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Finance Assignment - Westpac Banking Corp

Added on - 08 Dec 2020

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WESTPAC BANKINGCORP
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................11. Providing critical analysis of annual report of organisation...............................................12. Comparing firm with other corporations listed on ASX....................................................43. Summarising report to reach towards conclusion..............................................................7REFERENCES................................................................................................................................8
INTRODUCTIONFinance is a fast field in which company's management takes crucial decisions so as toenhance profitability in overall financial health. Present report deals with Westpac Banking Corpengaged in imparting financial services listed on ASX. Critical analysis of the company onaccounting concepts, AASB guidelines and true and fair view has been explained. Comparisonof organisation is done with Commonwealth Bank of Australia engaged in same sector. At theend, summary has been provided whether investment should be made or not. Ratio analysis isconducted for 2016 and 2017 financial years for both organisations. Thus, strict adherence toAASB and Corporation Act, 2001 enhances financial statements of company useful forstakeholders.MAIN BODY1. Providing critical analysis of annual report of organisationBusiness has to perform its operations by considering rules and framework governed bythe accounting professional body so that it may carry on tasks without any difficulty. It isessentially required as organisation should obey all laws listed by body. The financial statementssuch as cash flow statement, balance sheet and income statement shows true and fair view ofcompany's financial health (Sutherland, 2017). The information so supplied are quite beneficialfor stakeholders to rely on and take decisions in their favour. In relation to this, Westpac BankingCorp which is one of the biggest banks of Australia has been pioneered in financial servicesprovided to customers. The Australian professional body regarded as AASB (AustralianAccounting Standards Board) guides and regulates corporations so as to provide true financialsto users of accounting information for taking better decisions. The adherence to AASB,preparation of true financials conceptual framework and corporation law can be explored inWestpac Banking Corp whether it has strictly adhered to it or not.AASB provides variety of guidelines which are to be met by organisation for operating inthe best possible manner. AASB 101 provides that presentation of financial statements should bemade in accordance to general purpose statements to effectively ensure comparability oforganisation's previous accounting records and same with other similar organisations (AASB 101Presentation of Financial Statements. 2015). The board lists down that firm should adhere torules and standards and prepare financials showing true and fair view quite effectually. AASB1
119 postulates benefits reserved for employees. It can be identified in annual report of WestpacBanking Corp that CEO and Group executive’s personnel’s have been imparted with lifeinsurance cover under the scheme of Westpac Group Plan at no expense (Annual report ofWestpac Banking Corporation.2017). Superannuation benefits are being given by complyingwith AASB 119 Employee Benefits. Another standard such as AASB 2 for share based paymenthas been included in financials of Westpac Banking Corp for the year 2017. Fair value of LTIgrants have been made during the year. LTI grants would be vested on satisfaction ofperformance in forthcoming periods.AASB 8 devoted to operating segments requires results of various segments oforganisation for presenting information consistent with that of Westpac Banking Corp decision-maker. In addition to this, company utilises performance measures known as cash earnings. Theterm represents profit from current ongoing operations useful for calculating dividends. It isneither net profit nor as a measure for cash flow in firm. The management believes it allowsWestpac Group to effectively measure performance quite effectually. It can be seen thatcompany is strictly following all the standards and prepares financials accordingly for impartingtrue view to stakeholders which have stake in overall financial health of organisation.General purpose financial reports various aspects of qualitative characteristic ofinformation. The objective is to provide prominence included in financial reporting andimportance to assess management's capability of protecting resources. Moreover, to introduceprudence concept which is useful for achieving neutrality. Another objective is to state thatfaithful representation is on the basis of substances of economic phenomenon and not merely onlegal form. There are various qualitative characteristics of useful financial information arerelevance and faithful representation. It postulates that information should be capable forinitiating difference made by external or internal parties (Conceptual Framework for FinancialReporting. 2015).In simple words, accounting concept such as relevance states that information beingprovided to users should make an impact on decision-making. This may include content ortimeliness by which decisions can be affected. On the other hand, faithful representation as namesuggests that substance of economic phenomenon must be given by which faith can be attainedby users of accounting information regarding financial statements. Moreover, complete2
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