Genworth Mortgage Financial Reporting: A Contemporary Issues Analysis

This report provides a comprehensive analysis of Genworth Mortgage's general-purpose financial reporting practices. It examines the company's adherence to the measurement requirements of the conceptual framework, fundamental and enhancing qualitative characteristics, and the ability of financial report users to make informed decisions. The analysis utilizes the 2018 annual report and relevant accounting literature to assess compliance with IFRS, AASB, IASB, and the Corporations Act 2001. The report investigates how Genworth Mortgage applies fair value and historical cost measurements, discloses relevant information, and presents financial statements in a clear and understandable manner. It also considers the required accounting knowledge for analyzing the company's reports and concludes on whether Genworth Mortgage meets the requirements for general-purpose financial reporting, providing valuable insights into the company's financial reporting quality and its usefulness to stakeholders. The report highlights how the company uses its financial statements to provide information on financial performance, financial position and cash flows to assist users in making decisions.

Running head: CONTEMPORARY ISSUES IN ACCOUNTING
Contemporary Issues in Accounting
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Executive Summary:
For this report, emphasis would be placed on analysing the various aspects of general purpose
financial reporting of Genworth Mortgage, which is a leading provider of lenders mortgage
insurance in Australia. The organisation has conducted accurate application of the fundamental
qualitative characteristics by disclosing the required information regarding various economic
phenomena. Along with this, the organisation has met the enhancing qualitative features related
to financial reporting. The above analysis has made it evident that Genworth Mortgage has
disclosed the needed financial statements in its annual reports so that the users could obtain the
necessary information that would assist them in undertaking significant decisions. Finally, it has
been analysed that Genworth Mortgage has adhered to the guidelines and norms mentioned in
IFRS, IASB, AASB and Corporations Act 2001 for complying with the needs related to general
purpose financial reporting.

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Table of Contents
Introduction:....................................................................................................................................3
1. Compliance with the measurement requirements of the conceptual framework:........................3
2. Compliance with the fundamental qualitative characteristics:....................................................7
3. Compliance with the enhancing qualitative characteristics:........................................................8
4. Ability of the users of financial reports to use the report in making decisions:........................10
5. Required accounting knowledge of conceptual framework for company analysis:..................12
6. Requirements for general purpose financial reporting:.............................................................13
Conclusion:....................................................................................................................................13
References:....................................................................................................................................15

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Introduction:
The global companies adopt general purpose financial reporting so that they could deliver
financial information to their main shareholders for assisting them in undertaking decisions.
When these financial reports are prepared, the organisations are liable to adhere to the needed
standards and guidelines of financial reporting so that they could avoid various financial
reporting issues. In Australia, the organisations listed in ASX have to adhere to the financial
reporting standards developed by the “Australian Accounting Standards Board (AASB)” for
preparing and presenting their financial reports. Along with this, they have to adhere to the
AASB conceptual framework standards and “International Financial Reporting Standards
(IFRS)”. For this report, emphasis would be placed on analysing the various aspects of general
purpose financial reporting of Genworth Mortgage, which is a leading provider of mortgage
insurance for the lenders in Australia (Genworth.com.au 2019).
1. Compliance with the measurement requirements of the conceptual framework:
The ASX listed firms are obliged by AASN for adhering to the recognition and
measurement requirements in accordance with the conceptual framework for financial reporting.
As per the AASB conceptual framework, the organisations have to adopt between different bases
of measurement, which include current value and historical cost. The bases of measurement
under current value include value-in-use and fair value (Brouwer, Faramarzi and Hoogendoorn
2014).
Moreover, the organisations bear the liability to adhere to the recognition criteria
mentioned in the AASB conceptual framework in order to recognise their liabilities, assets,

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expenses, income and equity. Therefore, there are two particular requirements to be considered
in order to recognise these accounts. Firstly, there is a chance that the economic benefits
expected in future related to the financial items would flow from or to the concern. Secondly, the
items have values or costs and they could be gauged with precision (Cheng et al. 2014). In this
case, it is crucial to determine whether Genworth Mortgage has adhered to the bases of
measurement and recognition criteria mentioned in the conceptual framework.
According to the annual report of Genoworth Mortgage in 2018, it could be seen that the
organisation uses fair value as well as historical cost (Investor.genworth.com.au 2019). Some
extracts from the latest annual report of the organisation are shown below:

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From the above extracts, it is clearly seen that Genworth Mortgage has used both fair
value and historical cost methods for measuring and recognising their assets depending on the
composition and nature of those assets (Investor.genworth.com.au 2019).

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From the above extracts, it could be seen that Genwworth Mortgage has used fair value
and amortised cost basis in order to gauge and recognise its business liabilities. In this regard, it
is to be mentioned that amortised cost is the process of historical cost (Gordon et al. 2015).
Based on the above discussion, it could be said that Genworth Mortgage has adhered to the
recognition and measurement requirements of the AASB conceptual framework for general
purpose financial reporting,
2. Compliance with the fundamental qualitative characteristics:
In accordance with the conceptual framework of AASB, fundamental qualitative
characteristics are of two types, which include the following:
Relevance:

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Relevant financial information has the ability of making a difference in the process of
undertaking decisions for the users (Gebhardt, Mora and Wagenhofer 2014).
Faithful representation:
For becoming useful, it is necessary to ensure the faithful representation of the financial
statements along with relevance (Henderson et al. 2015).
These fundamental qualitative characteristics are crucial for the organisations and
Genworth Mortgage is not an exception to the situation as well. For appropriate application of
these characteristics, the organisation has to detect an economic phenomenon necessary for the
user decision-making process, as in the case of assets of Genworth Mortgage. Secondly, it is
necessary to detect the kind of information associated with assets that contain high relevance, if
they are available and represented faithfully. These include process of measurement, values,
impairment, recognition criteria and impairment (Investor.genworth.com.au 2019). Genworth
Mortgage has reported its assets in the balance sheet statement and all relevant information
regarding the same has been disclosed in the form of financial footnotes in its annual report. Like
these assets, the organisation has reported all pertinent information regarding the economic
phenomena of the financial statements.
3. Compliance with the enhancing qualitative characteristics:
Enhancing qualitative characteristics are of four types, which include verifiability,
comparability, understandability and timeliness. It is necessary to state these characteristics
could not ensure the financial information useful alone, if they are not represented faithfully and
relevant (Nobes 2014).

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Verifiability:
With the help of verifiability, the users of the financial statements are ensured that the
financial information represents faithfully the economic phenomena. Genworth Mortgage could
not provide direct verification of certain financial information. Hence, for maintaining
verifiability, the organisation has reported underlying assumptions for its different line items in
its notes to consolidated financial statements.
Comparability:
According to this characteristic, users find financial information to be useful at the time
they could be contrasted to identical information of the other organisation or different timeline of
the same organisation (Simnett and Huggins 2015). In the annual report of 2018, Genworth
Mortgage has reported information of the past year in order to enable the users in comparing
information with other organisations or past year.
Understandability:
In accordance with this characteristic, the financial information is categorised,
characterised and presented in concise and clear way for ensuring its understandability (Van
Mourik and Katsuo 2014). Genworth Mortgage has assured the exclusion of complicated
financial information from the financial reports for making the same understandable to the
financial report users.
Timeliness:
As per this characteristic, there needs to be availability of financial information to the
decision-makers timely for affecting the process of decision-making. Thus, the users do not find

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relevance in older information. According to the 2018 annual report of Genworth Mortgage, it
contains the information of the current year and the past year. Moreover, the organisation
discloses its financial reports timely in order to assist the users for undertaking better decisions.
4. Ability of the users of financial reports to use the report in making decisions:
General purpose financial reporting contains three objectives. These mainly include
providing information regarding the financial position of the organisations, financial
performance of the organisations and cash flows of the organisations valuable in the process of
undertaking decisions (Wahlen, Baginski and Bradshaw 2014).

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