Medi Bank Group Financial Analysis

This assignment delves into the financial structure and reporting of Medi Bank Group. It examines the composition of the group, including its parent company, subsidiaries, and significant investments. A key focus is on the requirement for consolidated financial statements under AASB 10, discussing the rationale behind this practice and its importance for stakeholders. The assignment also analyzes the impact of investment portfolio changes on the group's overall risk profile.

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Running head: FINNACIAL ACCOUNTING REPORTING
Financial Accounting Reporting
Name of the Student
Name of the University
Author Note

1FINANCIAL ACCOUNTING REPORTING
Question 1
The composition of Medi bank group and the joint ventures and significant investment
The above question relates to the Medi group which has its parent company named
Medibank Private Limited and it also has many subsidiaries. These subsidiaries are wholly
owned subsidiaries which are 100% owned by the company (Sinclair, Northcott and Hooper
2014). The two wholly owned subsidiaries which the company own are namely the Australian
Health Management Group and another company is Medi bank Health Solutions Private Limited.
In the above case the Australian Health Management Group owns four 100% subsidiaries
and the other company Medi bank Health Solutions Private Limited hold six subsidiaries out of
which six is held in Australia and two in Singapore (Ben‐Shahar, Sulganik and Tsang 2016). The
Medi Bank Group has investment portfolios which have suddenly changed its direction from the
high risk and high return asset to the lower risk and low return portfolio of assets. The Medi
Group has invested 75% of their funds to the fixed income securities. The rest of the 25% funds
are invested by the company in the high risk assets such as the foreign and Australian equities
and properties.
Question 2
Requirement of providing separate consolidated financial statement by parent company
In spite on the subsidiary company being the separate legal entity it is important that the
parent company prepares a consolidated financial statement. The company has company with the

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accounting standards AASB 10 which states that it is compulsory that the parent company
prepares a consolidated statement if it has subsidiary companies.
The parent company Medi bank Group has three types of control. Firstly it has the rights
to expose to variable returns from the subsidiary; secondly it has the power over the subsidiaries.
Lastly it can use its power to affect the returns of the company. It is clear from the above
scenario that the Medi Bank Private Limited being the parent company wholly owns the
subsidiaries (Lowe and Campbell 2017). The standard AASB 101 does not apply to the company
since it has wholly owned subsidiaries. As per the AASB 3 which deals with the entity if there is
acquisition of the entity. If the company has paid net consideration higher than the fair value then
it will account for goodwill.
As per the annual report it describes as per Section 4, the accumulated impairment loss
due to goodwill. The balance sheet as on 30th June, 2016 reflects that the goodwill of the
company is AUD 188 Million (Bisogno, Santis and Tommasetti 2015). In the annual report of
the company it reflects the balance of $ 107.3 Million since the amount of $ 81.5 Million is
deducted for accumulation of impairment loss and thus it is shown in the notes to the financial
statement in note 13 of the Annual report of the company in 2016.
Need for disclosure of AASB10 in the financial statement is as follows:
It is compulsory to disclose in the financial statement as per the requirement of AASB10
that every parent company having its subsidiaries shall compulsorily prepare a consolidated
financial statement. It is seen that by consolidating the financial statements, there is the
possibility of depicting more relevant information about the group companies including the
parent as well as the subsidiary company (Halloran 2014).The investors or the shareholders are

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more concerned about the information of the group which is portrayed in the consolidated
financial statement rather than in the individual balance sheet of the entities. Secondly the
consolidation of financial statements also helps the entities to make provision for comparable
information regarding the parent subsidiary relationship between the companies. Thirdly the
consolidation of financial statement also helps the officer and management of the parent
company herein the Medi bank Private Limited to be accountable and be informed about the
performance of the group as a whole. Lastly the entity should prepare the consolidated financial
statement so as to enable the parent company Medi bank Private Limited so as to accurately
report the possible risks and the returns which the associated with the possession of the
subsidiary company (Carey, Potter and Tanewski 2014).

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References
Ben‐Shahar, D., Sulganik, E. and Tsang, D., 2016. Does IFRS 10 on Consolidated Financial
Statements Abandon Accepted Economic Principles?. Australian Accounting Review, 26(4),
pp.341-345.
Bisogno, M., Santis, S. and Tommasetti, A., 2015. Public-Sector Consolidated Financial
Statements: An Analysis of the Comment Letters on IPSASB’s Exposure Draft No.
49. International Journal of Public Administration, 38(4), pp.311-324.
Carey, P., Potter, B. and Tanewski, G., 2014. Application of the reporting entity concept in
Australia. Abacus, 50(4), pp.460-489.
Halloran, J.L.H., 2014. Accounting technologies and new public management: a field study in a
NSW public school.
Lowe, P. and Campbell, F., 2017. Financial Statements.
Sinclair, R., Northcott, D. and Hooper, K., 2014. Can sector-specific standards enhance the
comparability of Third sector organisations' financial statements?. Third Sector Review, 20(2),
p.27.