Financial Reporting Analysis of Barratt Developments plc for the year ended 30 June 2020

• This assignment must be completed individually.

• You must use the Harvard referencing system.

• Your work must indicate the number of words you have used. Written assignments must not exceed the specified maximum number of words. When a written assignment is marked, the excessive use of words beyond the word limit is reflected in the academic judgement of the piece of work which results in a lower mark being awarded for the piece of work (regulation 6.74).

• Assignment submissions are to be made anonymously. Do not write your name anywhere on your work.

• Write your student ID number at the top of every page.

• Where the assignment comprises more than one task, all tasks must be submitted in a single document.

• You must number all pages.

In order to achieve full marks, you must submit your work before the deadline. Work that is submitted late – up to five working days after the published submission deadline - will be accepted and marked. However, the element of the module’s assessment to which the work contributes will be capped with a maximum mark of 40%.

Work cannot be submitted if the period of 5 working days after the deadline has passed (unless there is an approved extension). Failure to submit within the relevant period will mean that you have failed the assessment.

You are an accountant within an accounting practice with several high wealth clients. One of these clients wishes to invest a significant amount of money in the ordinary shares of Barratt Developments plc but does not understand the performance and position of the business as shown in its Financial Statements for the year ended 30 June 2020.

You have been asked to produce a report for the client limited to only the issues below, which the client has asked for advice on:

a) Calculate ratios for profitability, liquidity, efficiency and gearing for the years to 30 June 2020 and 30 June 2019. 30 marks

b) Analyse the performance and position of Barratt based on the above ratios. 20 marks

c) Evaluate Barratt reporting of Intangibles, including Goodwill and Impairment Tests with reference to IAS 38 Intangible Assets, IFRS 3 Business Combinations and IAS

POINTS TO CONSIDER

The total word limit for this assignment is 2,500 words. This is spread between the 3 sections a) to c) in proportion to the marks available. Thus, the word limit for part a) is 750 words part b) 500 words and part c) 1,250 words. The word limit in part a) is notional only, ie; in producing your ratios you will probably not use 750 words but part a) is counted as 750 words regardless of this. You may not transfer any of the word limit in part a) to use in part b) or c

Issues and Analysis Covered

Your report should only consider the issues in points a) to c) above. Do NOT discuss other issues such as future prospects of Barratt, marketing methods, economics or any other issue not in part a) to c) above.

Remember the client has come to you for advice on financial reporting issues and thus your report should be focused on this topic. Your report should only advise the client about the meaning of financial reporting figures and financial reporting standards used in producing these figures. The client will obtain advice from other advisors on issues such as alternative possible investments or the state of the economy, so your report should be restricted to financial reporting issues only.

• Consider approximately 10 ratios spread across the areas of profitability, liquidity, efficiency and gearing.

• The calculation of ratios must be shown, not merely the result.

• Explanations of ratios are NOT required. However, if you make an adjustment to a figure used in a ratio to improve its relevance to Barratt then a brief narrative comment on this is sensible.

• You should use knowledge gathered from a range of academic sources to produce your ratios. In part b) above:

• Only comment on the ratios you have calculated for Barratt for the years 2020 and 2019. Do NOT consider other years or compare Barratt to the performance of competitors.

• There are NO MARKS for using analysis of others, rather only your own analysis of your own figures will gain marks. eg; the beginning of the annual reports for Barratts contains Key Performance Indicators, Chairman and Chief Executive Officer analysis of performance but this is not relevant to your work as it is not based solely on your ratios in part a) and nor is it focused on explaining financial reporting standards. Academic authors, investment analysts and others may also have produced an analysis of Barratt but again this will be no use to you, as again it will not be basedsolely on your ratios in part a) and nor is it focused on explaining financial reporting standards.

• Stating that a ratio has increased or reduced attracts NO MARKS.

• Stating that a ratio has improved or worsened attracts marks but not a pass mark.

• Listing generic causes of ratio changes unrelated to Barratt is worthy only of a basic pass mark.

• Identifying specific causes and effects of ratio changes for Barratt attracts a good mark.

• Precise analysis of issues in depth, placing ratios in context with one another and identifying which issues are significant and which are insignificant attracts an excellent mark.

• A comment which demonstrates an understanding of accounting standards.ie; show how accounting standards requirements have contributed to the ratio figures attracts an excellent mark.

• You should use knowledge gathered from a range of academic sources to enable your analysis.

• Discuss relevant core requirements of IAS 38, IFRS 3 and IAS 36.

• Identify Barratt compliance with these core requirements to support your discussion.

• You should use knowledge gathered from a range of academic sources to evaluate Barratt compliance with both accounting standards, illustrating your points with examples of actual reporting practice at Barratt. Secondary research will therefore be required

ASSESSMENT CRITERIA

Task a) assessment criteria:

• Knowledge and understanding of financial reporting information contained in Statement of Profit and Loss and Other Comprehensive Income, together with Statement of Financial Position and Statement of Changes in Equity.

• Ability to identify and apply appropriate information within the calculation of financial ratios for the London Stock Exchange quoted public limited company stated within the assignment question.

Task b) assessment criteria:

• Knowledge and understanding of the financial reporting requirements for figures within a Statement of Profit and Loss and Other Comprehensive Income, together with Statement of Financial Position and Statement of Changes in Equity.

• Ability to analyse the financial performance and position of the London Stock Exchange quoted public limited company stated within the assignment question.

Task c) assessment criteria:

• Knowledge and understanding of the accounting standards stated within the assignment question and the Conceptual Framework.

• Ability to evaluate the compliance of the London Stock Exchange quoted public limited company financial reporting with the accounting standards stated within the assignment question and with the Conceptual Framework.

You must be mindful that marks will be allocated based on your knowledge, understanding, ability to define, explain, apply, analyse and evaluate the key concepts.