ACCT11059- Accounting, Learning & Online Communication Chrystal Gerard - 12097784

Assignment 2Moodle Profile: Chrystal Gerard

Blog Link: Life By The Numbers With Chrys

STEP 3: RESTATING FINANCIAL STATEMENTS

I am no stranger to financial statements; working in an accountants firm, I see and handle them

every day. But in saying this I have never actually had the opportunity to analyse the information

presented to me with a background understanding of where it came from to put the figures into

context. This is why I really enjoyed this assignment; it gave me the opportunity to closely examine

the Harvey Norman’s financial statements and accompanying notes to figure out where the figures

are actually coming from and what they are representing.

Throughout my financials and restated financial statements, I have strategically used excel equations

to ensure my figures are not only balancing on each sheet but that the restated figures are also

matching the original financial statements. I have found this has helped me to understand the link

between the original financials and the restated to understand how operating and financial activities

are separated within a set of accounts.

Restating the Statements of Movements in Equity

I found restating this to be fairly straightforward for Harvey Noman Holdings Limited. The only two

areas where I had to really delve deeply into the notes to establish if currency translation differences

and interest rate swaps were related to financial or operating revenue. On the surface I would have

assumed (without looking at the relevant note) that they were financial, but on investigating (Note

#36) I was able to ascertain that they both were relevant to setting up new business ventures in

different countries and therefore were an operating activity. It was great to begin looking into what

the descriptions on the actually financials were relating to and to examine the notes to make sense

of the information being presented.

Restating the Balance Sheet/Financial Position

I have found, in completing this restating, that there is a lot of different terms and phrases that I am

yet to learn, which I think with time and exposure will become clearer to me. Most classification of

items in the balance sheet were fairly straightforward and most items were considered ‘O’ operating

revenue. It was great to use the Facebook page to bounce ideas off the other students and confirm

the thoughts that I had already going around in my mind. Particularly, Paul Feasey was particularly

ACCT11059- Accounting, Learning & Online Communication Chrystal Gerard - 12097784

helpful in this area when I had just been overthinking and overanalysing a component of my balance

sheet.

It was great to have someone else verify the conclusions I had reached and to get some input from

an external source.

Overall the balance sheet was rather simple to restate, and as with all of the other financial

statements I proactively used Maria’s videos to assist and ensured to use her checks to ensure my

figures were relative to the original financials.

Restating the Income Statement/Financial Performance

As Maria had predicted, this was the hardest statement to restate for me – although in saying this is

was because in watching the video I had paused and restated not only my operating expenses but

also my operating comprehensive income also. This is what comes from not watching the recording

the whole way through and then completing the task at hand (lesson learnt!). I really appreciated

Maria’s tips in the video about how to figure out where you had gone wrong in the restating. I ended

up figuring out where I had gone wrong by printing the income statement and crossing each item off

one at a time – which is when I had realised my mistake. I was pleased as this was actually a really

easy fix and I was able to use it as a learning experience and problem solve to find the solution. I

didn’t have any Financial Comprehensive Income to include in my restated statements, but I have

chosen to include this, so I know it was a zero balance to create good practice to make sure I don’t

miss a step when restating in the future.

In the initial entering of the financial statements I got to the point where Maria talked about splitting

out operating and financial revenue and for some reason (I cannot remember now) I hadn’t actually

ACCT11059- Accounting, Learning & Online Communication Chrystal Gerard - 12097784

completed this step. So when it came to restating the income statement I had to go back and

complete this step – kicking myself that I didn’t do it the first time around! And by golly, I was glad

for the peer feedback on the Facebook page and Martin’s prompt reply to my questions! The issue I

came up with was that my financial statements for Harvey Norman Holdings Limited didn’t as clearly

express what was considered ‘financial income’ or ‘interest’ as the examples given so I was a little

bamboozled at first. What confused me was that they clearly split out the operating revenue and

lumped the ‘gross revenue from other unrelated parties’ together, and there were no accompanying

notes to provide further clarification.

And this is where I turned to my peers to see what they had represented in their annual reports. It

was great to have feedback which enabled me to clarify my own thoughts and ideas. Robert

Marsden’s comments were particularly helpful to assist me to narrow down my thought processes at

this time as his comments enabled me to think in context given what Harvey Norman Holdings

Limited do and whether it was an operational or financial activity. So when I had received Martin’s

reply to my question I had already chosen to allocate only the ‘interest received’ as financial

revenue.

ACCT11059- Accounting, Learning & Online Communication Chrystal Gerard - 12097784

In conclusion, I really enjoyed examining the operating and financial activities and how each plays an

important role within the financial statements. I feel in doing this I have gained a deeper

understanding of what an operating activity and a financial activity consists of and a clearer idea of

how to read the notes to the financial statements.

STEP 4: PEER FEEDBACK

Pending….