Improving the Effectiveness of Disclosure of Financial Information

Running head: FINANCIAL ACCOUNTING
Financial accounting
Name of the University
Name of the student
Authors note

1
FINANCIAL ACCOUNTING
Table of Contents
Answer to Question 1:.....................................................................................................................2
Answer to Question 2:.....................................................................................................................7
Answer to Question 3:...................................................................................................................10
Answer to Question 4:...................................................................................................................14
Answer to Question 5:...................................................................................................................15
Reference list:................................................................................................................................17

2
FINANCIAL ACCOUNTING
Answer to Question 1:
To,
Chairperson
International standard accounting board
30 cannon street, London- EC4M 6XH, United Kingdom
Date: 20th August, 2017
Subject: Recommendations on improving the effectiveness of disclosure of financial information
Sir,
I have considered submitting the response in regard to the propositions that have been
made by IASB (International Accounting standard board) regarding the regarding the principles
of effective communication. The financial reporting of organizations faces some of the concerns
while presenting the information such as irrelevant information in the notes, presentation of
insufficient information and ineffective communication. I am interested in making investment in
two chosen companies listed on Australians stock exchange such as Common wealth bank and
National Australia Bank. Some of the relevant information presentation is not depicted properly
due to inappropriate presentation of financial data that creates difficulty for investors in arriving
at any reasonable decision. Analysis of the annual report of both organizations has indicated that
they are required to work on their data presentation and improving the effectiveness of
information (Cheung & Lau, 2016).
I have gone through the discussion paper proposed by the standard that has outlined the
seven principles of effective communication. This have assisted me in better understanding the

3
FINANCIAL ACCOUNTING
development of set of new and clarification of existing set of principles and properly
understanding the disclosure issues. Principles that I have become acquainted with for improving
the effectiveness are that the information disclosed should be specific to reporting entities,
information should be simple and clear and there should not be any redundant duplication, data
presented should be comparable, there should be proper linkage to the information presented and
information should be presented in an appropriate format (Novotny 2016). Gaining information
of all such principles has assisted me in analyzing the presentation of data. After becoming
acquainted with the effective communication principles and analyzing the annual report of both
the organizations, I have been able to ascertain that there are some of the principles to which the
organization is not adhering to. After evaluating the financial reporting, I have come to known
that both the organizations are complying with some of the principles while it is lacking
compliance to some other principles. A reputed and renowned organization such as banks should
provide investors with information that would help them in taking financial decisions. Banking
organization is required to make proper presentation of their liquidity and credit risk along with
the segmental analysis.
After evaluating the financial information and several disclosures made in the financial
report of both the organizations, I have deduced the fact that there are not appropriate disclosures
made in some regard. Both the banks that are CBA and NAB have not presented segmental
analysis and have not adopted the approach of segmentation (Capital.nab.com.au, 2018). In
addition to this, the divisional performance of CBA has been illustrated with summary in its
notes to financial statements along with facts and figure presentation in the tabular format. On
other hand, there has not been elaborated presentation of divisional performance of NAB.
Furthermore, both banking institution have made detailed presentation of requirement of Basel