Financial Accounting Report: CBA vs NBA Bank Communication

This financial accounting report examines the communication effectiveness of financial statements from Commonwealth Bank of Australia (CBA) and National Australia Bank (NBA), with a focus on the impact of International Accounting Standards Board (IASB) guidelines. The report highlights the challenges faced by a client due to inconsistencies and lack of comparability in the notes sections of the banks' annual reports, particularly concerning earnings per share (EPS) and dividend information. The analysis reveals that CBA and NBA present information in varied formats, with differing levels of detail and graphical presentations, hindering effective comparison. The report suggests strategic actions for IASB, including raising awareness among companies regarding specific disclosure formats, introducing clear guidelines for notes in financial statements, and emphasizing standardized formats for both main statements and notes to enhance comparability and reporting effectiveness. The conclusion emphasizes the need for standardized and comparable financial statements to aid investors in making informed decisions, summarizing that effective strategies are needed to improve the comparability and format consistency of annual reports.

Financial Accounting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Preparing a letter to IASB............................................................................................................3
CONCLUSION................................................................................................................................5

INTRODUCTION
In order to ensure standardization and ensures comparability aspect introduces guidelines
as well as lay more focus on effective disclosure & communication. On the basis of given case
situation, client wishes to invest in either Commonwealth bank of Australia or National
Australian Bank. In this report will highlight difficulties faced by the client due to ineffective
communication takes place in the note section of financial statements. Further, report also
presents the manner through which reporting and communication can be enhanced.
Preparing a letter to IASB
To
International Accounting Standard Board
Date: 3rd May 2018
On the basis of guidelines revealed by IASB for ensuring effective communication notes section of the
financial statements must be entity specific, clear & precise, organized, properly linked, free from
duplication, comparable and in an appropriate format. By analyzing the notes section pertaining to
Commonwealth bank of Australia, it has assessed that such financial institution included information
about accounting policies and process followed. However, in the notes section only theoretical
information was presented by such bank. In addition to this, annual report published by Commonwealth
bank of Australia clearly exhibits that in comparison to NBA, less information was served by CBA in the
notes section pertaining to the earnings per share. This is one of the most effectual measures that investors
undertake while taking decision about investments. Moreover, EPS provides deeper insight to the
investors about profitability which in turn allocated to the outstanding or equity shareholders. Thus, due
to the variations take place in such information, being a client, difficulty is facing in doing comparisons.
In addition to this, as compared to NBA, detailed history of dividend has presented by CBA. At the time
of making investment decisions, investor lays high level of focus on analyzing the level of returns in the
form of dividend. CBA has served information regarding dividend pertaining to the period of 2015, 2016
and 2017. Referring such aspects, it can be depicted that information presented by both the institutions are
not highly comparable in nature. Moreover, somewhere detailed information was provided by CBA. On
the other side, in some areas, highly detailed information was provided by NBA. This in turn makes the
information incomparable in nature. Further, it has found from the annual report assessment or evaluation

that under notes section varied formats followed by such two banking institutions. Besides this, 43 notes
were prepared by CBA, whereas annual report of NBA contains 42 notes. Further, titles of the notes are
also varied and somewhere not supported with the financial information.
Along with this, annual reports published by both the banking institutions namely CBA and NBA have
included several tables and graphs. However, it is lacking the feature of comparability because graphs
prepared and presented by such institutions differing. Graphical presentation is considered as the most
effectual way which helps in comparing the performance of one unit with another. Hence, absence of
such feature in the annual reports of such affects the level of effective communication significantly. In
addition to this, it has found that CBA has presented clear and precise information about derivative assets
and liabilities. On the other side, in the annual report of NBA most of the information is related to the
hedging aspects presented numerically.
Apart from this, company is required to present all the relevant information about operations and future
plans which in turn aid in investors decision making. By seeing or considering the annual report of NBA
it can be entailed aspect regarding relevant information is lacking. Further, in against to NBA, CBA has
presented entity related information more effectually. In a clear and precise way, CBA presented mission,
vision, values, future strategies etc under specific headings. Hence, as compared to CBA, NBA reports
lacking the feature of effective communication.
Due to this, it is highly difficult to analyze and evaluate the reports of such two banking institution.
Meanwhile, without doing comparison it is not possible to assess the level to which one unit has
performed in a better way.
Ways to improve the effectiveness of notes disclosure: On the basis of issues assessed above, need
pertaining to taking strategic action or measure have been assessed. Thus, as per the issues take place in
the annual reports of CBA and NBA following strategies are recommended to IASB such as:
 Focus should be placed on developing awareness among the companies regarding the
extent to which disclosure of information in a specific format is required from the
perspective of stakeholders.
 Specific and clear guidelines pertaining to the notes in financial statements should be
introduced by IASB. In other words, by presenting specific guidelines about the
information which should be included in the notes section of financial statements feature
of comparability can be ensured.
 Further, emphasis should be placed on introducing specific formats regarding both main
statements and notes sections. This in turn facilitates preparation and presentation of
annual reports as well as accounts in the best possible way.

Being an investor, issues are facing when two potential companies evaluated for investment purpose.
Moreover, in the lack of having specific and standardized reports no effectual comparison can be made.
Thus, strategic measure or action needs to be undertaken within the suitable time frame for enhancing the
level of reporting effectiveness and communication aspect.
Sincerely
Financial analyst
CONCLUSION
By summing up this report, it can be concluded that IASB rules and regulations need to
be followed by every business unit for facilitating standardization. Moreover, without having
standardized and comparable statements investors would not become able to decide which
business unit is performing better. It can be summarized from the report that annual reports of
CBA and NBA pertaining to the year 2017 are lacking the characteristics of comparability and
varied format level. Thus, for making improvement regarding such aspects effective strategies
need to be undertaken.