Advanced Financial Accounting - Assignment
Added on 2019-10-31
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Running head: ADVANCED FINANCIAL ACCOUNTINGAdvanced Financial AccountingStudent’s NameCourse Code
1ADVANCED FINANCIAL ACCOUNTINGAnswer to Question 1To, ChairpersonInternational Standard Accounting Board30 Cannon street, London- EC4M 6XH, United KingdomDate: 20th August, 2017Subject: Recommendations and Suggestions on applications of formatting and principles duringpreparation of financial reportsRespected Sir,The proposal of IASB regarding the operative communications of the financial statisticsrelated to objects, I have structured it to reply for its submission. I am looking for an investmentopportunity in Westpac group and ANZ bank. It is understood that preparation of financialstatements concerning the implementation is clumsy and often it is observed by the investors asinconsistent about the performance in context of financial statements (Arnold, 2012). Annualreport prepared contains vital information which is charred by incompetent demonstration of thedata of finances. It becomes problematic to take important decisions on the basis of that. Afterreviewing the annual reports submitted by both organizations I have observed the requirement toescalate the quality of communication statements. I have studied the plan of current communication which is guided by principles whichrequires being flawless and modest, object definitive, related to relevant information, preparedfor emphasizing significant matters, no redundant repetition, presented in suitable format and
2ADVANCED FINANCIAL ACCOUNTINGanalogous. After analyzing the annual report of both ANZ bank and Westpac Group for the yearfinancial year 2016, it was established that some of the actual principles of communication canbe added, which is absent while few of them comply (Anz.com, 2017)(westpac.com, 2017).Reputed and famous banks would assist the investors with analyzed evidence that would helpthem in preparing points to make financial decisions. Banks are obligated to create and deliverwith the appropriate section wise analysis and their risks of credit allotment and liquidity. After reviewing the analysis of annual reports and the data and constituents containedtherein, I have made not of some of the particulars that both the banks have not made theirdisclosures. Westpac has conducted an independent analysis segment wise and there is a constantdescription of every segment whereas ANZ bank has not been seen to practice the same methodas Westpac. They have incorporated their analysis details in the finance statements and have notmentioned it individually. Basel reforms include broader set of methods for consolidation of therules of banking world. It was found out that ANZ bank has not submitted any kind of detailsabout the requirements demanded by the Basel Reforms separately (Zehri & Chouaibi, 2013).There was no evidence of individual disclosure on the risks of credit allotment and liquiditystatus of the bank. But the notes of the financial statements contained those details. Moreover,Westpac was seen to make proper revelation of material and necessities of Basel Reforms andkinds of risks present in the banking world. About Tier I and Tier II, there was no written proofin the annual report. On the other hand, all the details were diligently mentioned in the Westpacannual report. Westpac has been particular in mentioning the performances of each division ascompared to ANZ bank who has not written anything about that part.Banks were unable to analyze and read the details of performance streak which wasshown in a graphical presentation. This was done for the ease of banks to analyze their
3ADVANCED FINANCIAL ACCOUNTINGperformance. On the accord of submitting a descriptive revelation in some of the matters, the useof graphical presentation would have been more relevant. In context of the given facts, there is adire of enhancement in the communication of the financial reports. I would like to suggest some guidelines which IASB should incorporate to enhance theefficiency and to work in an entity specific way for comparisons. Entity specific principles whichare available in the annual report are structured according to the requirement of the time ratherthan being general (Ahmed, Neel & Wang, 2013). Other irrelevant information is availableoutside the ambit of annual reports that is why writing more specific details becomesappropriate. However, placement of information should be done to reduce the effort made forcomparisons between entities and reporting periods. This should be done to keep the integrity ofinformation intact. Graphical presentation in the annual report can prove to be handy to complywith the above requirements.The draft of discovery initiatives delivered by IASB also contains requirements ofsupervision on formatting. It is interpreted by shareholders and financiers of the organization thatcommunication efficiency of financial matters can be enhanced with the use of appropriateformatting (Zehri & Chouaibi, 2013). It can be observed that the process of comparison betweentwo distinct reporting periods among the organization becomes easy and less time taking and canbe practiced for doing the same thing between any two entities. Suggestion given by the boardfor applying suitable format to show the financial data are supported by many reasons.Severalestablishments in the financial world such as banks have printed reports that deliver guidance inmaking annual reports with the help of tables and graphs In addition to that, there is a factor ofuncertainty when it comes to using suitable formats for constructing annual reports.Theinformation which is delivered to the stakeholders will improve a lot if appropriate formatting is
4ADVANCED FINANCIAL ACCOUNTINGdone. It is because of the reasons mentioned above that I have concluded the analysis of annualreports of two banks and I have found out that there is a requirement to use formatting in aproper way as one of the guidelines that will assist in producing active communication offinancial details written in the financial report of institutions. However, the improvement of format should be based on the factors which are specificand relevant to the entity. This will depend on the nature of information to be disclosed, whichcan be expressed more clearly in the tabular form. Requirement of fundamental guidance is therefor using the new formatting styles in the financial details of organization. Quality of informationmentioned in the notes of disclosures can be made better by using proper formatting. The constituents of suitable formatting will contain diverse formats that would be usedaccording to the type of business object and would be specific in all its sense. Both generalizedformatting and condition based formatting should be there so that both of them can be used asper the requirement. This type of disclosure will lift the spirits of investors, stakeholders and thecreators of the financial statements. Furthermore, development of non-monetary regulation forthe use of formatting is also required.Placing myself in the shoes of an investor, I would suggest that IASB should take accountof some of the guidelines of operational communication of financial data. The most relevantprinciple would be definitive to the entity, as it will support the investors in producinginformation with much ease while making it easily comparable. It will change the nature offinancial information through objects among reporting periods. Besides, the supervision onformatting also needs to be taken further by considering factors which are specific to someorganization.
5ADVANCED FINANCIAL ACCOUNTINGYours sincerely, ABC Investor
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