Evaluation of the Financial Statements of the Westpac and the National Australia Bank

CORPORATE
ACCOUNTING

Abstract
The financial statements aid the stakeholders of the business in the decision making process
and must be mandatorily and efficiently prepared by the management of the entities. The
report evaluates the various facets of the financial statements of the two renowned
organisations from the financial sector of Australia, namely the Westpac and the National
Australia Bank. The sources of funds is examined to conclude that the deposits and
borrowings form the major part of the funding of the both entities. In addition, the pros and
cons of each source of funds has been provided. Further the report examines the assets and
liabilities of the organisations, and the composition of the same. In addition to the above,
there is a specific section for the analysis of the provisions and the contingent liabilities of the
organisations.

Contents
Introduction................................................................................................................................3
Identification of the sources of funds.........................................................................................3
Evolution of sources of funds....................................................................................................4
Identification of percentage of fund...........................................................................................4
Merits and shortcomings of different sources of funds..............................................................5
Examination of different types of liabilities...............................................................................6
Examination of key provisions under AASB 137 Provisions, contingent assets and liabilities 7
Different categories of assets as being recorded by companies.................................................9
Critical Examination of the Measurement basis......................................................................10
Conclusion................................................................................................................................10
References................................................................................................................................11

Introduction
The decision of financing is one of the most significant strategic business decisions. These
decisions are dependent on numerous factors, such as the objectives of the company, political
and economic environment, interest of the investors, legal regulations and others. In addition,
the vitality of the said decisions lies in the fact that these are irreversible decisions and
involves huge fun ds and legal compliances. The objective of the following assignment is to
evaluate the various aspects of the sources of the funds of the two renowned companies
namely the National Australia Bank and the Westpac, the stock of whose are listed on the
Australian Stock Exchange. In addition, the report would shed light on the application of the
AASB 137 ‘Provisions, Contingent Liabilities and Contingent Assets.’
Both the selected organisations belong to the financial industry and stand in the top four of
the country’s banks list. The entity National Australia Ba1nk (NAB) is engaged in the
provision of the personal, business and corporate financial service solutions (National
Australia Bank, 2020). While the personal financing solutions involve the services like
personal banking, personal loans, credit cards and others, the business solutions include
superannuation and insurance and other services. The other organisation that is Westpac has a
similar services to provide. The organisation Westpac was originally established in the year
1817 and the name of the organisation was changed to Westpac in the year 1982 (Westpac,
2020).
Identification of the sources of funds
The chief source of finance of the Westpac bank has been analysed to be the deposits and the
borrowings, followed by the Share Capital. It has been assessed from the balance sheet of
Westpac for the year 2019 that out of the total liabilities of $ 841119 million, the deposits,
and borrowings amount to $ 563247 million (Westpac, 2019). The second key source of
outside source of finance for both the organisations is that of the debt issues which includes
bonds, notes and subordinate sources of finance. The capital structure of the National
Australian Bank has the similar composition where the deposits and other borrowings amount
to $ 522085 million out of total liabilities of $ 791520 (National Australia Bank, 2019). Thus,
it can be stated that the outside borrowings and deposits are the main sources of funds for
both the organisations. The third key source of finance is the ordinary share capital, the
retained profits and the reserves for the both of the organisations.