ACC514 | Financial Accounting Assignment

Added on - Mar 2020

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Running head: FINANCIAL ACCOUNTINGFinancial accountingName of the UniversityName of the studentAuthors note
1FINANCIAL ACCOUNTINGTable of ContentsAnswer to Question 1:.....................................................................................................................2Answer to Question 2:.....................................................................................................................6Answer to Question 3:.....................................................................................................................9Requirement i:.............................................................................................................................9Requirement ii:..........................................................................................................................10Requirement iii:.........................................................................................................................11Answer to Question 4:...................................................................................................................13Answer to Question 5:...................................................................................................................16Reference & Bibliography:............................................................................................................18
2FINANCIAL ACCOUNTINGAnswer to Question 1:To,ChairpersonInternational standard accounting board30 cannon street, London- EC4M 6XH, United KingdomDate: 20thAugust, 2017Subject: Guiding and recommending on use of formatting and principles in financial reportSir,The proposition of IASB concerning the effective communications of financialinformation of entities, I have planned to make s submission in response to the same. I have beenconsidering investments in two banking institutions that is ANZ bank and Westpac group. It hasbeen explained that prepares of the financial statement regards the exercise as complex and manytomes it is perceived by investors that performance is depicted in insufficient manner using thefinancial statements. Valuable information in the annual report is drowned by poor presentationand organization of financial data (Burcă & Cotleţ, 2014). This makes it difficult for investors totake any viable financial decisions. After going through the annual reports presented by bothorganizations, I have thought that there is need to increase the financial statementscommunication effectiveness. There needs to be more standardization in terms of bothdisclosures and preparation of financial statements.I have gone through the proposition of set of principles of effective communication thatcomprise of being clear and simple, entity specific, linked to related information, organized for
3FINANCIAL ACCOUNTINGhighlighting important matters, no unnecessary duplication, in appropriate format andcomparable. After the analysis of annual report for financial year 2016 for both ANZ bank andWestpac Group, it has been ascertained that there are some of the effective principles ofcommunication is lacking while some of the principles they are complying. Good and reputedbanks would provide investors with much detailed information that would assist them in makingfinancial decisions. Banks are required to make and provide with the proper segmental analysisand their liquidity and credit risks.After going through and analyzing the annual reports and the information andcomponents contained therein, I have come across some of the facts that both organizations haveand not have made the disclosures. Westpac has done separate segmental analysis and there is aconsistent segment definition. On other hand, ANZ bank has not done a separate analysis andhave not adopted a segmentation approach. They have depicted in their notes to financestatements rather than showing it separately. Basel are comprehensive set of measures of reformsfor strengthening the regulation of banking industry. It was ascertained after evaluation of theannual report that ANZ bank have not disclosed any information about Basel requirementsseparately. There was also not separate disclosure of the liquidity and credit risks. It was mainlymentioned in the notes to financial statements. On the other hand, Westpac has made appropriatedisclosure of information and requirements of Basel and types of risks involves in bankingindustry. Regarding Tier I and Tier II, there was nothing properly mentioned in the annual report.However, this particular area was properly highlighted in the annual report of Westpac. Westpachas properly presented the divisional performance as against ANZ that did not presented thisparticular area.

In brief I would recommend that IASB should include some the principles of effective communication of financial information. The most effective principle would be entity specific, as it will assist the investors in generating information easily along with making it able to easily compare the financial information across entities and between reporting periods.

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