Analysis of Owner’s Equity and Liabilities of National Australia Bank and Westpac

Corporate Accounting
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Abstract
Australian business entities have different types of legal status as small proprietary
companies, reporting entity and large proprietary companies. As per their status, the
business entities has to furnish their financial statements to the stakeholders with
necessary disclosures specified by regulatory bodies like AASB, Corporation Act,2001,
ASX with necessary compliance for reporting entities. In this article, two different
reporting entities are selected for analyses of their financial reports in perspective of
owners’ equity and liabilities sections with their respective components and projected
movements of those components for last three years as per their respective audited
annual reports with necessary disclosures. The companies selected for this purpose are
National Australia Bank or NAB and Westpac. These analyses would be formed with
critical research on the referred subjects for these two companies with retrieval of data
from their audited annual reports. For these analyses, different parts of annual report for
last three years are to be considered with their features of item-wise movement of
owners’ equity and liabilities. The outcome of this research would be able to provide
clear direction of movement of different sub-components of liabilities and owners’ equity
and thus can highlight the source of funds for those two reporting entities. This report
will conclude with conclusion to summarize the discussion for these reporting entities.
Key words: Owners’ equity, liabilities, Proprietary Companies; Proprietorship
Companies; reporting entity; AASB.
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Table of Contents
Introduction................................................................................................................ 4
Legal status- NAB and Westpac..................................................................................4
Analysis of Owner’s Equity and Liabilities- NAB and Westpac....................................5
National Australia Bank (NAB).................................................................................5
Owner’s equity- NAB............................................................................................ 5
Liabilities- NAB..................................................................................................... 7
Westpac.................................................................................................................. 9
Owner’s Equity- Westpac..................................................................................... 9
Liabilities- Westpac............................................................................................ 11
Conclusion................................................................................................................ 13
References:.............................................................................................................. 14
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Introduction
This report will highlight two items of balance sheet of two reporting entities featured in
ASX as listed companies. The referred two items are owner’s equity and liabilities.
There are different components forming these balance sheet items in the annual
financial report of any reporting entity. The objective of this report is to identify those
components of balance sheet with their comparative analyses to earmark their
movement for last three years from disclosed annual financial reports published for
stakeholders. The two companies selected for these analyses are National Australia
Bank or NAB and Westpac. Both Nab and Westpac is engaged in banking and financial
activities in Australia for long period. NAB has started its operation since 1982, while
Westpac has started its operation in 1817. NAB has the ranking of one of the four
largest financial organizations of Australia in respect of market capitalization, customer
base and earnings with its global ranking of 21st biggest bank considering market
capitalization and 50th largest member of global banking industry. Westpac Banking
Corporation is known popularly as Westpac. This banking corporation has it’s
headquarter at Sydney. This bank has gone through transition process through its latest
merger with Commercial Bank of Australia in 1982. This bank is also considered as one
of the four major banks of Australia with 14 million customers and around 40,000
employees and has eminent and prestigious acknowledgement from Dow Jones as the
most sustainable banking corporation globally for consecutive four years in a row.
Legal status- NAB and Westpac
Prevalent Australian legal status of business entities are small proprietary company,
large proprietary company and reporting entity. Both these banking organizations are
under the segment of reporting entity as per specified definition mentioned in AASB.
The main criterion for reporting entity is their financial reporting pattern and respective
expectation of stakeholders on those financial reports. The feature of reporting entity is
considered, when the stakeholders of any entity are depending upon General Purpose
Financial Report or GPFR to understand the financial condition of any entity. The stake
holders normally initiate their decision making process by assessing those financial
reports. The types of stakeholders are broadly divided into two groups- internal and
external. Internal stakeholders of any reporting entity are employees and the Board,
while external stakeholders consist of creditors, shareholders, different regulatory
authorities of Australia. All these stakeholders depend upon the financial statements
published by the entity made on the basis of GPFR. Reporting entity is consisting of
large private companies with external shareholders and public limited companies
enlisted in ASX. It is mandatory for the reporting entities to ensure preparation of GPFR
with necessary disclosure to confirm compliance of different accounting and other
standards ,as specified by AASB, (AASB, n.d) IFRS, (IFRS, 2017) ASX (ASX, n.d), and
Corporation Act 2001 (Legislation, 2018), effective in Australia business perspective.
Other business entities, falling under no-reporting entities, do not required to prepare
financial reports under GPFR; instead they have to prepare special purpose financial
report. While it is mandatory for reporting entity to ensure necessary disclosures as per
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