Step 5 – Restating

How did you go with this step? I found it a good refresher and a good process to go through for my firm.

Here is what I have to say about the process for me:

Time has come to restate a financial statement once again and I was excited for this task. When I completed restating task in the first unit ACCT11059 Accounting and Online Learning back in 2019, I was excited to enter data into a spreadsheet and learn different little tricks in Excel from Maria’s videos. At the time I was not working in a finance role and I had just started as an administration officer in my first “office” job after 11 years working as a pathology collector. Using excel was exciting and I felt like I was really getting into the accounting type tasks. This time around I have been working for nearly 2 years in a finance role and excel is definitely a daily program I use, and I have become skilled in pivot tables, vlookups, text to columns and other formulas and tools. Even using Excel as much as I do for work, I was still excited to enter in all the data for step 4 and then complete the restating for step 5. Once again, I followed along with Maria’s videos and worked with her to complete the restating for my firm. This is such a great way to learn, being hands on and working with the teacher to put into practice what they are teaching. I feel doing the restating this term compared with back in ACCT11059 was similar, some items were easy to determine and others I needed to investigate. I didn’t feel frustration completing the task, some questions come out of it but not frustration.

To carry out the restating for Xero there was some items where I went to the notes of the financial statements in the annual report to check whether I should categorise as financial or operating. This included contingent consideration which for Xero consists of the groups probability weighted assessment of discount amounts payable to vendors in respect of business acquisitions. Due to the fact it is for business acquisitions and would relate to equity investors/debt investors not for the customers and suppliers (operation) of the business I decided to categorise as financial. This is an item which I’m sure I have heard of before, but it wasn’t familiar, so I learnt something possibly new.

I had questions on the other income and other expenses items because in 2022 and 2021 these are separated out but in 2020 and 2019, they are combined as one figure. I investigated the notes to try and separate them to be consistent over the four years, but there was no note number I could refer to so I could investigate. Another two items I questioned were the basic earnings/(loss) per share and diluted loss per share, I didn’t include these in the restating of my incomes statement as the figures aren’t included in the total comprehensive income/(loss) for the year, but should I have? This is something I will try and discuss with other students and see what they did for theirs and what they think.

When it came to cash and cash equivalents, I followed Maria’s lead with working out how to separate to operating and financial but using 1% like Maria’s seemed way to low for my firm. When dividing the cash and cash equivalents by total operating revenue the results for the four years ranged from 15.04% to 77.51%. I made the decision to allocate 10% of the item to operating and the remained to financial due to those percentages being well and truly over 1% unlike Maria’s firm. This will be another point to discuss with other students and see if anyone else had a similar consideration for their cash and cash equivalents. This result of my cash percentage made me also question why it is so high compared to Maria’s firm. Does my firm need to have so much cash and cash equivalents? I looked back to my firm from ACCT11059 and its cash way lower and under the 1% like Maria’s. I double checked I used the right figures and I have but it seems Xero’s cash is high and this is something I can investigate further.

Thanks for reading.