Analysis of Accounting Theory and Royal Commission: ACC30008 Report

This report provides an analysis of accounting theory and contemporary issues, focusing on the Hayne Financial Services Royal Commission in Australia. It examines the background and intent of the commission, along with evidence from scholarly articles, and explores theories such as shareholder, agency, and stewardship theories. The report includes an analysis of sustainability reports from Australia's four largest banks, illustrating the practical application of these theories. It further discusses the implications of the Hayne report on Australian companies, offering recommendations for Premier Investment Limited. The report emphasizes ethical culture, corporate governance, and individual accountability, providing a comprehensive overview of the commission's impact on the financial sector.

Running Head: ACCOUNTING THEORY & CONTEMPORARY ISSUES
ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Name of the Student
Name of the University
Author Note

1ACCOUNTING THEORY & CONTEMPORARY ISSUES
Executive summary
The objective of the report is to consider and highlight the issues reported by Hayne Financial
Services Royal Commission to the government of Australia. The report is expected to have its
implications beyond the banking industry. It will focus on the background as well as intent of
royal commission and will generate evidence through focusing on different journals regarding
any aspect of the report. It will further explain the theories those are used in the selected articles.
In the next part the annual report of largest 4 Australian banks will be generated and will be used
for depicting examples regarding how the theories learnt under ACC30008 is applied in
disclosures. Finally the report will provide recommendations based on the findings regarding
most crucial part of the report.

2ACCOUNTING THEORY & CONTEMPORARY ISSUES
Table of Contents
Introduction................................................................................................................................2
Background and Intent of the Royal Commission.................................................................2
Evidence and Explanation of Theories..................................................................................4
Exploration of Sustainability Reports....................................................................................6
Implication of Hayne Report..................................................................................................8
Conclusion and Recommendations............................................................................................9
Reference..................................................................................................................................10

3ACCOUNTING THEORY & CONTEMPORARY ISSUES
Introduction
The aim of this assignment is to do the analysis of accounting theory and report it to
the CEO of Premier Investment Limited. The Royal Commission, which was established on
December, 14, 2017 has submitted the report and recommendations on the misconduct in
banking, financial services and superannuation. For which there was many suggestions that
was given by the professionals for the implications of the reports and the recommendations
that extend well beyond the industry of banking. Therefore, under this report discussion will
be done on the background and the intent of the Royal Commission. In addition, discussion
will also be done on the evidences of this aspect from the scholarly journal articles.
Moreover, discussion will also be done on the annual or the sustainability reports of the four
largest bank of Australia. Further, discussion will be on implications of the Hayne report on
the other Australian companies. Lastly, recommendations will be provided to the CEO of
Premier Investment limited for the most important part of the report for focusing on the terms
of applicability to the small listed company (Final Report. 2019).
Background and Intent of the Royal Commission
Background
The Royal Commission has enquired and reported to the Australian government
regarding misconduct of bank, superannuation as well as industry of financial services. This
commission was established because of the various revelations in the media regarding the
greed culture within the various financial institutions of Australia such as news about account
fraud scandal at the US bank. The news was broadcasted for exposing the sales-driven culture
of commonwealth bank. Moreover, there was also news about the series of the scandals of
National Australian banks, under which there was claim by the whistle blower about the
toxic, volatile and Machiavellian culture at the bank and there was much more case that has

4ACCOUNTING THEORY & CONTEMPORARY ISSUES
insisted the commission regarding reporting and recommending on the matter to the
government (Hayne 2018).
Intent
Kenneth Hayne’s final report in the industry of service for banking and finance
have referred to the ASIC and APRA, 24 referrals, in order to take actions for misconduct.
The total number of 76 recommendatiosns was made for criticizing the misconduct by top
executives in banking and financial sector as well as for the fixation of the problem. The
primary responsibility that held with the misconduct is to the board and the top executives.
Therefore, the commission have recommended as well as highlighted the banking, financial
services as well as superannuation industry regarding the culture, governance and the
structures of the industry (Gilligan 2018). Following are the intent of the commission’s
report:
Banking
 Imposition of the duty on the brokers of mortgages for acting in best interests of
borrower in civil penalty provision form.
 Requirement of the borrower for paying fees to brokers and banning the trail
commission.
 Regulating of the mortgage brokers or providing financial advice.
 Making the provision in Banking Code 2019 for governing consumer contracts terms.
Financial Advice
 Establishment of mandatory codes for financial services industry with the enforceable
code provisions.
 Requirement for the ongoing fee arrangements to be annually renewed.

5ACCOUNTING THEORY & CONTEMPORARY ISSUES
 Requirement of the financial advisors for disclosing to the clients for any conflicts
regarding partiality, independence and biasness.
 Creation of the system of new disciplinary for the financial advisors that requires
registration of advisors as well single disciplinary body.
 Requirement of licenses for reporting serious concerns of compliance.
 Requirement of licenses for enquiring detection of the advisor misconduct, informing
as well as remediating to the affected clients.
Superannuation
 Trustees to be prohibited from assuming obligations that is beyond which is aroused
from their duties,
 Banning of the advice fees that are deducted from the MySuper accounts.
 Establishment of the single default super fund for every worker.
 Abolishment of the use of techniques of heavy handed for selling superannuation.
Evidence and Explanation of Theories
Shareholder and Steward Theory
According to Michael W. Small, there are number of situations that prevails
chicanery, lies and deceit as well as in which the primary motive of the individual lies in the
personal profit that is that are overwhelmed by the act of greed sense that act at as a recourse
to the ethical guidelines. As per him, the business ethics is known as the principles and the
values that govern the group or the person behavior for the right and wrong or the standards
relating to the right conduct of business setting (Small 1995).
Theory of Agency
According to Herbert Stein, the recommendations of the royal commission on banking
and finance are aimed at the creation of the financial system of “non-discriminatory”. The

6ACCOUNTING THEORY & CONTEMPORARY ISSUES
report has suggested that the requirement that is imposed by the law or by financial
community traditions is very rigid as well as conservative. The commission has put their trust
on the supervision for assuring quality of the institutional assets. They have suggested for the
independence of the banks because of the existence of strong inflationary bias of the process
of government. In addition, as per him, flexibility rate will be advantageous for the
circumstances of the Canada because it provides greater freedom as well as domestic
monetary policy effectiveness, however, these advantages should not be overstressed (Stein
1966).
Theory of Stewardship
According to Robert Freestone, the public enquiry has made the mark on planning
practice evolution in the world of English speaking. As per him, the major disclosure of
government official disclosure is royal commission. There was several key inquires that were
mounted on the city improvements, housing as well as administration of municipal , as there
was state drew upon the model of time-honored of government for addressing the problems
of new urban for which there was few home grown precedents. The value of the
recommendations were unambiguously archetypal expression of the early modernist
planning, spaciousness importance, development on the harmonious lines, public regulations,
order and control (Freestone 2006).
According to Scott Atkins, the recommendations as well as supporting commentary of
it should be viewed as being relevant for not only to the financial services entities but also to
the non-financial service. There is universal application of the content that is especially on
the culture as well as governance. The interpretation of the recommended culture as well as
governance should be informed clearly about the key questions, general rules and underlying
principles. As per him, Hayne is not recommending any revolutionary or the novel, by

7ACCOUNTING THEORY & CONTEMPORARY ISSUES
changing the law or the changes in conventional view of good practice; rather he has
emphasized the areas of the good governance which were ignored by the experienced boards
(Atkins and Charlton 2019).
Whistle blowing
According to Eileen Z. Taylor, the moral intensity is defined as the relation of
intention as well as reporting. Higher level of professional increases the chance that initially
auditor will report the violation observed and the commitment of the auditor increases the
perseverance of reporting. Therefore, the results assists researchers as well as the
organizations for the antecedents of the whistle blowing understanding that is in the form of
corporate governance and effect of antecedents on whistle blowing perseverance (Guthrie and
Taylor 2017).
Exploration of Sustainability Reports
Following are the four largest bank of Australia. Following are the sustainability
reports of the company that explains the examples of the theories mentioned above:
National Australia Bank
It is one of the largest banks of Australia in terms of its market capitalization,
customers as well as earnings. Their financial solutions of personal banking include personal
loans, insurance, internet banking, accounts as well as personal loans. The company has
learned the lessons from the announcement by the government regarding royal commission
and the attention by the whistleblower inn 2015, the company involves itself for being
responsible business and making the ethical decisions for serving the customers and the
community through the right behavior (nab.com.au. 2019).
Commonwealth Bank

8ACCOUNTING THEORY & CONTEMPORARY ISSUES
It is the multinational bank based in Australia whose business is across United States,
New Zealand, United Kingdom and Asia. The corporate responsibility programs and the
initiatives have supported the bank for delivering the sustainable and the balanced outcomes
for the customers, people, community as well as shareholders. The company focuses on the
area of serving responsibility of customers, trust and reputation, accountability, diverse as
well as inclusive workforce and long term sustainability (commbank.com.au. 2018).
Australia and New Zealand Banking Group
This is the company headquartered in Melbourne, Australia, which is the second
largest bank of Australia. The services of Australia and New Zealand banking group includes
offering of the variety of the business as well as personal financial solutions. The company
provides fair and equitable wages, safe working environment, fair hours, freedom of
association and the policy of whistle blowing. Their purpose and values for setting of these
standards is to set out the integrity, accountability and encouraging openness (anz.com.au.
2019).
Westpac Limited
It is the first bank of Australia that provides various ranges of the innovative financial
packages for supporting the needs of corporate as well as personal needs. The company
assesses the feedback from the stakeholders and the trends of the industry for understanding
the issues that needs more concerns for now as well as for future. The company engages;
consult as well as partner with the stakeholders for achieving the goals of the society
(Westpac Sustainability 2018).

9ACCOUNTING THEORY & CONTEMPORARY ISSUES
Implication of Hayne Report
The issues that are highlighted in the report have wider application for the governance
and the management of the corporate of Australia. Hence, following are the implications of
the of the Hayne Report on the ASX listed companies:
 Community Standards and their Expectations: The financial institutions should
obey the law, have to be fair, they should provide the services that fits the purposes,
should act in the best interests of the other, does not involve in misleading or
deceiving and lastly should deliver the services with the reasonable care
(mondaq.com. 2019).
 Ethical Culture: The financial service sector aims for building and, maintaining the
culture of the importance of the duty of the directors as well as management for their
customers.
 Rogue Employees: There are no compliance programs that can help in preventing the
criminal activity by the employees of the corporation. Therefore, the corporation
should ask whether there are sufficient oversights as well as challenges by board as
well as its committee of gatekeepers of any non-financial risk that emerges (Hamer
2014).
 Individual Accountability: The commissioner has demanded for active using the
judiciary for enforcing the standards o community and legal.
 Corporate Accountability: There should be considerable pressure on ASIC and
APRA for prosecuting the corporation and the individual for breaching of the rue.
 Director Duties: The role of the board is not for reviewing correspondence that goes
out of the door rather they have to be aware of the important matters that arises out of
the business and making strategic directions of the business of the company. In case if
managements is not working in the interest of stakeholders, board should intervene.

10ACCOUNTING THEORY & CONTEMPORARY ISSUES
 Shareholders Wealth Maximizations: Hayne has rejected the suggestions regarding
owe by the company for maximizing of the returns of the shareholders. The
commission has recognized that the directors should ‘stare down” the shareholders
short term interests. The longer is the period there would be more chances of
converging of the stakeholders’ interest with corporation that continues for long term
financial advantage (Hargovan 2018).
Conclusion and Recommendations
Therefore, it should be concluded from the analysis that organizations should ensure
that their business promotes integrity as well as objectivity for the fulfillment of the ethical
standards in reporting and financial accounting. The increasing amount of scandal in the
business organization has affected the trust of the stakeholders in the organizations.
Therefore, transparency in the adopting the accounting standards as well as practices is
become very important for ethical conduct of the organization and overall trust worthiness of
the company.
The recommendation that can be given to the company should be to adhere to the
ethical practices by focusing on the ethical conduct as well as the business activities by not
indulging itself in the wrong practices ad clearly defining the roles of the board and the
management and serving to the interest of the stakeholders.

11ACCOUNTING THEORY & CONTEMPORARY ISSUES
Reference
anz.com.au. (2019). Retrieved from
https://www.anz.com.au/content/dam/anzcomau/documents/pdf/aboutus/wcmmigration/
2018-anz-sustainability-review.pdf
Atkins, S. and Charlton, P., 2019. Chartered secretary: The banking royal commission final
report: Culture and governance implications. Governance Directions, 71(2), p.65.
commbank.com.au (2018) https://www.commbank.com.au/content/dam/commbank/about-
us/shareholders/pdfs/results/fy18/cba-annual-report-2018.pdf
Final Report. (2019). [ebook] Available at: https://treasury.gov.au/sites/default/files/2019-
03/fsrc-volume1.pdf [Accessed 18 May 2019].
Freestone, R., 2006. Royal Commissions, planning reform and Sydney improvement 1908–
1909. Planning Perspectives, 21(3), pp.213-231.
Gilligan, G., 2018. The Hayne royal commission and trust issues in the regulation of the
Australian financial sector. Law and Financial Markets Review, 12(4), pp.175-185.
Guthrie, C.P. and Taylor, E.Z., 2017. Whistleblowing on fraud for pay: Can I trust
you?. Journal of Forensic Accounting Research, 2(1), pp.A1-A19.
Hamer, D., 2014. Wrongful convictions, appeals, and the finality principle: The need for a
criminal cases review commission. UNSWLJ, 37, p.270.
Hargovan, A., 2018. Governance in practice: Hayne royal commission interim report:
Unclogging the central artery. Governance Directions, 70(11), p.691.
Hayne, D.M., 2018. Submission in response to the Interim Report of the Royal Commission
into Misconduct in the Banking, Superannuation and Financial Services Industry.