of the announcement from Premier to the market on 20 September 2018, including the approach taken to announcing the write down of the value of its casual wear brand name assets in its financial report for the year ended 28 July 2018 the market reaction to the announcement to the market on 20 September 2018 recommendations as to what Premier might do to reduce the likelihood of it being subjected to future pressure from ASIC to write down the value of its non-financial assets. The team report will reflect the personal view of the team based on research evidence, theory and original consideration. The report is expected to draw on: Australian Accounting Standards ASIC reports DatAnalysis. DatAnalysis is a comprehensive data set on all companies listed on the Australian Securities Exchange (ASX). Includes annual reports, corporate history and listing details, cross directorships and committee composition, shareholders’ trading history, takeover details, industry comparisons, price history and graphs, financial data, key events corporate calendar and ASX announcements 2 Newspaper and other media reports Scholarly articles from academic journals. This is the start we have made: Background: Premier Investments is an Australian public company that has been listed on the Australian Securities Exchange (ASX) since 15 December 1987. The company was established in Australia with a particular focus on retailing, importing and distributing which later expanding to New Zealand, Asia and Europe. In 2008 Premier acquired Just Group Limited, which is comprised of Jay Jays, Just Jeans, Jacqui, Dotti, Portmans, Peter Alexander and Smiggle. Premier also holds 28.06% stake in Breville Group Limited, an electrical consumer products manufacturer. In 2018 Premier had 9000 employees in Australia, 1,200 stores across multiple countries as well as operating online. Premier aims to continue expanding and growing its online presence in the future. The Accounting Treatment questioned by ASIC: The Australian Securities and Investments Commission (ASIC) regularly checks financial reports submitted by companies. The impairment of non-financial assets has been a focus for ASIC’s Financial Reporting Surveillance Program for several years now. In early 2018, ASIC raised concerns about the reported value of some brand name assets in Premier’s financial report for the year ending 29 July 2017. The corporate regulator (ASIC) expressed uncertainties about the value of the casual wear brands Just Jeans, Jay Jays and Dotti, questioning the reasonableness of the royalty rate assumptions and the sales grown forecasts used in Premier’s annual impairment testing. ASIC’s main concerns were the reliability of the assumptions made by external sources and the company’s sales forecasts exceeding the actual sales figures over several reporting periods. In July 2018,Premier subsequently wrote down the value of the mentioned casual wear brands by $30 million, resulting in a decrease of net profit by 20.5% to $83.6 million from the $105.1 million recorded in 2017. Under the Australian Accounting Standards companies are required to test the value of goodwill and brand names every year but are not allowed to write up the value of well performing brands. While Premier’s casual wear brands sales had declined, brands such as Peter Alexander and Smiggle had grown to $512 million (an eight-fold increase) since 2008, offsetting the declining sales according to Premier. If ASIC had not intervened, Premier would have continued using an incorrect Accounting treatment resulting in the breach of True and Fair View of Financial Statements which would have consequently misled the users of these statements. Market Reaction: Restatement of earnings announced by a company often receives a negative reaction in the financial market.This reaction is due to the fact that restatements of company’s earnings often indicate a negative impact on the prices of share. Such announcements are critical to the market and the reaction received is usually based on what parts of the financial reports have been adjusted. The news of the write down of assets by Premier Investments Limited was published worldwide and reduced the demand for Premier shares. Premier suffered a decrease in net profit of 20.45% after tax after writing down $30 million of assets value. Before the announcement was made, Premier’s share prices were at a high of $19.72 (12th September 2018) and a low of $13.75 (1st February 2019) and saw an improvement from February 2019 until present ($15.40 on 6th September 2019). THIS IS ALL I REQUIRE FOR THE ASSIGNMENT / THESE ARE MY SECTIONS the examination of the basis of accounting treatment adopted by premier and the basis of concerns raised by ASIC. -the discussion of the announcement from premier to the market, including the approach taken to write down the value of the brands.