Assignment - Financial Accounting

BBAW2103 / 2013

TABLE OF CONTENT

1.0 INTROUCTION...................................................................................................... 2

1.1 Missions…………………………………………………………………….......2

1.2 Visions…………………………………………………………………………..3

1.3 Financial Highlights……………………………………………………………3

1.3.1 Revenue………………………………………………………………4

1.3.2 Profit before tax……………………………………………………...5

1.3.3 Profit after tax………………………………………………………..6

1.3.4 Profit before tax margin……………………………………………..7

1.3.5 Profit after tax margin……………………………………………….8

2.0 ACCOUNTING INFORMATION USERS OF BONIA CORPORATION BERHAD……………………………………………………………………...................... 9

2.1 Auditor………………………………………………………………………….9

2.2 Employee……………………………………………………………………....10

2.3 Government……………………………………………………………………10

3.0 RELIABILITY CHARACTERISTIC OF ACCOUNTING INFORMATION FOR INTERNAL USERS ……………………………………………………………………...11

4.0 RELEVANCE CHARACTERISTIC OF ACCOUNTING INFROMATION FOR EXTERNAL USERS……………………………………………………………………..13

5.0 SUMMARY……………………………………………………………………….14

REFERENCES

FINANCIAL ACCOUNTING Page 1

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1.0 INTRODUCTION

Bonia Corporation Berhad is a public listed company in Malaysia which is listed in the

Main Market of Bursa Malaysia and it is categorized under the consumer product. Bonia

Corporation Berhad is a Malaysia-based investment holding and management company. Being a

leader in the Asian leather fashion industry, Bonia provides a wide variety of high quality leather

and fashion products through innovative merchandising and creative marketing activities.

Bonia Group has a network of over 700 sales and outlets and 70 boutiques throughout the

world including countries like Singapore, Malaysia, Japan, Taiwan, Hong Kong, China,

Thailand, Vietnam, Indonesia, Brunei, Kingdom of Saudi Arabia, Oman, and Syria. Its

subsidiaries include CB Marketing Sdn. Bhd., CB Holdings (Malaysia) Sdn. Bhd., Ataly

Industries Sdn. Bhd., Luxury Parade Sdn. Bhd., Eclat World Sdn. Bhd., CB Franchising Sdn.

Bhd., BCB Properties Sdn. Bhd., Long Bow Manufacturing Sdn. Bhd. and De Marts Marketing

Sdn. Bhd. The Company operates mainly in Malaysia and Singapore. In August 2011, the

Company acquired Vista Assets Sdn Bhd.

Bonia Corporation Berhad which is listed on the Main Market of Bursa Malaysia is involved

in retailing, manufacturing and investment and property development. The three segments are:

Retailing which is engaged in designing, promoting and marketing of fashionable

apparels, footwear, accessories and leather goods.

Manufacturing which is engaged in manufacturing and marketing of fashionable leather

goods,

Investment and property development which is engaged in investment holding and rental

and development of commercial properties.

1.1 MISSIONS

In Bonia, it holds three different categories of Missions statement whereby it all started with

the letter R and it can be told by the 3R Missions of Bonia. The Missions are:

Recognition – to be recognized as an international luxury brand with excellent customer

satisfaction.

Resources – to build, recognize and reward our valued human capital.


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Responsibilities – to provide sound return to stakeholders and fulfilling community

social responsibilities.

1.2 VISIONS

The Visions of Bonia contains five categories and it all stated will the letter B. The

company’s vision can be recognized by the 5B Visions of Bonia.

Brand Value – Bonia group will have the most desirable brands in the fashion industry

which will be relevant to all generations.

Brand Visibility – Bonia will be well-established in 5 key countries and have brand

visibility in 30 other countries.

Billion Dollar Company – Bonia shall contribute to an annual group turnover of RM1

Billion with atleast 12% profit before tax.

Business Listing – Bonia shall have two more public listed companies in the region.

Best Employer – Bonia Group will be recognized in the regions as the preferred

employer and shall create a workforce of passion and accountability.

1.3 FINANCIAL HIGHLIGHTS

Meanwhile, the financial highlights of the Bonia Corporation Berhad will be explained

for five years of accounting years of assessment which is from year ended june 2008 until june

2012, whereby, I will explain the financial highlights between five types of financial categories.

They are the revenue, profit before tax, profit after tax, profit before tax margin in percentage,

and profit after tax margin in percentage.


BBAW2103 / 2013

1.3.1 REVENUE

Year of

Assessment 30 June 2008 30 June 2009 30 June 2010 30 June 2011 30 June 2012

Revenue (RM)

300,189,000.

00

314,891,000.

00

360,099,000.

00

461,381,000.0

0

579,812,000.

00

As we can see from the above table, it shows Bonia’s revenue between five years of

assessment. In the year of assessment 2008, Bonia had collected their revenue of RM 300.19

million which had been increased in year of assessment 2009 to RM 314.29 million. Meanwhile,

Bonia had increased their revenue from year of assessment 2010 and 2011 which is RM 360.10

million and RM 461.38 million respectively. Last but not least, in the year of assessment 2012,

Bonia had once again gained an increased revenue collection from RM 461.38 million in 2011 to

RM 579.81 million in the year of assessment 2012. I can say that Bonia Corporation had done its

homework and job well as they had succeed in increasing their revenue from year to year in that

five particular year of assessment.


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1.3.2 PROFIT BEFORE TAX

Year of Assessment 30 June 2008 30 June 2009 30 June 2010 30 June 2011 30 June 2012

Profit before Tax

(RM)

38,334,000.

00

29,515,000.

00

45,455,000.

00

56,546,000.

00

66,882,000.

00

In the accounting year of assesment 30 June 2008, Bonia Corporation Berhad had gained

the profit before tax of RM38,334,000.00 while in the year of assesment 30 june 2009, the

company had decreased its number of profit before tax which was RM29,515,000.00.

Meanwhile, Bonia Corporation Berhad managed to earn back its value by increasing its profit

before tax in the year of assesment 30 June 2010 for RM45,455,000.00 and it keep on increasing

in the next year of assement which is in 2011 for RM56,546,000.00. As for the latest accounting

year of assesment, which is 30 June 2012, the company also managed to increased its profit

before tax value for RM66,882,000.00.


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1.3.3 PROFIT AFTER TAX


Profit after Tax

(RM)

28,223,000.

00

21,062,000.

00

33,203,000.

00

42,604,000.

00

45,557,000.

00

As for the profit after tax, in the accounting year of assesment 30 June 2008, the

company had managed to earn the profit after taxation for RM28,223,000.00 meanwhile in the

year assesment 30 June 2009, Bonia Corporation Berhad had earned an increased amount of

profit after tax which was RM21,062,000.00. For the accounting year assesment 30 June 2010,

the company had regained its value in profit after taxation amounted RM33,203,000.00 and keep

on increasing in the year 2011 which was RM42,604,000.00. As for the last year accounting year

of assesment, which is 30 June 2012, Bonia Corporation Berhad had constantly increased its

profit after taxation for RM45,557,000.00.


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1.3.4 PROFIT BEFORE TAX MARGIN


Profit before Tax Margin

(%) 12.77 9.37 12.62 12.26 11.54

In the year of assesment 30 June 2008, Bonia Corporation Berhad had the profit before

tax margin for 12.77% while in the accounting year of assesment 30 June 2009, the company

had scored the profit before tax margin for 9.37% which shows a decrease from the previous

year. Moreover, in the accounting year of assesment 30 June 2010, Bonia Corporation Berhad

had captured a good increment of profit before tax margin which was 12.62% meanwhile, there

was a slightly declination in the accounting year of assesment 30 June 2011 which was 12.26%.

Bonia Corporation Berhad had once again decrease its value of profit before tax margin in the

accounting year of assesment 30 June 2012 which amounted to 11.54%.


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1.3.5 PROFIT BEFORE TAX MARGIN


Profit after Tax Margin

(%)

9.40

6.69

9.22

9.23

7.86

As for the profit after tax margin, Bonia Corporation Berhad had gained 9.40 % in the

accounting year of assessment 30 June 2008 meanwhile 6.69 % in the accounting year of

assessment 2009. Moreover, the company had gained an increment of profit after tax margin in

the year of assessment 30 June 2010 which was 9.22 % and had a slightly increased in 2011

which was 9.23 %. As for the last year which was in the accounting year of assessment 30 June

2012, the company had decreased its percentage of profit after tax margin to 7.86 %.


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2.0 ACCOUNTING INFORMATION USERS OF BONIA CORPORATION BERHAD

2.1 Auditor

The auditor of Bonia Corporation Berhad is BDO Chartered Accountants which is one of

the well known medium audit firm in Malaysia. BDO Chartered Accountants had been

appointed by Bonia Corporation Berhad as its auditor and BDO Chartered Accountants had been

provided useful and trusted audited accounting information towards Bonia Corporation Berhad

with true and fair view.

The first purpose is fraud investigation. Fraud investigations are a special interest for

auditors. Companies that engage in suspicious, illegal or fraudulent activity may come under

investigation by regulatory authorities. If Bonia Corporation engages in some suspicious

fraudulent activities, BDO Chartered Accountants has to put itself as an uninfluenced observer to

clarify or bare witness towards the fraudulent activities that occurred.

The second purpose in obtaining accounting information from the auditor is for the

public interests. BDO Chartered Accountants has to provide opinions for quarterly or annual

reports regarding a company's financial accounting process. Private investors, investment firms

and other individuals have an interest in this information. BDO Chartered Accountants serve to

certify that the general public has a precise understanding of the accounting information. While

the general public cannot request an audit of a public or private company, shareholders can elect

a board of directors for this purpose. The board often hires a public accounting firm to conduct

audits for the general public's interest.

The third category of users who would like to obtain from the auditors intention from

Bonia Corporations Berhad’s accounting information is for the third party review. BDO

Chartered Accountants are interested in Bonia Corporation Berhad’s accounting information on

behalf of a third party organization. These organizations include banks, lenders, government

agencies and other businesses. BDO Chartered Accountants typically release official reports that

state their opinion of the Bonia's accounting information. This opinion can be favourable,

unfavourable or adverse, if BDO Chartered Accountants has serious concerns about the Bonia

Corporation Berhad.


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2.2 Employees

Employees are the individuals who transform economic resources into valuable

consumer goods or services. Employees are interested in the company’s profitability and

stability. They are after the ability of the company to pay salaries and provide employee benefits.

They may also be interested in the company’s financial position and performance to assess the

possibility of company expansion and career opportunities.

In Bonia, employees can be interested in company’s financial information for several

reasons. Bonia Corporation Berhad may offer contributions to employees by providing ESOS

(Employee Share Option Scheme), or might be the retirement account plan. The income

statement usually lists the amount of these contributions in expense accounts.

Employees may also receive commissions or bonuses based on the amount of sales a

company has generated during a certain time period. Business owners can also treat employees

like partners. Employees in a partnership-style organization often receive a portion of net income

as their pay.

2.3 Government

Governing bodies of the country, especially the tax authorities, are interested in an

entity's financial information for taxation and regulatory purposes. Taxes are computed based on

the results of operations and other tax foundations.

In Bonia, the company will have to provide their accounting information to the tax

regulatory in order to determine their taxable income which has to be paid to the Malaysia Inland

Revenue Board. In order to determine the tax, Bonia has firstly to prepare their computation on

financial statement which has to be prepared by BDO Chartered Accountants as their auditor.


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3.0 RELIABILITY CHARACTERISTIC OF ACCOUNTING INFORMATION FOR

INTERNAL USERS

Each organization has implied and clear goals and objectives. Many organizations have a

mission statement that particularly describes their goals. These goals can vary widely among

organizations ranging from non-profit organizations, where goals are aimed at serving specified

elements, meanwhile, for profit organizations where goals are directed toward maximizing the

owner’s objectives.

Business owners often require financial information when making business decisions.

Incorrect or inappropriate information can hamper decision-making or cause business owners to

make incorrect assessments about their companies.

Accounting information must be reliable. This is because business owners can be assured

that accounting information presents a good quality of the company’s financial presentation.

Business owners of Bonia Corporation Berhad need accounting information that is applicable to

the business decision at hand. They can request financial statements and all the working papers

throughout the accounting process. As for the example, the cost distribution reports might not

provide sufficient information for business owners who must make a decision on hiring

employees. Business owners should particullarly request and review accounting information.

This is because, is to ensure it provides the most valuable information for the decision making

process.

Let us look at the 2011 annual report of Bonia Corporation Berhad in the statement of

comprehensive income, under the general and administrative expenses. As we said earlier, if the

business owners have the intention to hire new employess, they will need to have the

quantitative information of how much their expense on general and administrative.

As in 2011, the company had spent RM16,746,000.00 of expenses on general and

administrative. This means that if the owner would like to hire some more employees for the

next particular year, they will need to analyse on the expenses that will incurred whether they

wanted to hire some more employees to increase efficiency or to maintain the current situation.

It is all up to them based on the accounting information provided by the BDO Chartered

Accountants. Therefore, all of this information has to be useful in order to make them happy

when looking at it.


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Accounting information must be understandable. This is an important qualitative

characteristic for business owners like Bonia Corporation Berhad. Many business owners do not

have a strong accounting background. Business owners should choose an accountant who can

prepare information in an easily understandable manner, which in this case, BDO Chartered

Accountants happened to be the professional accountant for Bonia Corporation Berhad in order

to provide understandable accounting information for them.

In Bonia Corporation Berhad, besides the cost allocation reports requested by the owner,

they can request the information of its Investment Properties in 2011 annual report in order for

them to analysis on how much the companies own the investment properties before they make

any decisions to acquire new properties or not to buy any new properties. For example, in 2011,

the annual report of Bonia Corporation Berhad, in the statement of financial position stated

under non-current assets to be precise, shows that the company own the investment properties

valued at RM16,403,000.00 compared to the year 2010 which was RM17,274,000.00. It shows

that the company had sold some of it properties in 2011 which the number shows a decline.

Therefore, the owner of the Bonia Corporation Berhad will need to analyse using the

provided accounting information in order for them to buy new investment properties to increase

their non-current assets or to sell their properties. All the decision that will be made by the

owners of Bonia Corporation Berhad will be based on the accounting information provided in

the annual report and information provided by the chartered accountants.


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4.0 RELEVANCE CHARACTERISTIC OF ACCOUNTING INFROMATION FOR

EXTERNAL USERS

Accounting information should be related between each other at a specific time period or

contain information regarding individual business functions. Business owners often conduct a

trend analysis when reviewing financial information. The analysis should compare the trend of

historical financial information to the company’s current accounting period information. Any

unrelated historical information can misrepresent the trend analysis process.

Let us see at Bonia Corporation Berhad’s disclosure on an increase in Earnings Per Share

(EPS) from RM0.166 to RM0.194 in 2010 and 2011 respectively. The information is relevant to

investors as it may assist them in confirming their past predictions regarding the profitability of

the company and will also help them in forecasting future trend in the earnings of the company.

Relevance is affected by the materiality of information contained in the financial statements

because only material information influences the economic decisions of the investors of Bonia

Corporation Berhad.

Besides that, let see in Bonia Corporation Berhad’s group cost of sales in the 2011 annual

report, the amount shows that the group have to spend RM194,232,000.00 of costs in order to

make the sales of RM461,381,000.00. This information should be relevant parallel to the

operations of the company in order to ensure that the company had spent its money to cover cost

of sales which are on the right path without any misuse of money.

Therefore, it is important for BDO Chartered Accountants to ensure that any relevant

information on the cost of sales should be taken into account in order to ensure that there will no

missing items of the money which were spent on the costs of sales. The creditors should use this

information to analyse whether it is relevant for them to provide goods and raw materials on

credits to Bonia Corporation Berhad in order to produce their end products.


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5.0 SUMMARY

Relevance and reliability are two of the four key qualitative characteristics of financial

accounting information. Relevance requires that the financial accounting information should be

such that the users need it and it is expected to affect their decisions.

Reliability requires that the information should be accurate and true and fair. Relevance

and reliability are both critical for the quality of the financial information, but both are related

such that an emphasis on one will hurt the other and vice versa.

After the balance sheet date during the time when audit is carried out, it becomes clear

which debts were realized and where were not hence it improves the reliability of allowance for

bad debts estimate but the information loses its relevance due to too much time being taken.

Timeliness is the key to relevance.

Accounting information is relevant when it is provided in time, but at early stages

information is undefined and later less reliable. Therefore reliability and relevance are two main

important factors for the users to take into account when they are considering their knowledge in

Bonia Corporation Berhad’s accounting information.

(2903 Words)


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References

Frank Wood and Alan Sangster. (1999). Business Accounting 1. Pitman Publisher. United

Kingdom: London.

S. Susela Devi, Howard Davey, Keith Hooper. (2004). Accounting Theory and Practice: A

Malaysian Perspective. Prentice Hall. Malaysia: Kuala Lumpur.

Assoc. Prof. Dr. Shahul Hameed Hj Mohamed Ibrahim. (2009). Accounting and Auditing for

Islamic Financial Institutions. Kuala Lumpur: INCEIF

M W E Glautier and B Underdown. (2001). Accounting Theory and Practice. England:

Edinburgh.

http://www.bonia.com/

http://bonia.listedcompany.com/misc/ar2011.pdf

http://www.securities.com/

http://bonia.listedcompany.com/

Lynette Teal, http://www.wisc-online.com/


http://www.wisc-online.com/

http://bonia.listedcompany.com/

http://www.securities.com/

http://bonia.listedcompany.com/misc/ar2011.pdf

http://www.bonia.com/

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Assignment - Financial Accounting