The Accounting and Business Management Case Competition 2008 - 2009

- Secondary School Group

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Agenda

˙Objectives & Background˙Entry requirements˙Competition details (format, structure, judging criteria, awards)˙Supports provided by the HKIAAT˙Q&As

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Objectives

• To enhance students’ ability in using accounting information for business development and their generic skills as required by today’s business world.

• To provide students with fundamental accounting and business management knowledge and skills, and to develop their positive values and attitudes.

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Background

• Initiated by The Hong Kong Institute of Accredited Accounting Technicians Limited (HKIAAT) since 2002.

• Formerly known as Accounting Case Competition.

• Co-organizers: The Education Bureau and Hong Kong Association for Business Education.

• Every year it attracts more than 300 students from secondary schools and tertiary institutes.

• A new competition format will be adopted this year.

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Entry requirements

• Full-time Secondary 4 to 7 students

• Admission is on a team basis with four members (could be from different levels), all of whom must study at the same school.

• Each school shall nominate a maximum of five participating teams.

• Deadline for registration deadline: before 6:00pm, 31 October 2008 (Friday) .

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Competition format

• There will be two rounds of competition:

� 1st round – Written report

� 2nd round – Public oral presentation

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1st round – Written report

• Each participating team is required to submit a written report in either English or Chinese, depending on the choice indicated on the registration form.

• Questions will be based on the Annual Report 2007 of MTR Corporation Limited.

• The questions will be announced on the HKIAAT’swebsite on 3 November 2008 .

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Guidelines for submission of written report

• Length of the report

� English report - Not more than 20 pages of A4 papers

� Chinese report - Not more than 13 pages of A4 papers

• Font type and size

� English: Arial (12 points)

� Chinese:新細明體 (11 points)

• The written report SHOULD NOT be bound nor put in any folders/files.

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Guidelines for submission of written report (Cont’d )

• Separate cover page for each report with names of team members and contact details.

• The content pages SHOULD NOT include the names of teammembers and school.

• Submit three hardcopies together with soft copies (pdf format)saved in a CD-Rom.

• Submit to the HKIAAT by hand .

• Submission deadline: before 6:00pm, 3 December 2008.

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2nd round – Public oral presentation

• Date of Competition: Saturday morning, 17 January 2009

• Venue: Australian International Competition, Kowloon Tong

• Only EIGHT merit teams will be shortlisted to give a 10-minute oral presentation.

• Apart from the merit teams, the 12 outstanding performance teams will be invited to attend the final competition.

• The list of merit teams and outstanding performance teams will be announced on 6 January 2009 .

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2nd round – Public oral presentation (cont’d)

• Other participating teams are also welcome to enrol for attending the competition.

• The oral presentation can be in English or Chinese, depending on the choice indicated on the registration form.

• Awards will be presented on the same day.

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Year 2002: Café de Coral Holdings Ltd

Year 2003: JUSCO

Year 2004: Cathay Pacific

Year 2005: Bossini Int’l Holdings Ltd

Year 2006: Hong Kong Economic Times

Year 2007: The Hongkong and Shanghai Hotels Limited

Annual reports adopted:

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Question structure:

Section A

• Ratio analysis• SWOT analysis• Business policy• Business performance review

Section B

•Accounting knowledge•Recommendations on Management

and business strategies

Quite similar to previous years

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Examples for Section A

Ratio analysis: 2004

The ratio for Cathay is bit better than that of JA, but note that this has to be paid partly out of retained profits.

N/A0.8 timesDividend cover

Cathay has much better ratio than JA does.

N/A39 centsEarnings per share

Cathay has better management efficiency.

-2.5%1.74%ROCE

Cathay has much better returns.This is an indication of a good marketing policy and cost control.

-6.6%4.41%Net profit margin

Profitability

Interpretation and limitationJACathay Ratio

To be continued…..

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JA has a high total debts to equity ratio paired with a low gearing. This suggests that the firm relies heavily on short-term finance.

83%58%Total debts to equity

JA has lower gearing than that of Cathay. However, both companies are far from the risky state of over borrowing.

44%48%Gearing

Cathay does a bit better than JA here, but both companies are operating far from the desirable interest cover level.

N/A1.23 timesInterest cover

The liquidity position for Cathay is quite acceptable but JA’s liquidity position is poor.

0.33/11.40/1Current ratio

Liquidity and debt management

Interpretation and limitationJACathay Ratio

Examples for Section A (cont’d)

Ratio analysis: 2004 (cont’d)

To be continued…..

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Examples for Section A (cont’d)

Ratio analysis: 2004 (cont’d)

Cathay has much better ratio, which may possibly be the reason for its better ROCE.

43%111%Fixed assets turnover

JA has slightly better credit control than Cathay.

34 days56 daysDebtors ratio (days)

Asset management

Interpretation and limitationJACathayRatio

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Area of concern Description

Strengths���� efficient cost control � good liquidity position� good assets management efficiency� established as a market leader

Weaknesses���� no extensive diversification of products and markets� credit control needs to be improved� heavy reliance on overseas supplies (fuel, manpower)

Opportunities ���� international cargo demand is expected to rise� boom in tourism both in local and overseas markets

Threats���� key giant competitors� threat of terrorism� fears of a resurgence of SARS and outbreaks of avian flu

Examples for Section A (cont’d)

SWOT analysis: 2004

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Examples for Section A (Cont’d)

Business strategy/policy : 2004Cathay Pacific Airways may have benefited from a boom in the local tourist market and a successful campaign in extending services to different parts of the world by means of negotiation and collaboration with overseas partners. However, given the keen competition in the Southeast Asia region, threats in political conflicts, and fluctuations in fuel costs, it will be harder to ensure steady growth in the years ahead. You are therefore asked to draft abusiness policy for the firm as a guide for sustained growth.

Management

Financial

Marketing

Product

Proposed Business Policy of Cathay Pacific Airways

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Examples for Section B

On page 113 of the Annual Report 2006, Note 14 discloses information about the Group’s fixed assets.REQUIRED:

With reference to Note 14, reconstruct:

(a) the asset accounts, in columnar form, of the following fixed assets for the year ended 31 December 2006:

(i) hotels and other buildings held for own use;

(ii) plant, machinery and other fixed assets; and

(iii) investment properties

(b) the accumulated depreciation (provision for depreciation) accounts, in columnar form, of the following fixed assets for the year ended 31 December 2006:

(i) hotels and other buildings held for own use; and

(ii) plant, machinery and other fixed assets.

Accounting knowledge: 2007

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Goodwill‘Prior to the adoption of SSAP 30 “Business combinations” in 2001, goodwill arising on acquisitions was eliminated against consolidated reserves in the year of acquisition. On the adoption of SSAP 30, the Group applied the transitional provisions of the SSAP that permitted such goodwill to remain eliminated against consolidated reserves. Goodwill on acquisitions subsequent to the adoption of the SSAP is treated according to SSAP 30 goodwill accounting policy above’. This is quoted from page 55 of Bossini’sannual report.According to the new Hong Kong Financial Reporting Standard HKFRS3, which has superseded SSAP 30, how should the purchased goodwill be treated, and what is the rationale behind this treatment?

Examples for Section B

Accounting knowledge: 2005

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Judging Criteria

1. Written report

• Accuracy of content

• Adequacy of research

• Analytical approach and styles

• Creativity in problem solving

• Theoretical and practical justification

• Writing style, report organization and references

• Validity of conclusions

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Judging Criteria (Cont’d)

2. Public oral presentation

• Completeness of content

• Validity of conclusions

• Time management and teamwork

• Professionalism of presentation (including use of visual aids)

• Vocal skills and non-verbal skills (body language)

• Performance in Q&A session

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Awards

• Champion team : $3,000 cash prize and individual trophies

• 1st Runner-up team : $2,000 cash prize and individual trophies

• 2nd Runner-up team : $1,500 cash prize and individual trophies

• Best presenter : $500 and trophy

• Merit teams (5 awards) : Trophy for each team

• Outstanding Performance : Certificate for each team

team (12 awards)

• Certificate of participation will be issued to all participants.

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Supports provided by the HKIAAT• Free business operation seminars during the 1st stage:

Enrollment form for the above seminars will be available on the HKIAAT Website from 3 November 2008.

Career in Accountancy

Ms. Lindy YauPracticing Director, C K Yau & Partners CPA Limited

3:45 pm-5:00pm

Thursday, 20 November 2008

Use of financial information for business development

Ms. Janice FungFinance Manager, MTR Corporation Ltd

3:45 pm-5:00pm

Thursday, 13 November 2008

Seminar topicSpeakerTimeDate

• The seminars will be taped and uploaded to the HKIAAT website for students’ access.

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Supports provided by the HKIAAT (con’t)

• Free presentation skills workshop (for merit teams only).

• Tea reception with CPAs and business leaders on the oral presentation day.

Dr. Harry Wong, Director & Lead Consultant, WYH International Consultancy

2:30pm to 5:00pmMonday, 12 January 2009

SpeakerTimeDate

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Enquiries

• HKIAAT website: www.hkiaat.org

• Email: hkiaat@hkiaat.org

• Telephone:

2823-0630 Miss Alison Lee2823-0623 Miss Sharon Keung

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Q & A Session