Financial Accounting Report: Bank Financial Statement Analysis

This financial accounting report analyzes the financial statements of ANZ Bank and Westpac Group, focusing on the application of International Accounting Standard Board (IASB) principles. The report evaluates the banks' compliance with disclosure requirements, including segment analysis, Basel re...Read More

Running head: FINANCIAL ACCOUNTING
Financial Accounting
Name of the Student
Name of the University
Author’s Note

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Table of Contents
Answer to Question 1......................................................................................................................2
Answer to Question 2......................................................................................................................6
Answer to Question 3......................................................................................................................9
Requirement I..............................................................................................................................9
Requirement II...........................................................................................................................11
Requirement III..........................................................................................................................12
Answer to Question 4....................................................................................................................15
Answer to Question 5....................................................................................................................17
References......................................................................................................................................19

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Answer to Question 1
To,
The Chairperson
International Accounting Standard Board
30, Cannon Street, London- EC4M 6XH, United Kingdom
Date: 20 August 2017
Subject: Guiding and recommending on the use of formatting and principles in financial report
Respected Sir,
International Accounting Standard Board, commonly known as IASB, hasd
developed a proposition regarding the effective communication of the financial information of
the companies. My plan is to make a submission as a response of the proposition. For this reason,
I have taken into consideration two of the famous banks that are ANZ Bank and Westpac Group
for investment. The preparation of financial statements is regarded as a complex job and there
are many examples where the investors failed to get wrong perception about the financial
performance of the companies by busing financial statements. Poor presentation and organization
of financial data is a major reason of this and thus, the investors fail to take effective decisions.
After the observation of the annual reports of these two banks, I have realized the need to
increase effective communication of financial information. In case of preparation and disclosure
of financial statements, there is a need for more standardization processes.

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There are some major traits of the new proposition; they are to be simple and clear, to be
specific to the entity, to be relevant and related, to be able to highlight major factors and others.
Based on the observation of the annual reports of ANZ and Westpac, I have come to know that
the organizations have failed to comply with some of the major principles and they have
complied with some (westpac.com.au, 2017). It is the responsibility of the good and reputed
banks to disclose all the detailed information for the investors in order to provide assistance in
investment decision-making process. It is expected from the banks that they will publish all the
detailed segment analysis of liquidity position and credit risks (hkicpa.org.hk, 2017).
As per my observation of the annual reports of both the bank, I have come to know that
both the banks have not made all the necessary disclosures. The consistent segment analysis of
Westpac is there in the annual reports. On the contrary, there is not any separate segment
analysis for ANZ, as the bank has not adopted the segmentation approach (iguana2.com, 2017).
BASEL provides a set of comprehensive measure for the regulations of banking industry. I have
noticed the fact that ANZ has not complied with the requirements of BASEL separately
(iguana2.com, 2017). In addition, the separate analysis of liquidity position and risk analysis was
also missing for the bank. On the other hand, it has been seen that Westpac has complied with all
the regulations of BASEL and the bank provided the information about the risks involved in their
banking operations. In the annual report of ANZ was missing the information regarding Tier I
and Tier II (iasplus.com, 2017). However, all the information regarding Tier I and II are there in
the annual reports of Westpac (westpac.com.au, 2017). Thus, it can be said that the all the
division information were there in Westpac those were missing in ANZ.
I would like to mention the fact that both the banks have not analyzed their trend of
performance with the help of graphical presentation that is a helpful tool for the inventors to

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analyze the performance of the companies. Along with narrative description, graphical
presentation is also needed (Burcă & Cotleţ, 2014). Thus, graphical presentation needs to be
included in the financial reports of the companies. In this regard, I would like to make some
recommendations to IASB regarding communication principles in order to make the financial
reports comparable. Financial reports of the companies need to be developed around the
principle of entry specific so that all the available information in the annual reports is based on
the business operations of the specific companies (Craig & Michaela, 2014). There is not any
benefit to provide generic information in the annual report, as they are readily available in the
outside sources except annual reports. Moreover, information needs to be presented in the annual
reports in such a way so that they can be comparable to other companies over many reporting
period. In this particular process, graphical presentation plays a major role (ey.com, 2017).
As per IASB’s draft disclosure initiative, the communication effectiveness of financial
information can be developed with the help of proper formatting as it helps in comparing the
financial reports of different companies for many years (iasplus.com, 2017). Different financial
organizations including banks provide the specific set of guidance on the use of table and graphs
in the annual reports of the companies. In addition, issue can also be seen regarding the
formatting of the annual reports of the companies. Thus, I would like to recommend the use of
proper formatting to ensure effective communication of financial information for the two banks
(Deegan, 2013). As a result, the investors will be able to analyze the financial health of the
companies. In this regard, it needs to be mentioned that there is a relation between the formatting
of annual reports and the concept of entry specific. It is more continent to present the financial
information in the tabular form. Based on the nature of the business, the companies need to

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choose the structure of the format of annual reports. Effective disclosure of the financial
information helps the investors in the investment decision-making process (aasb.gov.au, 2017).
Thus, based on the above discussion, as an investor, I would like to make the
recommendation regarding the inclusion of the principle of effective communication of the
financial information of the companies. All the financial information the company needs to be
entry specific. This process will help the investors to ascertain the financial information of the
companies along with the comparison of financial information for many years. In addition, I
would like to recommend that the business organizations should adopt the strategy of proper
formatting for their annual reports.
Sincerely,
ABC

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Answer to Question 2

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Working Notes:

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Answer to Question 3
Requirement I

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Requirement II

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Requirement III
Worksheet for Current Tax Liability/ (Refundable)

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Working Notes:

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Answer to Question 4
In the Books of Snowy Limited
Journal Entries

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Working Notes:

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Answer to Question 5

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References
2016 ANNUAL REPORT. (2017). News.iguana2.com. Retrieved 13 September 2017, from
http://news.iguana2.com/anz/ASX/ANZ/459865
Annual Report 2016. (2017). Westpac.com.au. Retrieved 13 September 2017, from
https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/ic/
2016_Westpac_Annual_Report
Burcă, V., & Cotleţ, D. (2014). Considerations on IASB Recent Issued Standards.
Craig, D., & Michaela, R. (2014). Financial Accounting Theory.
Deegan, C. (2013). Financial accounting theory. McGraw-Hill Education Australia.
Disclosure Initiative – Principles of Disclosure. (2017). aasb.gov.au. Retrieved 13 September
2017, from http://www.aasb.gov.au/admin/file/content105/c9/ITC35_04-17.pdf
Disclosure Initiative – Principles of Disclosure. (2017). ey.com. Retrieved 13 September 2017,
from http://www.ey.com/Publication/vwLUAssets/ey-disclosure-initiative-principles-of-
disclosure-april/$FILE/ey-disclosure-initiative-principles-of-disclosure-april.pdf
Disclosure initiative — Principles of disclosure. (2017). Iasplus.com. Retrieved 13 September
2017, from https://www.iasplus.com/en/projects/major/principles-of-disclosure
IASB publishes discussion paper on disclosure principles. (2017). Iasplus.com. Retrieved 13
September 2017, from https://www.iasplus.com/en/news/2017/03/dp-pod

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INVITATION TO COMMENT ON IASB DISCUSSION PAPER DP/2017/1 Disclosure Initiative
– Principles of Disclosure. (2017). hkicpa.org.hk. Retrieved 13 September 2017, from
http://www.hkicpa.org.hk/file/media/section6_standards/standards/FinancialReporting/
ed-pdf-2017/i2c_di.pdf