CaseTutorial_2-_UTSC_Limited-_Solution - UTSC 2011 Fall...

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Case Workshop 2 – Notes – November, 2011 1. Role: UTSC Limited (UTSC) currently imitates a contest among its franchised stores and Calgary Store is the winner. They have engaged you to prepare a report to determine the appropriateness of the accounting methods Calgary Store uses and ensure that the accounting methods used were “fair” in the context of the contest. 2. Users and Objectives: a. Management of UTSC – Ensure accurate financial reporting by the Calgary Store and the contest results and assessments are fair. Their objective is also to promote the growth of businesses among all the franchised stores and hence maximizing the profit for UTSC. b. Owner of Calgary Store – want to ensure fair and accurate financial information and reporting to assess the company’s financial position and operating results. Their objective is to remain as the winner of this contest and receive the prize of $100,000. They also want to make sure that everything reported is ethical. c. Owner of Vancouver Store – their objective is to win the contest. Since they are the close second, they would likely want to see that there are errors in Calgary’s reporting of financial results. d. Other users can include the rest of the franchised stores and CRA, etc. – Their objectives will include the necessity to provide fair and accurate financial reporting. The other franchised stores also want to make sure that the contest result truly reflects the winning results. e. Identify possible conflict in objectives between the Calgary and Vancouver stores. 3. Constraints: a. Being a privately owned company, UTSC has the option to adopt IFRS or ASPE. However, UTSC has mandated that all financial reporting should follow IFRS to ensure consistent reporting across all franchised stores. b. The contest rule and formula – The formula for the contest is (Income before tax in 2011 – Income before tax in 2010)/Income before tax in 2010. c. Ethical standards – All the franchised stores involved in the contest must ensure that they are ethical in reporting their financial results and truly reflects their performance. MGTB05 – Case Workshop #2 Suggested Solution
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CaseTutorial_2-_UTSC_Limited-_Solution - UTSC 2011 Fall...

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