Page 25 - CIMA MCS Workbook May 2019 - Day 2

CIMA MAY 2019 – MANAGEMENT CASE STUDY

TASK 2 – ACCIDENT ON SITE

Trigger and task
You receive the following email

From: Eva Edberg (Human Resources Officer)
To: Finance Manager
Subject: Accident on site

You may have heard that there was an accident last week involving one of our integrated cranes
whilst unloading components to begin on‐site assembly of a new property. Apparently, part of a
load slipped from the crane and injured one member of our installation team.

Initial investigation by the on‐site construction manager seems to indicate that the winch
mechanism was faulty and had not been correctly attached to the crate. The crate swayed and, as
a consequence, knocked over and injured the employee.

I have been tasked with looking after the welfare of the injured worker, who is currently
hospitalised, and to collate a summary of the key consequences of the accident, including the
related financial reporting issues.

The board of directors of Jord Homes have asked me to look into possible reasons for inclusion of
provisions and other related items within the annual financial statements as a result of the
reported accident.

So that I can report back to Theo Larsson before the next directors’ board meeting early next
week, could you summarise the requirements of IAS 37 Provisions, Contingent Liabilities and
Contingent Assets and apply those requirements to the consequences of the accident?

Please provide this information to me by the end of this week.

Prepare a response to Eva’s request (Time: 45 minutes)

44 KAPLAN PUBLISHING