Westpac Group Financial Reporting Case Study - ACC203A Analysis

This case study analyzes Westpac Group Plc's financial statements, focusing on intra-group transactions like services between the parent company and its subsidiaries, and the treatment of non-controlling interests (NCI). It identifies that Westpac eliminates intra-group services from its loans and deposits. The report also examines Westpac's subsidiaries, noting the absence of foreign subsidiaries and the conversion of foreign branch financial data to Australian dollars. Furthermore, the study highlights Westpac's policies on sustainability, corporate governance, audit committee practices, and solvency maintenance. The case study also addresses the impact of COVID-19, detailing Westpac's employee vaccination policy and loan support for businesses, while acknowledging the challenges in financial reporting due to pandemic-related uncertainty. References to relevant academic sources are also included.

Financial report

TABLE OF CONTENTS

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REFERENCES................................................................................................................................6

5
After analysing the financial statement of Westpac Group Plc, it is identified that the issuing
invoice for the supply of financial services by both subsidiary and parent company is an example
of intra-group transactions. For example, the services provided by Westpac to its subsidiary is
being recorded as loans in the assets side and sales in income statement. While on the other hand,
the same transaction is recorded by its subsidiary as deposit and borrowings in liabilities side of
balance sheet and expenses in the income statement. Westpac Group have eliminated this
intragroup transaction by eliminating the number of inter-services from its loans in asset and
deposits & borrowings in liabilities side of Group balance sheet. Another example of intra group
transactions found out in the financial statement of Westpac group is non-controlling interest
(NCI) having value of $16 million (Lee and Jin, 2019). The Non-controlling interest means the
share of the equity of the subsidiary company on which parent company do not have any control.
It should be adjusted for the effect of profit and losses made on intra-group transactions. This is
the most significant process of consolidation as it helps in showing the real profit and
performance of Westpac Group and its subsidiaries on year end date. The NCI will locate in the
balance sheet set of the financial statement under equity section.
6
The subsidiaries of Westpac Plc are St. George Bank, BankSA and Bank of Melbourne. It is
analysed from the Westpac background and acquisition information that there are no foreign
subsidiary companies of Westpac Plc. The bank has foreign branches but do not have foreign
subsidiary as it is identified that Westpac have acquired 20% shares in The Bank of New
Zealand, 20% in BNSW, 20% in Bank of Hawaii (Cordue, 2019). It is analysed from the
financial statement of the company that they accounted its foreign branch financial information
in Australian $ by converting foreign rate to domestic currency rates. It is identified from the
financial statement of Westpac Plc from disclosure regarding forward-looking statements that
they will translate its foreign branches or foreign subsidiaries (if in future) to US dollar as per US
securities exchange act 1934.

7
On the basis of the published set of group financial statement of Westpac plc, it is identified that
company follow various policies on different areas such as:
Sustainability: It is identified from the financial statement of Westpac bank that every year bank
prepares and disclose sustainability report to the financial statement users and public. In the
sustainability report, the information regarding bank measures to support environment
protection, donation for poor children education etc. has been disclose.
Corporate Governance: It is also analysed from financial statement of the bank that Westpac Plc
follow highest level of corporate governance framework and approach. For example, compliance
with ASXCGC’s recommendations, compliance with the New York stock exchange listing rules
and compliance with the New Zealand stock exchange corporate governance rules and principles
(Al-Wattar, Almagtome and Al-Shafeay, 2019).
Audit Committee: It is also analysed from the financial statement of company that Westpac Plc
follow policy in relation to audit committee. The audit committee of Westpac Plc include non-
executive independent chairman and director of 6 member.
Solvency: In order to maintain the solvency within the organization the Westpac Plc follow
policy set by the industry standards. The bank maintain ratio of 2:1 between the equity and debt
financing. This is disclosed by company through ratio analysis and valuation report.
It is compulsory for Westpac Plc to disclose all this information and statements in their report
because the companies are listed in Australia and New Zealand stock exchange (Petrescu and
et.al., 2020). To provide correct information to financial statement users these statements are
compulsory for the bank to prepare and disclose.
8
The latest annual report of Westpac Plc state the policy which is made by bank in against the
Covid-19 to identify the impact of pandemic. The bank has made it mandatory for the employees
to get fully vaccinated against Covid-19. Not only that, the bank has also extended its Covid-19
support for business to provide loan at lower interest rates (Baumöhl and et.al., 2020). It means
during Covid-19, Westpac Plc provided loan to business at lower interest rates with the aim to
support them. This is basically done by Westpac bank with the Commonwealth Bank. The

impact of Covid-19 over the financial reporting of company is that preparing and auditing
financial statement poses difficult calls and is unclear due to high uncertainty for Westpac bank.

REFERENCES
Books and Journals
Al-Wattar, Y. M. A., Almagtome, A. H. and Al-Shafeay, K. M., 2019. The role of integrating
hotel sustainability reporting practices into an Accounting Information System to enhance
Hotel Financial Performance: Evidence from Iraq. African Journal of Hospitality,
Tourism and Leisure. 8(5). pp.1-16.
Baumöhl, E. and et.al., 2020. From physical to financial contagion: the COVID-19 pandemic and
increasing systemic risk among banks.
Cordue, P. L., 2019. A 2019 stock assessment of ORH 7A including Westpac Bank. New
Zealand Fisheries Assessment Report, p.33.
Lee, J. S. and Jin, S. Y., 2019. Tunneling through Intragroup Transactions: Evidence from
Korean Chaebols.
Petrescu, A. G. and et.al., 2020. Assessing the benefits of the sustainability reporting practices in
the top Romanian companies. Sustainability. 12(8). p.3470.