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ACC202 Management Accounting Problem: Case Study of WealthWise Insurance Assessment 3 Answer


Assessment 3

Assessment Type: Group Case Study – 2500 +/- 10% word report and analysis.

Purpose: This assessment is designed to assist students to combine the technical skills learned with the theoretical aspects of a number of management accounting concepts. The assessment will allow students to demonstrate their ability to analyse the information provided for a given scenario and present their findings as they relate to the requirements of this assessment.

As this is a team-based assessment, it will allow students to further develop their team-working and problem-solving skills.

It contributes to subject learning outcomes a, b, and c.

Value: 20% All group members will receive the same mark. Please note the penalties applied for late/missing deadlines – these marks will be deducted from the final mark of the assessment.

Group formation: Group of between 3-5 students to be formed no later than week 5 tutorial session.

The group should complete any ‘tables’ or calculations using the spread sheet application and then copy and paste these into a ‘document’ incorporated with their submission.

Topic: Management accounting problem (case study).

Task details:


WealthWise Insurance has recently set up an internal information system to improve social and environmental practices within the company. The company has its head office in Brisbane and offices in all capital cities and every regional city with a population of more than 50 000 people. One of the underlying principles of the company is to be socially and environmentally responsible. This principle has been in place for many years, dating back to the firm’s founder, Jeannette Dai, who felt that she would like to contribute to society rather than simply maximising profits.

The company is a major contributor to charities, particularly those that focus on the homeless and the poor. It actively promotes environmental management in all of the company operations. It sponsors a program that provides scholarships to disadvantaged students to allow them to attend university, and it is proud to offer employment in the company to long-term unemployed and the poor. Each year it publishes a sustainability report that summarises its achievements across each area of performance.

Over time these activities have become a marketing strength of WealthWise. The social and environmental stance taken by the company has attracted many customers to the company. Listed on the Australian Securities Exchange in 2001, the company has also become a preferred investment of ethical and green investment funds.

The mission statement of WealthWise states that it will aim to:

  • support employees in achieving their personal and career goals
  • act in a socially responsible way when dealing with insurance clients and the general community
  • promote a better social and physical environment for the world.

However, the current chief executive officer, Sylvia Trott, thinks that the firm has become complacent and is resting on its past achievements. She is concerned that the firm has built up a reputation for good social and environmental practices but is not walking the talk. There is some level of discontent among employees about the way that management treats staff, and this is impacting on employee satisfaction.

There have also been negative reports in the media of its treatment of businesses in Phuket and Langkawi that were damaged in the December 2004 tsunami. The reports claim that the company has tried to minimise the amounts paid to these businesses by strictly applying clauses in the insurance contracts that cover earthquake damage but not flood damage.

In 2004, the company’s profit rose by 15 per cent to $173 million, on an asset base of $1 235 million. This is the third consecutive year of increased profits. Earnings per share were 62 cents, and the market value was $5.40 per share. The board is concerned that WealthWise makes a loss on its insurance business, while its investments yield a strong return and are the main reason for the increase in profitability. Its investment portfolio includes shares in BHP Billiton, Qantas, Telstra and James Hardie Industries.

The board adopts a sustainability approach to viewing its performance and uses the following key performance indicators to assess company performance:

Financial indicators:

  • profit
  • gross insurance premiums
  • return on investment

Economic indicators:

  • policy, practices and spending on local suppliers
  • procedures for hiring local staff
  • development projects primarily for public benefit

Social indicators:

  • employee satisfaction ratings
  • percentage of women in the top three tiers of management
  • number of indigenous employees
  • customers’ ethical ranking of sales staff
  • number of staff hired who were previously unemployed teenagers

Environmental indicators:

  • tonnes of paper recycled per annum
  • percentage reduction in electricity usage
  • litres of fuel per dollar of sales.


  • Write a report to the chief executive officer explaining what steps she can take to encourage staff to behave in a way that supports sustainability. Specifically, explain to her how the performance measurement system could be used in a balanced way to support the achievement of the company’s goals.
  • Style and Format:
    • Report should be typed on single sided pages, using Arial 11 font, double line spaced with 2.5 cm margins all around.
    • Reference and reference list – in text referencing should be in accordance with the Harvard Anglia method. The reference list should be prepared in accordance with the Harvard Anglia method and list only those references cited in the body of the report
      Research requirements: Students need to support their analysis with reference from the text and a minimum of six (6) suitable, reliable, current and academically acceptable sources – check with your tutor if unsure of the validity of your sources. Groups seeking higher grades should support their analysis with an increased number of reference sources comparable to the grade they are 




The chief executive officer must take the following steps to encourage its staff to behave in such a manner that supports sustainability –

Implementation of the performance measurement system:

The implementation of PMS in the company is vital as it will assist in introspecting the current progress and ascertaining the actual performances of respective employees/staff at the workplace. Furthermore, PMS is one the effective approach which aligns the vision and objectives with resources- capital and manpower (Carless, Salter, Yang, & Lam, 2011). In addition to this, measurement and improvements concerning employee performance are necessary to ensure sustainable performance at a workplace that is possible through an effective performance management system (Eccles, Perkins, & Serafeim, 2012). Ensuring a clear understanding of the company's policies, guidelines to staff will lead to improved productivity, clear directions and sustainable performance and there will be no room for doubt at workplace Furthermore, meetings and appraisals such as 360 degrees, staff self-appraisal, and feedback under PMS are some of the major tools which will assist in identifying actual performances of staff members to what was being expected by them regarding their jobs hence, it will improve productivity and sustainability of performance by the employees resulting in the accomplishment of desirable goals. In addition to this, rewarding, promoting them through remuneration, bonuses, applause in the forefront will increase their motivation and lead to improved quality of performances hence, leading to sustainability at the workplace (Boud, 2010). Moreover, rewarding them with compensation, bonuses, and rewards for their excellent performances will keep them motivated and they will work even better than before thereby goals can be achieved effectively (Miller, 2011).  In addition to this, the CEO of a company can ask its employees to self-appraise regularly and order managers to personally interact with the staff regularly which will assist in addressing their issues and needs at a workplace that will lead to maintaining robust relations, improved performance and clarity of jobs. - Goals need to be amended to stay in the competitive game hence, guiding staff towards current goals and training them accordingly will foster sustainability. Furthermore, ensuring long term goals and policies to staff will prevent ambiguity concerning their duties at the workplace and foster sustainability. Hence, setting staff targets and ascertaining progress drives up quality of performance and company’s long term growth (Epstein, & Roy, 2011)

Implementation of SMART-

Ensuring a clear understanding of the set policies, guidelines, and blueprint to staff will lead to sustainable performance and there will be no room for doubt at workplace hence, a SMART tool is an effective approach that encourages accomplishment of long term goals (Starik, & Rands, 2015).

  1. Specific- setting a meaningful and clear vision and mission will prevent ambiguity and staff would be able to perform sustainably.
  2. Measurable- Quantifiable measures and tools will assist in tracking the current progress or position of the company.
  3. Attainable- The availability of required resources and setting up realistic goals is need of the hour.
  4. Relevant- The vision, mission, and objectives must align with goals of the company.
  5. Time-based- Goals need to be amended to stay in the competitive game hence, guiding staff towards current goals and training them accordingly will foster sustainability. 
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