AAS Investment Accounting Assignment

Assignment Task

Question 1

AAS Investments invests money on behalf of its members. The company guarantees its members a favourable interest rate in return for long-term investments. AAS_executive started the company five years ago and they were_the_only_original_investment analysts, making all the investment decisions.

The company was initially very successful, due to a combination of AASs’ expertise and a favourable world economic climate. Specialising in investing in the emerging markets of Asia and Africa, AAS Investments achieved excellent returns on their investments; This allowed them to meet guarantees given to members as well as funding the expansion of the company itself.

The company has grown and it currently employs 60 staff of whom 12 are investment analysts. However, investment returns have declined and the company is now having problems providing i ts guaranteed return to investors. Consequently, AAS executive is reviewing investment procedures and exploring options for returning the company to the profitability it enjoyed in its early years.

Required:

(a) Explain the difference between a structured, a semistructured and an unstructured decision. Would you consider the investment decisions made by AASs executive and his fellow analysts to be structured, semistructured, or unstructured?

(b) One of the options AAS executive is considering is the use of a decision support system t o help their investment analysts make appropriate investment decisions. Briefly describe what is meant by a decision support system and comment on its possible contribution to the investment decisions made by analysts at AAS Investments.

(c) AAS executive is also considering the development of an expert system.

Required:

Briefly describe what is meant by an expert system and comment on its possible contribution to the investment decisions made by analysts at AAS Investments.

Question 2

The Accountancy Teaching Co (AT Co) is a company specializing in the provision of accountancy tuition courses in the private sector. It makes up its accounts to 30 November each year. In the year ending 30 November 2020, it held 60% of the market share. However, over the last twelve months, the accountancy tuition market in general has faced a 20?cline in demand for accountancy training leading to smaller class sizes on courses. In 2020 and before, AT Co suffered from an ongoing problem with staff retention, which had a knock-on effect on the quality of service provided to students. Following the completion of developments that have been ongoing for some time, in 2021, the company was able to offer an improved service to students.

The developments included:

• A new dedicated 24-hour student helpline
• An interactive website providing instant support to students
• A new training programme for staff
• An electronic student enrolment system
• An electronic marking system for the marking of students’ progress tests. The costs of marking electronically were expected to be $4 million less in 2021 than marking on paper. Marking expenditure is always included in the cost of sales

Extracts from the management accounts for 2020 and 2021 are shown below:

On 1 December 2020, management asked all ‘freelance lecturers’ to reduce their fees by at least 10% with immediate effect (‘freelance lecturers’ are not employees of the company but are used to teach students when there are not enough of AT Co’s own lecturers to meet tuition needs). Al l employees were also told that they would not receive a pay rise for at least one year. Total lecture staff costs (including freelance lecturers) were $41.663 million in 2020 and were included in the cost of sales, as is always the case. Freelance lecturer costs represented 35% of these total lecture staff costs. In 2021 freelance lecture costs were $12.394 million. No reduction was made to course prices in the year and the mix of trainees studying for the different qualifications remained the same. The same type and number of courses were run in both 2020 and 2021 and the percentage of these courses that was run by freelance lecturers as opposed to employed staff remained the same.

Due to the nature of the business, nonfinancial performance indicators are also used to assess performance, as detailed below.

Required:
Assess the performance of the business in 2021 using both financial performance indicators calculated from the above information a the non-financial performance indicators provided.

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