Report on Accounting Issues Faced by the Bank of Queensland (BOQ)

This report provides a comprehensive analysis of the accounting issues faced by the Bank of Queensland (BOQ). It begins with an executive summary outlining the aims and findings, followed by an introduction that establishes the scope and background. The core of the report delves into four key issues: compliance system problems, inappropriate auditing systems, share price fluctuations, and interest rate changes. Each issue is thoroughly discussed, supported by evidence and relevant financial data. The report then concludes with major findings and actionable recommendations, emphasizing the need for improved goodwill, enhanced auditing practices, and better risk management. The report also includes a detailed reference list using Harvard referencing, citing academic sources and industry reports to support its analysis. The report aims to provide a clear understanding of BOQ's financial challenges and suggest potential solutions for future success.

Bank of Queensland

ACCOUNTING ISSUES 1
Executive Summary
The main aim of this report is to analyse the financial issue of the company. In this report,
Banks of Queensland has been taken into consideration to analyse the accounting issues faced
by the bank. It has been founded that the low share prices, interest rate and inappropriate
system are the financial issues faced by the company. Appropriate auditing system,
increasing demand of the bank by introducing the high goodwill values are the solution of
these issues.

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Contents
Introduction...........................................................................................................................................3
Issues.....................................................................................................................................................3
Conclusion.............................................................................................................................................5
References.............................................................................................................................................7

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Introduction
An issue is the process of raising funds or stock to investors as a method of financing the
business. The company faces the accounting issues as per the financial position of the
company (Schaltegger, and Burritt, 2017). The main aim of this report is to analyse the issues
faced by the company. In this report, Banks of Queensland has been taken into consideration
to analyse the issues and their solution. Banks of Queensland is an Australian retail bank
which headquarters in Queensland. It is one of the oldest financial institutions in Queensland
that has 525 branches and 78 corporate branches throughout Australia.
In this report, the issues faced by the Bank of Queensland will be discussed. Later on, the
discussion is made on the solutions of the company.
Issues
There are many issues which is faced by the Bank of Queensland and these are given below:
The compliance systems of BOQ are under problem:
It has been found by AUSTRAC that the bank of Queensland had the risk based control
systems and the process of monitoring the transaction is in appropriate. It is founded that the
anti-money laundering counter finance risk and money market deposit system risk of the
bank is stronger than the bank system and control for mitigate. As per the reports, it is
observed that the banking and financial services of the bank is involved in the financial
scandal due to which the life of many customer has been destroyed. Investors of the company
also lost the 10 million dollars due to the bank scandal. Financial loss to the customer is the
result of breaches in relations to its money market deposit (Financial Review, 2015).

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According to the Australian Securities and Investments Commission, 45 per cent is losses by
the bank.
Inappropriate auditing system
The auditing system of bank is founded as inappropriate due to which the bank faces the
issues. In the case of Wendy’s Milk Bar, Bank of Queensland provides the loan to the
company without checking the accounts. The staffs of the bank are responsible for this
scandal due to negligence towards the responsibility. It is founded that the company goes
down into liquidity and the bank faces the heavy loss. As per the report, the bank of
Queensland approved the loan of the company which is result of failed in risk audit
(Henderson, Peirson, Herbohn, and Howieson, 2015). After this scandal, the bank minimise
the repayments and delay the amounts of franchisee. The bank continuously caught due their
mistakes and loan payments. Another risk audit is carried out in 2013 in the case of Riches.
In this case, the branch is considered as the poor credit risk procedure in the place (Jacobs,
2018).
Share prices raises
It has been founded that the BOQ is growing with the decent share prices growth in the
teen’s levels. It seems that the bank paid the fair prices to the shareholders. The BOQ prices
are quite volatile for the company because it gives the chance to buy (Desjardins, 2017).
Stock prices of the bank are fluctuated due to increasing demand and supply. As per the
report, the bank paid the high return due to which investors influenced and feel worth to
invest by buy the share. But as now, the share prices of the bank go down due to its
decreasing the demand of investors. The image of the company is destroying due to its
scandal and issues. The investors did not invest feel worth to buy the share (Canly, 2017).

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The prices of inventory also indicate the ability of the bank which influences the investors to
buy the share.
Interest Rate of BOQ
In June 2018, BOQ had increased its interest rates for the home loans. It had increased the
rates for all its home loans which are variable in nature as well as for the line of credit that is
to be provided to the owner occupiers or investors. For the owner occupier home loan rate
(interest and principal repayments) has been increased by 0.09 per cent per annum. For the
owner occupiers the interest only repayments was enhanced by 0.15 per cent per annum.
With effect from August 2018, the rates of interest only loan has increased by 40 basis points
resulting in change in the variable rate of home loan for owner occupiers from 5.61% to
6.01%.The cost of funding has been increased significantly and is mainly driven by the rise in
30 and 90 days BBSW rates (Emmerton, 2017).
Conclusion
From the above analysis, it has been concluded that the BOQ faced the issues due to its
negligence towards the duties and responsibilities. The bank suffers the heavy loss and their
share prices also decreases in the market (Mickleboro, 2018). It has been recommended that
the company has to improve its goodwill value so that the investors will attract towards the
banks and buy its share. The goodwill value of the bank is getting high by introducing the
best scheme with the profits. The bank has to introduce the new project which result is high
return so that the investor feels worth to invest (Libby, 2017).
The recommendation is that the bank has to audit the accounts appropriately with the proper
evidence. The branch manager of the bank was founded responsible for its scandal in the case
of Wendy’s milk bar. The bank has to appoint the people who are not the member of board of

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director so that the chances of fraud are less. The staffs have to audit the books and accounts
properly before providing the loan to the companies. The proper financial statements of the
company has been analysed to take the financial decision (California State, 2018). It is also
recommended that the bank has to monitor the risk on the regular basis. The bank has to
improve the monitoring the transaction by following the appropriate procedure. The bank has
to analyse the benefits of the customer as well as the bank. The image of the bank will
improve by handling the monitoring the each and every transactions. It has been concluded
that the bank will achieve the success in the future by implementing the recommendation.

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References
California State. (2018) Audit Procedure and Recommendations. [online] Available from:
http://toolkit.capta.org/finance/pta-audit/audit-procedure-and-recommendations/ [Accessed
21/12/18].
Canly, M. (2017) Is It The Right Time To Buy Bank of Queensland Limited (ASX:BOQ)?.
[online] Available from: https://simplywall.st/news/is-it-the-right-time-to-buy-bank-of-
queensland-limited-asxboq/ [Accessed 21/12/18].
Desjardins. (2017) What Causes Stock Prices to Change?. [online] Available from:
https://www.disnat.com/en/learning/trading-basics/stock-basics/what-causes-stock-prices-to-
change [Accessed 21/12/18].
Emmerton, K. (2017) BOQ continues interest only rate rise trend in home loan market.
[online] Available from: https://mozo.com.au/home-loans/articles/boq-continues-interest-
only-rate-rise-trend-in-home-loan-market [Accessed 21/12/18].
Financial Review. (2015) Why Bank of Queensland’s compliance systems are under fire.
[online] Available from: https://www.afr.com/business/banking-and-finance/bank-of-
queensland-compliance-systems-under-fire-20150920-gjqnq8 [Accessed 21/12/18].
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B. (2015) Issues in financial
accounting. Pearson Higher Education AU.
Jacobs, S. (2018) Even when it admitted being in the wrong, the Bank of Queensland still
fought against paying a small business customer compensation. [online] Available from:
https://www.businessinsider.com.au/banking-royal-commission-bank-of-queensland-wendys-
2018-5 [Accessed 21/12/18].
Libby, R. (2017) Accounting and human information processing. In The Routledge
Companion to Behavioural Accounting Research (pp. 42-54). Routledge.

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Mickleboro, J. (2018) Why the Bank of Queensland share price has dropped lower today.
[online] Available from: https://www.fool.com.au/2018/12/10/why-the-bank-of-queensland-
share-price-has-dropped-lower-today/ 5 [Accessed 21/12/18].
Schaltegger, S. and Burritt, R. (2017) Contemporary environmental accounting: issues,
concepts and practice. Routledge.