Financial Accounting Report: CBA Executive Remuneration Analysis

This report provides a comprehensive analysis of the Commonwealth Bank of Australia's (CBA) executive remuneration, focusing on the accounting issues and financial reporting implications related to money laundering and bonus reductions. The report examines the context of the issue, including the reduction of short-term incentives for senior executives due to money laundering concerns, and details the actual remuneration structure of CBA executives, including fixed and variable components. It explores the financial position of the bank, including the reduction of executive fees and directors' fees, and the adoption of technologies to prevent illegal transactions. The report also delves into the issue of adopting global financial language for better business for SEC regulators, highlighting the major accounting barriers and language issues in international financial reporting. Furthermore, the report discusses the role of the Australian Securities Exchange (ASX), and the importance of understanding different accounting standards. The report concludes with an analysis of the target remuneration set for 2017 and the impact of these changes on the financial position of the entity, while also discussing the importance of GAAP and IFRS in financial reporting.

ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
Question 2........................................................................................................................................7
CONCLUSION..............................................................................................................................13
REFERENCE.................................................................................................................................14
BIBLIOGRAPHY..........................................................................................................................16

Illustration Index
Illustration 1: Remuneration to senior executives of CBA..............................................................2
Illustration 2: CBA board.................................................................................................................3
Illustration 3: Target remuneration for 2017...................................................................................4

INTRODUCTION
Accounting is a process of measuring, processing and communicating financial
information of any entity generates ideas for investors, creditors and management of risks.
However, management of entire business operations and decision making on it is possible
through recording and reporting financial transactions. The present report is based on introducing
accounting information article related to remuneration for senior executive for Commonwealth
Bank in Australia. It is financial service provider of the country who made planning policy
regarding article mentioned in Australian Securities Exchange (ASX) today. Including this,
different accounting standard board and theories of regulation regarding public and private
interest for the financial institution. Moreover, accounting standard boards and regulations
mentioned for accountancy will be introduced through this assignment. Likewise, theories used
in accounting and recording of financial transactions can be expressed. Thus, students are able to
understand article related to remuneration for senior executive for CBA as well accounting
theories and concepts deeply through this report.
QUESTION 1
Issues covered in exposure draft
The issue occurred in CBA is related to laundering laws related to money laundering and
according to which senior executive will lose all of their short term variable bonuses. However,
for both short term and long term variable bonuses for the financial year. Similarly, in the
financial year 2016, amount is mentioned for paid operations of banking sector (Noeker and
Juckel, 2017). In this regard, directors served full year will pay 300000 while for directors who
are to serve who fell to just for paid 273000. As such remuneration of executives is to present in
its annual report by which monetary position of the bank can recognise. Further, on the basis of
this issue and financial position of the bank, recording for further years. Thus, article mentioned
in the newspaper regarding financial issue and solving the issue is recorded.
REDUCING SENIOR EXECUTIVES' SHORT TERM INCENTIVE FOR CBA
Due to money laundering issue, CBA is facing issue of economic crises therefore,
planning for reducing short term incentive to create balance and improving financial position
of the organisation. However, it will be able for further implementation and strategies in the
future time period. Thus, bank can achieve effective profit by implementing this strategy and
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operating further activities.
Actual remuneration position of CBA:
For making decision to reduce economic issue of CBA, monetary position of the bank is
required to be identified can be understand as:
In the Australian market, it has been noted that arrangement of remuneration for CEO
and executive group made up with fixed and risk as well. It is determines in the two types of
variable remuneration such as short and long term context (Karakolias and et.al., 2017).
Components are based on the performances against key financial and non financial measures. In
this aspect, full details also required to make broader outcomes with full consideration that
disclosed in the annual report. In order to reach towards conclusion, overriding consideration in
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Illustration 1: Remuneration to senior executives of CBA
(Source: Remuneration of CBA, 2017)

the board was developed as the collective accountability of the senior management (CBA Pulls
back on Senior Executive remuneration, 2017).
The bank paid insurance during the financial year in term of policy for the benefit of
organisation. Insurance is the appropriate pursuant which determines in section 199B of the
corporation Act 2001. In accordance with commercial practice, insurance policy prohibit
disclosure of the terms and policy. It includes nature of the liability which insured against
amount of the premium. No application has been made under the section of 237 in the
Corporation Act 2001. Beside this, financial information included in the annual report which has
been prepared and presented with accordance with accounting standards. In addition to this, bank
is also committed to ensure that policies and practices reflect to high standards in the corporate
governance (Flege and Thomsen, 2017).
There are several guidelines has been developed in context of corporate governance, and
enhancement of balance performance and conformance. In the financial year of 2016, bank
governance arrangement consistent with principles and recommendations. Details of the bank
secretaries includes experience and qualifications that are set in the view. Financial information
included in the Annual report which has been prepared and presented in accordance with
Australian accounting standards (Dawid, Harting and van, 2017). This will ensure that
compliance develop in the financial reporting standards. Group managers and business
performance using cash basis to measure profit that which includes key items that excluded from
statutory profit.
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Illustration 2: CBA board
(Source: Remuneration of CBA, 2017)

Common wealth bank of Australia has reduced the pay of senior executive and non
executive directors in order to decrease money laundering activities. Besides reducing the pay
scale of senior executives the financial organisation can reduce short term variable incentive.
There is also decline in non executive directors fees in order to eliminate cyber crime
(Fernández, Arrondo and Pathan, 2017). Technology such as deposit machine can be adopted by
banks in order to facilitate anonymous cheque and cash deposits. This machine will assist
financial institution in preventing illegal transactions, can track criminal conducting illegal
transaction. The use of this machine will help bank in avoiding unnecessary suspicious
transactions. Government can set up an industry to solves various banking industry related
issues. The legal authority can establish an enquiry system to investigate “ culture problems in
the banking sector”.The government can set various limit for various transactions. Due diligence
strategy can be adopted which includes knowing the customer, obtaining information on
intended transaction and verifying above information through certificates and other sources.
Traceability of transactions which can be used by banks for detecting money laundering
activities. This strategy will enable financial organisation to ensure traceability of transaction and
opportunity to identify the origin of transaction (Nadeem, Zaman and Saleem, 2017). Person
who hold special authority to represent a legal entity that deals in financial undertakings
including managing director require verifying of their identity while making transactions.
Questionnaire method can be used in order to get information from customers about intended
transactions, purpose of financial activity, as well as nature of transaction.
Target remuneration for financial year 2017
On behalf of this data interpretation, it can be recognised that if senior executives of CBA
do not paid short term incentive for financial year 2017 then financial position of the entity.
However, CBA's director also have cut their fees by 20% for economic stability and improving
economic position efficiently (Terjesen and Trombetta, 2017). Therefore, by implementing this
strategy, bank will be able to spend adequate expenditures and increasing its sales revenue.
However, by reducing senior executives' bonuses, financial position of the bank can be improved
effectively. In this regard, following target is set for financial year 2017 overall targeted is to be
presented as:
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However, tragets for fixed, STI and LTI has set for effective cost in banking operations
for CBA that will be beneficial to reduce economic issue and enhancing financial position.
According to mentioned draft in Accounting Securities Exchange (ASX), it is recognised that
Commonwealth Bank board is decided to reduce senior executive bonuses to zero affect
remuneration and financial position of the entity. In this regard, accountant of the bank express
his views that it will be able to reduce risks and reputation matters of the entity (Terjesen and
Trombetta, 2017). Similarly, it is public interest in executive remuneration will be in favour of
financial institution entitled in Australian Reports and Analysis Centre (AUSTRAC).
The major accounting issue in the article is related to the language issue for the
international accounting differences. In the present time, there is not a single company which ios
limited within a country. Each small and large wants to conduct and operate its business at global
level so financial reporting standard of their country is major accounting barriers and language
cab also affected international financial reporting standards. The major issue in the given article
related to the SEC regulator should adopt global financial language for better business. This
article major focuses on the reporting of languages which is followed by the business in the
different countries. The major issue in this article is related to the different languages in the
international accounting. In addition to this, this article describes the Donald trumps collected
information related to issue of immigration, trade, freedom of forth estates as they are
dominating the media cycle. In this includes corporate governance new policies, direction under
fresh leadership securities and exchange. As per the recent executive order of the Donald trump
for a review of financial system regulation, he promises to make addressing over regulation and
his administration. The major issue of this article is related to the different language and different
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Illustration 3: Target remuneration for 2017
(Source: Remuneration of CBA, 2017)

accounting standards in the different country. Thus, organisation have to understand and adopt
different accounting standards. This topic is link with international financial accounting standard
as US is one of the icon in the field of accounting sector which is using GAAP on its financial
report. Other countries like Australia are using the IFRS in its accounting report, so there are
several standards from the IFRS and GAAP which will be the worldwide acceptable reporting
language.
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NEWS LETTER:
ADOPTING GLOBAL FINANCIAL LANGUAGE FOR BETTER BUSINESS FOR SEC
REGULATORS IN AUSTRALIA
The major accounting issue in the article is related to the language issue for the international
accounting differences. In the present time, there is not a single company which is limited
within a country. Each small and large wants to conduct and operate its business at global level
so financial reporting standard of their country is major accounting barriers and language cab
also affected international financial reporting standards.
The given article related to the SEC regulator should adopt global financial language
for better business. This article major focuses on the reporting of languages which is followed
by the business in the different countries. The major issue in this article is related to the
different languages in the international accounting.
This article is related to the different languages in the international accounting. In addition
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to this, article describes the Donald trumps collected information related to issue of
immigration, trade, freedom of forth estates as they are dominating the media cycle. In this
includes corporate governance new policies, direction under fresh leadership securities and
exchange.
As per the recent executive order of the Donald trump for a review of financial system
regulation, he promises to make addressing over regulation and his administration. The major
issue of this article is related to the different language and different accounting standards in the
different country. Thus, organisation have to understand and adopt different accounting
standards.
However, Other countries like Australia are using the IFRS in its accounting report, so
there are several standards from the IFRS and GAAP which will be the worldwide acceptable
reporting language.
8

Donald trumps collected information related to issue of immigration, trade, freedom of
forth estates as they are dominating the media cycle. In this includes corporate governance new
policies, direction under fresh leadership securities and exchange.
However, other countries like Australia are using the IFRS in its accounting report,
so there are several standards from the IFRS and GAAP which will be the worldwide acceptable
reporting language.
Draft:
LANGUAGE ISSUES IN ACCOUNTING IN AUSTRALIA
The article is related to understand accounting systems to be followed on in recording financial
transactions of the business enterprise. However, language issues occurred in reporting is useful
for maintaining and reporting. In addition to this, Donald Trump expresses his views that
different language issues occurred in article due to immigration and freedom to forth estate
dominate media cycle. In this regard, importance of GAAP accounting standard has been
described for financial reporting and recording data and administration of organisation
effectively. Similarly, accounting standard and financial reporting for GAAP and IFRS are
determined. In addition to this, accounting standard regarding recording and reporting financial
transactions is described to reduce language issues occurred in accounting process.
Discussion on draft
In this discussion, learners can understand both positive and negative aspects of the
strategy to reduce short term senior executives' bonuses to zero (Cunningham, 2017). In this
regard, its advantages and drawbacks are to be understood as:
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