Sourcing Funds

Contents Introduction 4 Part-A4 Items recorded under owner's equity section 4 Movement over three years period in each item recorded under equity section4 Items recorded under liabilities section 9 Movement over three years period in items recorded under liabilities section10 Advantages and disadvantages of sources of fund 13 Part-B14 Concepts of small proprietary company, large proprietary company and reporting entity 14 Implications of three types of companies in relation to compliance and reporting requirements 15 Conclusion 15 References [pic] 17 Introduction When the corporations aim

Running head: REPORT 1
Corporate and Financial accounting
Student details:
9/24/2019

REPORT 2
Abstract
It is required by the companies to raise the capital funds or external funds, for expanding the
businesses in new marketplaces or places, for investing in research as well as development, or
for fending off competition. Sourcing money can be made for the various reasons. The
conventional fields of the requirement can be for capital asset gaining - new machineries or a
creation of a new buildings and depots. Production of new products may be extremely costly as
well as here again capital can be needed. Usually, this development is funded internally, where
the capital for acquirement of machineries can come from external resources. In recent as well as
age of tight liquidity, various entities have searched the short term capital in a manner of
overdrafts and loans for rendering the cash flow cushion. The rate of interest may differ from
company to company and also as per the purposes. The following parts discuss significance and
drawback of the sources of funds, concept of large and small proprietary companies and concept
of reporting entity.

REPORT 3
Contents
Introduction......................................................................................................................................4
Part-A...............................................................................................................................................4
Items recorded under owner’s equity section..............................................................................4
Movement over three years period in each item recorded under equity section..........................4
Items recorded under liabilities section.......................................................................................9
Movement over three years period in items recorded under liabilities section.........................10
Advantages and disadvantages of sources of fund.....................................................................13
Part-B.............................................................................................................................................14
Concepts of small proprietary company, large proprietary company and reporting entity.......14
Implications of three types of companies in relation to compliance and reporting requirements
....................................................................................................................................................15
Conclusion.....................................................................................................................................15
References......................................................................................................................................17

REPORT 4
Introduction
When the corporations aim to utilize the profits from business functions to fund like projects, this
is regularly more favorable for companies to look for external investors as well as lenders. In
spite of the differences amongst numerous organizations everywhere in the world across
numerous industries, there are some sources of fund accessible to entities. The sources of
funds for the business are debt, equity, debenture, term-loan, letter of credit, retained earnings,
working capital loan, as well as venture-funds and others (cremers, et. al, 2016). All sources of
funds can be useful in different conditions. They are categorized as per the period, and
regulation, ownership along with the generation’s sources. In the following parts, different
sources of fund used by Commonwealth Bank and ANZ bank is discussed and critically
examined. The first also recognizes the movement over the three periods in the sources of funds
used by Commonwealth Bank and ANZ bank. The second part also states the concept of small
proprietary company, large proprietary company and reporting entity, and implications of them
in relation to compliance as well reporting requirements.
Part-A
Items recorded under owner’s equity section
The owner's equity or shareholder’s equity is described as a proportion of total value of the
assets of corporation, which may be claimed by the owners such as partner sole proprietor. The
owner's or shareholder’s equity is considered (along with liability) as the business asset’s source.

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The major elements of the shareholder’s equity (owner’s equity) cover the retained earnings,
outstanding shares, treasury stock as well as additional paid up capital (Carini, 2018).
From the annual report of ANZ Bank, it is analyzed that there are some items are recorded under
owner’s equity. These items are ordinary share capital, reserves as well as retained earnings. It is
stated that Shares capital and reserve distributed to stakeholders of an organization, and non-
controlling interest are also recorded under the Owner’s equity or shareholder’s equity.
Furthermore, when Commonwealth Bank’s annual report is analyzed, this is found that items
recorded under the owner or owner’s equity are reserves, retained profits along with ordinary
share-capital. In addition, non-controlling interest as well as shareholders’ Equity distributed to
Equity holders is also covered under owner’s equity (Suryanta, 2016).
Movement over three years period in each item recorded under equity section
The main accounts, which affect the owner's equity, include revenue, expense, gain as well as the
loss. The owner's equity would enhance in case of having gains as well as revenues. The owner's
equity reduces in case of incurring losses as well as expenditures (Allashel, 2015). In a case,
when the liabilities become higher than the assets, the company would have the negative owner's
equity. The movement over three years in items recorded under equity is explained below-
Commonwealth Bank-

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ANZ Bank-

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From the above analysis, it is clear that movement in shareholders' equity over the three
accounting periods comprises the various elements (Rao and Tilt, 2016). Following are the
elements-
1. Reduction or increment in share-capital reserve
2. Net loss and profit distributed to stakeholders in accounting period
3. Gain and loss identified in equity in direct way
4. Payment of dividend to the company’s shareholders
5. Effects of the change in accounting policies
6. Effects of corrections of errors related to previous time (annual report, 2018b)
Items recorded under liabilities section
Liabilities are settled over the period throughout transfer of the financial advantages such as
money, services and goods. Generally, the liability is considered as the obligation between the
party as well as another not paid yet. In accounting world, the financial liability is obligation
however is more described by past dealings, events, exchange of service as well as asset, or
anything that will render economic benefits subsequently. The liabilities are short-
term (anticipated to made in twelve months or lesser) or long term (twelve months or more than
12 months). The liabilities can be non-current or current liabilities as per the background. They
may involve upcoming services payable to other; long-term borrowings or short term borrowings
from bank, persons or different organizations; or the past dealing that has made the pending
obligations. Mostly, common liabilities are largest such as and bond payable and accounts

REPORT 10
payable. The items included in the liabilities are loans, mortgage, deferred revenue, and accounts
payable as well as accrued expenses (Pozen and Hamacher, 2015).
From the annual report of ANZ bank, it is analyzed that following items are recorded under the
liabilities section in the balance sheet-
1. Settlement balances owed by ANZ
2. Deposits and other borrowings
3. Current tax liabilities
4. Collateral received
5. Derivative financial instruments
6. Deferred tax liabilities
7. Policy liabilities
8. Liabilities held for sale
9. Payables and other liabilities
10. External unit holder liabilities
11. Employee entitlements
12. Debt issuances
13. Other provisions (Annual report 2018a)
Furthermore, from the annual report of ANZ bank, it is analyzed that following items are
recorded under the liabilities section in the balance sheet-
1. Deposit as well as other public borrowing
2. Liability at FV throughout Income Statement
3. Payables pending towards different financial organisations

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4. Derivative liabilities
5. Pending towards controlled entities
6. Bank acceptances
7. Current tax liabilities
8. Current tax liabilities
9. Insurance policy liabilities
10. Other provisions
11. Debt issue
12. organized funds unit on issues
13. Liabilities held for sale
14. Bills payable and other liabilities
Movement over three years period in items recorded under liabilities section
When absolute and relative liabilities differ highly between sectors and corporations, they may
break or create the entity as simple as the missed earning report. It can say that the liabilities
state the deep story of how the entity finances, accounts and plans. This would require paying at
the upcoming date. Various ratios are dragged from line item of liability to attain health of
company at particular point of period (Class, 2016). When bonds payable and accounts payable
make up share of the liability portion of balance sheet, the not so general or lesser considered
item must be analyzed in detail. Movement over three years in items recorded under liabilities
part is evaluated below-
ANZ Bank-

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Commonwealth Bank-

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REPORT 14
Advantages and disadvantages of sources of fund
The business finance normally comes from 1 of 3 types of the sources. Firstly, the internal
sources involve saving or money from asset’s sales. The next is ownership capital that means
providing the stock to investor who pays cash for the shares as well as take the ownership stakes
in an organization. At last, the finance may arise from non-ownership capital. The non-
ownership capital means the grants, loan, credit lines as well as the investment from venture
capitalist, who does not take the ownership role in business (Flower, 2015).
There are various advantages of the sources of fund. The sources of funds render specific
advantages. Selling stock is amongst the quickest manners for getting access to the greater
amount of cash, as well as this is money that one will never require for paying back in a direct

REPORT 15
way. The internal sources of fund keeps control in the organization as well as do not subject to
the interest payment on the loans. At last, non-ownership capital is the votes of self-assurance
from investors or agencies that issue the loan or grants. The grant is especially valuable for the
reason that they do not need re-payment, as well as may be obtainable upon recurring basis. They
also have some disadvantages. All the sources of funds have certain drawbacks. The ownership
capital creates the company responsible to the group of stakeholders who have fractional rights
related to ownership. The loans cost interest that lender would require back on schedule whether
the company has turned the profits or not. The internal sources are partial as well as once the
company sells off the assets or spends the savings, then the company will require turning to the
new sources of external funds (Megginson and Fotak, 2015).
Part-B
Concepts of small proprietary company, large proprietary company and reporting entity
A proprietary company is the corporation, which is listed as, or converts into, the proprietary
entity as per the Law. This may be small proprietary organisation or large Proprietary
Corporation (Nguyen, and Meng, 2016). The proprietary corporation will be small Proprietary
Corporation for FY if this satisfies minimum two of the criteria-
1. Consolidated gross revenues for FY of entity as well as organizations its controls (if any)
not more than ten million dollars
2. Consolidated gross asset’s value at the financial year’s end of the corporation as well as the
corporations it controls (if any) is not more than five million dollars

REPORT 16
3. Entity as well as corporations it controls (if any) has more than fifty workers in financial
year ending.
Further, on 1st July 2019 or after July, the proprietary organisation will be larger company for
the financial year in a case when this satisfies minimum of following criteria-
1. Consolidated gross operating revenues, for FY of the corporation and organizations, its
control (if any) is ten million dollars or above
2. Consolidated gross asset’s value at end of financial year of organization as well as
corporations, its controls (if any) is five million dollars or above
3. In entities and corporation, it controls (if any) have fifty or above workers in FY ending.
Larger proprietary companies should make and lodge the financial report as well as the report of
directors for every financial year. It is required that accounts should be audited except
Australian Securities and Investments grants are received. If the corporation does not have
minimum 2 of above criteria, it is 'small'. In certain circumstances, small proprietary
corporations can have to lodge financial report.
Additionally, for financial years prior to 30 June 2019, the proprietary entity is described as
'large' if this satisfies minimum 2 of below mentioned conditions-
1. The consolidated revenue, for FY of organization and corporations, its controls is twenty
five million dollars or above
2. the value of the consolidated gross assets at the end of the financial year of the company
and any entities it controls is $12.5 million or more, and

REPORT 17
3. an entity as well as entities it controls have fifty or above fifty workers in financial year
ending
Thus, the large proprietary entities should prepare as well as lodge the financial reports and the
director's report for FY (Bower, 2018). The account should be audited except ASIC renders
relieves. If the entities do not fulfill minimum 2 of the criteria, then this is considered as small
entity. In addition, this is for the company that charged with governance to the documents
whether the entity has user based on the general purpose financial reporting to enable them for
describing entity as either non-reporting or reporting. In addition, the meaning of reporting
entity is the corporation wherever this is rational for anticipating that there is user dependent
upon GPFRs to get the understanding of financial positions as well as the performances of
entity, and to take decision on the basis of financial data as well as other data.
Implications of three types of companies in relation to compliance and reporting
requirements
By decreasing the load of financial reporting on the small sized business to medium sized
business, the owners may have back to operating the businesses, saving time as well as cost.
There are various implications on the c as well as small proprietary corporations. The large
proprietary corporations are needed to prepare, lodge as well as have audited the financial
reports, the director’s report along with the auditor’s report with Australian Securities and
Investments Commission in every FY. On the other hand, the small proprietary entities are

REPORT 18
normally not needed for making the financial report, however are required to maintain proper
financial records (Mastropietro and Omidian, 2015).
In addition, the particular entity is described as the reporting entity. This is needed to make the
General purpose financial report. In this way, it can say that the Australian Accounting Standards
should be implemented in preparation of financial report. The specific purpose financial report
just requires implementing measurement as well as recognition Australian Accounting Standards
with imperfect disclosures (Aobdia, 2018). There are advantages and drawbacks are related to
the reporting framework. In addition, the most significant risks for addressing is whether the
specific organization is properly described as either the non-reporting entity or reporting entity.
In a case when the definition of entity is not correct the Australian Securities and Investments
Commission would examine those charged with governance for making the wrong financial
reporting as well as consequently violating reporting requirement of the Australian Accounting
Standards along with Corporations Act 200.
Conclusion
As per the above analysis it can be concluded that the business requires finances for day to day
activities and for fulfilling necessary payments as well as expenditures. The money’s flow
through the financial system ends as the results. The finance is considered as elixir that is helpful
in creation of new business. It also permits the business for taking advantages of the opportunity
to produce, occupy local worker as well as in turn help the business and central, domestic and
state government throughout the remittances of the tax. The strategic utilization of the financial
instruments, like investment and loan, is essential for the business’s success. The financial trends
describe the state of economy at the international stage, so federal banks may make plan for

REPORT 19
appropriate financial policy. All the aspects of the international economy is based on the orderly
procedure of the finances. The capital marketplaces render cash for supporting the business, and
business renders cash to support the people. The income tax supports federal, local as well as
state governments. It can say that the capital markets make money, business allocate it, and
people and organizations spend it. A company may have new funds from different sources, such
as new share issues. For an instance, the entity purchasing the stock market listing for first time
and rights issue. The right issues include loan stock, venture capital, franchising, governmental
source, businesses enlargement scheme fund, retained earnings as well as bank borrowing.
Therefore, the concept of a reporting as well as non-reporting entity as well as importance of
meaning is essential to financial-reports made by organization as well as related benefits as well
as risks. It is necessary that those charged with supremacy appreciate the concept as well as look
for outer advices wherever required for ensuring that the decisions are right and proper. In
addition, it is also analyzed that the large proprietary companies are needed to prepare as well as
have audited the financial report. On the other hand, it is not applicable in the case of small
proprietary companies.

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References
Alhashel, B. (2015) Sovereign Wealth Funds: a literature review. Journal of Economics and
Business, 78, pp.1-13.
Annual report (2018) ANZ Bank. Available at:
https://www.anz.com/content/dam/anzcom/shareholder/anz_2018_annual_report_final.pdf
[Access on 25-09-2019]
Annual report (2018) Commonwealth Bank. Available at:
https://www.commbank.com.au/content/dam/commbank/about-us/shareholders/pdfs/results/
fy18/cba-annual-report-2018.pdf [Access on 25-09-2019]
Aobdia, D. (2018) Employee mobility, noncompete agreements, product-market competition,
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Bower, D.J. (2018) Company and campus partnership: supporting technology transfer. New
York: Routledge.
Carini, C., Rocca, L., Veneziani, M. and Teodori, C. (2018) The Reporting Entity Concept in the
Public Consolidated Financial Statement. International Journal of Business and Social
Science, 9(1), pp.1-21.

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The Corporations Act 2001