Financial Reporting Disclosures in Australian Corporate Sector - Westpac Group Annual Report - Example

Financial Report Lecture: Thomas Kern Student Name: Heath Dai Student ID: 42190193 Unit: ACCG224 Date: Executive summary Westpac Group Limited is an Australian based company trading under Australian Stock Exchange. The Westpac Group Limited is the parent company with subsidiaries that are operating under their policies. According to the requirement of the Australian Accounting Standards board (AASB) (Australia), 2012), the company is expected to prepare the books of account inclusively of their subsidiaries and disclose all the material facts in the report. The company consolidated financial statements reveal the trend of the company’s and its transaction in each financial year. Westpac Group Limited and Its Subsidiaries recognize the measures of presentation provided by the Australian Accounting Standards Board on financial statements. Financial Accounting Standards Board (FASB) also accredits the accounting measures that ensure that the accounting policies are represented and applied consistently. The guidance instituted by the International financial reporting standards (IFRS) implies that companies should attributively follow the requirements of accounting policies. The disclosure measures Westpac Group is of well described below in detail. Introduction Australia Accounting standard broad (AASB) is an Australian government agency which can be used as a tool to develop and maintains financial reporting standards. Australian Accounting Standards Board stipulates the accounting policies that companies should follow to disclose their financial statements. AASB 101 Presentation of Financial Statements as reconsidered incorporates IAS 1 Presentation of Financial accounting Statements as provided and regulated by the International Accounting Standards Board (IASB) (Australia), 2012). IAS Paragraph1 was adjusted s and added to this Standard by the prefix Aus in accordance with the compliance of the IASB and the IFRS. Westpac Group annual report shows the company’s representation of their financial statements and the policies provided by the AASB applied in forming the financial transactions. The Australian financial reporting requires companies to comply with the AASB requirements. AASB 7 introduces the amendments that ensure full disclosure of the material aspects in financial statements. AASB 101 provides the mode of adoption of the international presentation of financial statement in financial reporting.  An initiative of the Australian Accounting Standards Board (AASB) that allows none publicly accountable reporting entities in preparation of non complex financial statements by giving essential exemptions from the disclosure that are enclosed in the existing AASB standards. Accounting Disclosures Australian Accounting Corporations Act of 2001 endows the strategic guidelines in preparation of financial statements. Westpac Group Limited examines its measure and interpretation techniques of Australian Accounting Standards. This rules provided by the standards should in line with the International Financial Reporting Framework. The disclosure measures also to ensure that the financial statement prepared according to AASB 7 to represent utmost fair view of the Westpac Group Limited state of financial affairs (Doug Mills, 2006). AASB 101 defines the presentation of company’s liquidity state in meeting it’s current and long term financial obligations. The standards also recap the chances of errors such as Impairment and amortization of intangible assets (goodwill), depreciation of assets, accounting for income tax, and company’s financial obligations that arise from the use of financial estimation. Decision of disclosure of certain accounting policy also relies management effectiveness and assistance to users of the financial statements to understand how conditions, transactions, other financial events are reflected in presented in statement financial performance and financial position. Disclosure of particular accounting strategies is principally of handy to users when the desired policies are selected from alternatives acceptable by Australian Accounting Standards. An example is disclosure of whether a venture recognizes its interest in a consolidated entity using proportionate consolidation method as describe in (see AASB 131 Interests in Joint Ventures). Some Australian Accounting Standards purposely requires disclosure of fastidious accounting policies, such as the management alternative made between different policies. For example, AASB 116 defines the disclosure of the measures used for different classes of property, plant and equipment. Westpac Group Limited management facilitates the use of AASB 131 in disclosing its group financial statements and the subsidiaries (Kathie Cooper, 2012). The company management observes the merit affecting the use of IFRS together with the IAS 1 to enhance strategic measure that promoted understanding of the company consolidated financial accounting statement. However, the recognizing measures and Interpretation of the requirements of Australian Accounting Standard board which are utilize to determine the company’s comprehensive income statement and balance sheet. Westpac Group Limited observes its recognition, measurement and interpretational Australian Accounting Standards requirements that facilitate the users understanding in financial statements. The Westpac Group management has also issued policies in compliance with IAS and AASB standard to ensure that subsidiaries financial reporting are considered advantageous on concessions and the requirement of International Accounting standards. According to Westpac annual report, preparation, and presentation fair values of financial instruments such as property plant and equipment, goodwill, inventories, retirement obligation revenue recognition, and allowances made on doubtful accounts (Frank Clarke, 2007). Also, policies concerning earnings per common share and provision charged on the income statement are pervasiveThe Australian Accounting Standard Board provides intermediary provisions that require the company to establish firm measures to be followed in accounting for the business transactions and reporting. The assumptions and additional basis of estimation uncertainty disclosed under paragraph 125 accordingly relate to estimates that needs managerial diversity in subjective judgments on financial statements. Regarding disclosure variables and accounting assumptions affecting the company’s possible future declaration of the uncertainties simultaneously increases judgments complexity and the potential for a consequential material amendment to the company’s carrying amounts of the increasing assets and liabilities. The International standards and accounting policies enhancement provides well based financial statements by replacing estimation and poor judgment on the financial information that presented in annual reports. The decisive accounting policies of disclosure should present bearing information that enhances clear review of company financial condition (Westpac Group Ltd, 2012). Policies limit the changes of risk that can occur due to use estimates by the company management. This relief ensures that the non-reporting entity takes in account all evenhanded procedures to ensure that the relevancy of financial reports by complying with all recognition and measurement requirements (Doug Mills, 2006). The Westpac Group management is structured to limit financial estimation that will inhibit its risk of manipulation in financial statement. The material aspects of financial statement are fairly attributed to reduce rate of user’s reliability of financial statements. The state of Westpac financial performances identify the effectiveness of measures set by Australian Accounting Standards gives the users reliable evidence on the accounting information. Disclosure of financial statement is considered as the fundamental component interpreting the adopted accounting policies. Westpac financial position is used by potential investors in making viability of company investment decision. This will be reflecting the significant in adopting all the requirement of the accounting standards. The significant accounting policy fixed by FASB for the appliances of accounting methods and principles poses a wide range of general description which contrast with the decisive policies basing on the proposed principle estimation (Australia, 20012).AASB 129 expresses the disclosures of company’s as per paragraph 125. This has facilitated the users such as Directors shareholders and potential investors to understand the judgment that that management anticipates for the future and about other sources of estimation company uncertainty (Ron Dagwell, 2007). The nature and extent to which the information provided differ according to the nature of the postulation and other circumstances define the managerial decision on financial statements. According to the above disclosure criterion, not only the definitions are different, but also the intentions of using the two accounting disclosure policies are substantially different. FASB and IAS provide remedial consideration in disclosing the accounting policies which Westpac Group Limited need to embark on their requirement to enhance consistency in application of accounting policies. Westpac Group Limited management present the financial statement in accordance’s with the favor of the users comprehensive understanding to achieve familiarity in the statement and promote viable financial solutions. AASB 128 disclosures in paragraph 125 stipulate the treatment of the assets and the provision of uncertainties due to changing nature of their carrying amounts. Westpac Group management reporting techniques on the risk of changes in materiality of the accounting statements due to fair value based on the estimation disclosures (Clarke, 2012). The company recognizes revenue of products using their attached selling prices. Significantly, decisive accounting estimation should meet the requirement of FASB and AASB in accounting for the current company financial affairs. Westpac Group Ltd management is based on establishment of major accounting elements that are observed in order to account subsidiaries transaction. Management has established clear understanding of the accounting estimates that has enhanced Westpac Group Limited reporting. (Westpac Group Ltd, 2012). Westpac Group Limited only estimates some of the substantially uncertain and material accounting policies which may attributively cause impact on reliance of the financial statements. AASB stipulates the disclosures of significant accounting policies that identify the accounting principles and methods that will fundamentally affect the company’s financial position, and results in different financial operations and treatment (Kathie Cooper, 2012). The significant disclosure policies are the fundamental components in note of Westpac management's analysis and discussion. Westpac Group Limited financial impairs policies interpreted by the AASB 101 Financial position should imply to the precisions, and certainties that can is caused by rapid changes in the company’s financial status. (Westpac Group Ltd, 2012). These fundamental accounting treatments include judgments on whether company assets, revenue and obligations are appropriately for in the financial year. Assets and company obligation are measured at their fair values which thy do change in subsequent years and hence give rise to the assumption of estimation uncertainties at the end of the accounting period. Westpac current accounting Policies and Standards requirements The Westpac Group Limited current accounting outline describes a well based observes accounting policies and procedures according to the requirement of AASB 101. The company management accounting department perilously inclines with the requirement of international accounting standard IAS and IFRS (Daryl Fleay, 2011). The company reveals statements the accounting measures and polices they are used in each and every business transaction. The current accounting policies are used to value companies assets, financial obligations, and providing foe provision on the anticipated amount to be consumed as part amortization of goodwill depreciation and doubtful debtors. Management accounting department discloses the estimation based on the past financial period on the amount set aside for the doubtful debtors. This has no any relationship in the current financial treatment since debtors can increase or decrease during the financial year (Australia, 2012). Moreover, the accounting department should show the sequence of accounting transactions and indicates how the resultant estimates were achieved. Westpac Group Limited accounts for the company investment according to the requirement of IAS and IFRS presentation disclosures (International, 2007). The company provides a basis of recognizing the returns from investment where the dividends earned for the subsidiaries are jointly recognized in the Westpac Group Limited financial statement. According to AASB 101 the subsidiaries are consolidated and charged in the parent entity. Westpac subsidiaries are changes in financial performances are disclosed on the current parent financial accounting statements. The company accounts for treasury shares according to the requirement of A-IFRS where the shares are held differently from the life business returns and the results of the holdings are to be recognized as income in the disclosed financial information. This transaction was not accounted for since Westpac limited includes the held amount in the cash earning (Clarke, 2012). The company reflected an increasing trend of company’s financial performances this denotes that the company’s management disclosures are presented according to the requirement of AASB. Recommendation on Westpac Accounting disclosures Westpac management discloses their financial statements according to the provisions stated by IAS and IFRS standards. Management accounting department administers the company’s financial transaction by following the stipulation laid down under the Corporation Act 2001 which gives an in-depth disclosures on the company’s assets and liabilities. The provisions provided by the act regarding to the future company’s gains or losses is disclosed under the balanced sheet adjustments for total net book values of the company’s assets. The company’s fair value of the net assets is not shown as either revalued downwards or upwards. This disclosure must be observed to enhance accounting for the net fair value of assets. This discrepancy of the accounting disclosures should be effected to promote the requirements if the Australian Accounting Standard Board AASB 101. Appendix1 Westpac consolidated Accounting statement Appendix 2 Westpac Group Ltd PPE schedule Appendix 3 Westpac Group Ltd statement of financial position Reference List Australia, I., 2012. Chartered Accountants Financial Reporting Handbook. pp.42-24. WESTPAC Ltd (2012) WESTPAC Ltd Annual report 2012 Retrieved on 27th April 2013 Australia), I.(.I.o.C.A.i., 2012. Chartered Accountants Financial Reporting Handbook 2012, Google eBook. John Wiley & Sons. Clarke, E.A., 2012. Accounting: An Introduction to Principles and Practice. Cengage Learning. p.12. Daryl Fleay, N.P.N.A.M., 2011. TAFE Accounting: Financial Accounting Applications. Cengage Learning. Doug Mills, W.V.C.A.G.D., 2006. Introductory Accounting Incorporating Accounting Principles and Practice. UNSW Press. International, N., 2007. The international handbook of financial reporting. Cengage Learning EMEA. p.32. Kathie Cooper, W.N.F.J.L., 2012. Public Sector Accounting and Accountability in Australia. UNSW Press. p.314. Loren A. Nikolai, J.B.M.K.G.S.S.S., 2011. Accounting: Information for Business Decisions. Cengage Learning. pp.287-98. Michael Berrington, V.B., 2012. Pinnacle Financial Statements. IFRS SYSTEM. pp.42-46. Ron Dagwell, G.L.W.C.L., 2007. Corporate Accounting in Austalia. UNSW Press. p.639. Read More