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Financial Reporting Assignment IASB

   

Added on  2020-04-07

21 Pages1435 Words87 Views
Running head: FINANCIAL ACCOUNTINGFinancial AccountingName of the StudentName of the UniversityAuthor’s Note

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

2FINANCIAL ACCOUNTINGAnswer to Question 1To, The ChairpersonInternational Accounting Standard Board 30, Cannon Street, London- EC4M 6XH, United KingdomDate: 20 August 2017Subject: Guiding and recommending on the use of formatting and principles in financial reportRespected Sir,International Accounting Standard Board, commonly known as IASB, hasddeveloped a proposition regarding the effective communication of the financial information ofthe companies. My plan is to make a submission as a response of the proposition. For this reason,I have taken into consideration two of the famous banks that are ANZ Bank and Westpac Groupfor investment. The preparation of financial statements is regarded as a complex job and thereare many examples where the investors failed to get wrong perception about the financialperformance of the companies by busing financial statements. Poor presentation and organizationof financial data is a major reason of this and thus, the investors fail to take effective decisions.After the observation of the annual reports of these two banks, I have realized the need toincrease effective communication of financial information. In case of preparation and disclosureof financial statements, there is a need for more standardization processes.

3FINANCIAL ACCOUNTING There are some major traits of the new proposition; they are to be simple and clear, to bespecific to the entity, to be relevant and related, to be able to highlight major factors and others.Based on the observation of the annual reports of ANZ and Westpac, I have come to know thatthe organizations have failed to comply with some of the major principles and they havecomplied with some (westpac.com.au, 2017). It is the responsibility of the good and reputedbanks to disclose all the detailed information for the investors in order to provide assistance ininvestment decision-making process. It is expected from the banks that they will publish all thedetailed segment analysis of liquidity position and credit risks (hkicpa.org.hk, 2017).As per my observation of the annual reports of both the bank, I have come to know thatboth the banks have not made all the necessary disclosures. The consistent segment analysis ofWestpac is there in the annual reports. On the contrary, there is not any separate segmentanalysis for ANZ, as the bank has not adopted the segmentation approach (iguana2.com, 2017).BASEL provides a set of comprehensive measure for the regulations of banking industry. I havenoticed the fact that ANZ has not complied with the requirements of BASEL separately(iguana2.com, 2017). In addition, the separate analysis of liquidity position and risk analysis wasalso missing for the bank. On the other hand, it has been seen that Westpac has complied with allthe regulations of BASEL and the bank provided the information about the risks involved in theirbanking operations. In the annual report of ANZ was missing the information regarding Tier Iand Tier II (iasplus.com, 2017). However, all the information regarding Tier I and II are there inthe annual reports of Westpac (westpac.com.au, 2017). Thus, it can be said that the all thedivision information were there in Westpac those were missing in ANZ.I would like to mention the fact that both the banks have not analyzed their trend ofperformance with the help of graphical presentation that is a helpful tool for the inventors to

4FINANCIAL ACCOUNTINGanalyze the performance of the companies. Along with narrative description, graphicalpresentation is also needed (Burcă & Cotleţ, 2014). Thus, graphical presentation needs to beincluded in the financial reports of the companies. In this regard, I would like to make somerecommendations to IASB regarding communication principles in order to make the financialreports comparable. Financial reports of the companies need to be developed around theprinciple of entry specific so that all the available information in the annual reports is based onthe business operations of the specific companies (Craig & Michaela, 2014). There is not anybenefit to provide generic information in the annual report, as they are readily available in theoutside sources except annual reports. Moreover, information needs to be presented in the annualreports in such a way so that they can be comparable to other companies over many reportingperiod. In this particular process, graphical presentation plays a major role (ey.com, 2017).As per IASB’s draft disclosure initiative, the communication effectiveness of financialinformation can be developed with the help of proper formatting as it helps in comparing thefinancial reports of different companies for many years (iasplus.com, 2017). Different financialorganizations including banks provide the specific set of guidance on the use of table and graphsin the annual reports of the companies. In addition, issue can also be seen regarding theformatting of the annual reports of the companies. Thus, I would like to recommend the use ofproper formatting to ensure effective communication of financial information for the two banks(Deegan, 2013). As a result, the investors will be able to analyze the financial health of thecompanies. In this regard, it needs to be mentioned that there is a relation between the formattingof annual reports and the concept of entry specific. It is more continent to present the financialinformation in the tabular form. Based on the nature of the business, the companies need to

5FINANCIAL ACCOUNTINGchoose the structure of the format of annual reports. Effective disclosure of the financialinformation helps the investors in the investment decision-making process (aasb.gov.au, 2017).Thus, based on the above discussion, as an investor, I would like to make therecommendation regarding the inclusion of the principle of effective communication of thefinancial information of the companies. All the financial information the company needs to beentry specific. This process will help the investors to ascertain the financial information of thecompanies along with the comparison of financial information for many years. In addition, Iwould like to recommend that the business organizations should adopt the strategy of properformatting for their annual reports.Sincerely,ABC

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