Financial Accounting and Reporting Principles

This solved assignment delves into the core principles of financial accounting and reporting. It examines concepts like comparability, graphical presentation, and the significance of consistent entry methods for financial statement analysis. The assignment utilizes case studies of Australian financial institutions ANZ and Westpac to illustrate these principles in practice. Students will gain insights into disclosure requirements, IASB standards, and the role of transparency in financial reporting.

Running head: ACCOUNTING AND FINANCIAL REPORTING
Accounting and Financial Reporting
Name of the Student
Name of University
Author’s Note

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Table of Contents
Answer to Question 1......................................................................................................................2
Answer to Question 2......................................................................................................................6
Answer to Question 3......................................................................................................................9
Requirement I..............................................................................................................................9
Requirement II...........................................................................................................................11
Requirement III..........................................................................................................................12
Answer to Question 4....................................................................................................................15
Answer to Question 5....................................................................................................................17
References......................................................................................................................................19

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Answer to Question 1
To,
The Chairperson
International Accounting Standard Board
30 Cannon Street, London- EC4M 6XH, United Kingdom
Date: 20 August 2017
Subject: Guiding and Recommendations on the Formatting and Principles of Financial Report
Respected Sir,
The new proposition of International Accounting Standard Board (IASB) is
concerned with the effective communication of financial information of the companies (Burcă &
Cotleţ, 2014). Regarding this, I have decided to make a submission on this matter. For this
reason, I have taken into consideration investing in two of the renowned banks; they are ANZ
Westpac. The preparation of accounting and financial statements of the companies is a complex
process as this information helps the inventors to depict the financial position of the companies.
Many times poor presentation affects the organization of financial data. Poor presentation and
organization of financial data affects the financial position of the companies. Thus, the investors
suffer in taking effective investment decisions. From the observation of the annual report of both
the banks, I have realized it is essential to increase the effectiveness of the communication of
financial statements. There is a need of more standardized system for financial disclosure.

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After going through the set of principles of effective communication, I have seen that
there are crucial factors in this. They are to be simple and clear; to be entity specific; to provide
the relevant information; to highlight the important matters; no presence of any duplication; to
present information in the appropriate format so that they become comparable and others. After
the analysis of the 2016 annual reports of ANZ and Westpac, I have seen that both the companies
lack in complying with communication principles while both of them have complied with some
of the principles. It is the responsibility of the reputed banks to provide their investors with
correct financial information so that it can be helpful in their investment decision-making
process. In addition, banks are required provide segment analysis along with analysis of credit
and liquidity risks (Craig & Michaela, 2014).
The analysis of both the banks has made me aware the fact that both the banks have not
made the necessary financial and accounting disclosures. Westpac has conducted the segment
analysis separately along with each segment definition (westpac.com.au, 2017). On the contrary,
ANZ has not conducted any separate segment analysis as per the segmentation approach
(iguana2.com, 2017). They have mentioned some of these facts in financial notes rather than
showing them separately. The regulations of Basel are related with the banking industry
regulations. The analysis of ANZ annual report has also shown the fact that ANZ has not
disclose any information regarding Basel requirements separately (iguana2.com, 2017). The
separate disclosure of liquidity and credit risk was also missing. These facts have been
mentioned in financial notes. On the other hand, Westpac has all the necessary disclosures
regarding the Basel requirements along with the analysis of credit and liquidity risks of the bank
(westpac.com.au, 2017). However, there was not anything mentioned regarding Tier I and Tier II

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in the annual report of Westpac. Moreover, Westpac has measured their divisional performance
that is missing in the annual reports of ANZ (iguana2.com, 2017).
In addition, it has been seen that both the banks have not use graphical presentation.
Graphical presentation helps the investors to compare and analyze the performance of the
companies (iasplus.com, 2017). Thus, in spite of the presence of narrative disclosure, the
importance of graphical presentation cannot be ignored. Apart from the above, there is also a
need for effective communication of financial information. Thus, there is a need for the
improvements in the process of financial combination. In this situation, I would like to
recommend some of effective communication related principles of IASB for making the
financial statements comparable (Deegan, 2013). Companies need to follow the principle of
entry specific. Financial information needs to be relevant with the financial situation of the
companies rather than just to be generic. There is nothing special in generic information as they
can be obtained from annual reports of the companies. Thus, entry specific information needs to
be there in the financial statements. Furthermore, financial information need to be mentioned in
such a way so that they can become comparable based on several financial years. This can be
done with the help of graphical presentation of financial information.
The draft disclosure of IASB also includes the principles and guidelines related to
formatting of financial information (iasplus.com, 2017). The stakeholders and investors of the
companies believe that communication effusiveness can be increased with the help of proper
formatting. The main reason is that proper formatting helps to compare the financial information
of companies for several financial years. Thus, I would like to recommended the board of
director of companies for adopting the strategies of proper formatting. It can be seen that there
are many banks that publish the guidelines to use graphs and tables in the annual reports of the

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companies. In the financial reports of the companies, uncertainty regarding formats of the
presentation of financial reports can be seen. Communication with the company stakeholders can
be improved with the help of proper formatting. Based on the above discussion, I have realized
the fact that both ANZ and Westpac needs to implement the strategy of formatting of financial
report in order to improve the communication of financial information with the stakeholders
(iguana2.com, 2017). I strongly feel that the use of appropriate formatting for the presentation of
financial information will lead to effective decision-making of the investors.
In addition, the development of formatting is highly related with the concept of entry
specific as some situations demand the disclosure of financials information of the companies in
the tabular form. Thus, there is a need for necessary guidance for the formatting process of
financial statements (ey.com, 2017). Thus, the disclosure of financial information with the help
of notes can be improved with the help of formatting. Different methods of formatting need to be
applied based on the nature of business of the entities so that it become entry specific. These
types of formatting needs to be developed based on specific circumstances. These types of
disclosures need to have connection with the inventors and the preparation of financial
statements. Apart from this, there is a need to develop the non-monetary guidelines also
(aasb.gov.au, 2017).
As an investor, I would like to make the recommendation to IASB for the inclusion of the
above-discussed principles related to the effective communication of financial information. In
this case, companies need to consider the concept of entry specific as assists the investors to
compare the financial performance of the companies for many financial years. In addition,
companies need to consider the principles of graphical presentation and formation for the
communication of financial information.

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Sincerely,
ABC
Answer to Question 2

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Workings:

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Answer to Question 3
Requirement I

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Requirement II

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Requirement III

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Workings

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Answer to Question 4

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Workings

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Answer to Question 5

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References
2016 ANNUAL REPORT. (2017). News.iguana2.com. Retrieved 20 September 2017, from
http://news.iguana2.com/anz/ASX/ANZ/459865
Annual Report 2016. (2017). Westpac.com.au. Retrieved 20 September 2017, from
https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/ic/
2016_Westpac_Annual_Report
Burcă, V., & Cotleţ, D. (2014). Considerations on IASB Recent Issued Standards.
Craig, D., & Michaela, R. (2014). Financial Accounting Theory.
Deegan, C. (2013). Financial accounting theory. McGraw-Hill Education Australia.
Disclosure Initiative – Principles of Disclosure. (2017). aasb.gov.au. Retrieved 13 September
2017, from http://www.aasb.gov.au/admin/file/content105/c9/ITC35_04-17.pdf
Disclosure Initiative – Principles of Disclosure. (2017). ey.com. Retrieved 13 September 2017,
from http://www.ey.com/Publication/vwLUAssets/ey-disclosure-initiative-principles-of-
disclosure-april/$FILE/ey-disclosure-initiative-principles-of-disclosure-april.pdf
Disclosure initiative — Principles of disclosure. (2017). Iasplus.com. Retrieved 13 September
2017, from https://www.iasplus.com/en/projects/major/principles-of-disclosure
IASB publishes discussion paper on disclosure principles. (2017). Iasplus.com. Retrieved 13
September 2017, from https://www.iasplus.com/en/news/2017/03/dp-pod
INVITATION TO COMMENT ON IASB DISCUSSION PAPER DP/2017/1 Disclosure Initiative
– Principles of Disclosure. (2017). hkicpa.org.hk. Retrieved 13 September 2017, from

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http://www.hkicpa.org.hk/file/media/section6_standards/standards/FinancialReporting/
ed-pdf-2017/i2c_di.pdf