Australian Accounting Standards Board And The Global Accounting Standard Setting Process

Corporate Regulation

This report has divulged the key information on the corporate regulation and accounting standard which needs to be followed by company to make the business transparent to its stakeholders.  The details of the equity and debt capital structure of four banks have also been discussed to identify the financial leverage and cost of capital 

With the ramified changes in time, disclosure of the financial information to the stakeholders is very much required. It is analyzed that each and every company should follow proper IFRs rules and accounting standards if these companies want to establish harmonization in international and domestic accounting rules and frameworks while preparing the financial statements (Mwangi, and Murigu, 2015). As shareholders plays an important role for a company who takes decision that determined by the financial position of the company. Companies are having external shareholders along with internal shareholders. Financial report helps in assisting the information about the company for the shareholders. They know whether the company is growing or fallen. The external holders such as government, investors, business communities, shareholders  does not associate with the day to day functioning of the company so they desire to get the financial report of the company so that they determine the actual position related to monetary and non-monetary administration of the company. Financial reports consist of numerous things like solvency position, profitability position, liquidity position and also market valuation of the company. The non-monetary administration consists all the social responsibilities regarding towards the society, and report on renewable development (Morris, 2017).

The managers are not allowed to disclose the information voluntarily regarding the financial statements and reports of the company due to increased value of financial statements for the shareholders so they must be extremely coordinated and managed. The managers are not to communicate the information that doesn’t show the actual results or condition of the company or having the estimate report that doesn’t show the actual position even if the manager is permitted to disclose the information voluntarily. The financial report is composed to perform distinct functions some of them are: determining the real financial condition of the company for the investors or we can say the providers of finance, showing the shareholders about the company’s growth and potential so that they can invest and make trust on the company etc. In case, if the companies financial report is inadequate then the owners and managers are allowed to disclose only that information which shows the potential of the company, by not showing the weakness of the company so that the company remains trustworthy for the shareholders, and the shareholders make investments in the company. For continuing the stake of thee company, sometimes company announced incentives for the managerial on performance based. Sometimes if the report is not properly maintain in such case the manager may disclose only that statement that shows the profitability of the business just to earn some incentive through these financial reports that shows the inaccurate financial position of the company (Grant, 2016).

ACCOUNTING STANDARD SETTING

Hence, it is important to maintain the financial accounts and reports of the company. There are various accounting standards are to be form for financial reporting so that consistency remains. Shareholders can elucidate and evaluate the financial position by analyzing the report if it maintains according to the consistency of standards. It will also help in determining false representation and administration in the report so that these can be corrected (Flannery, 2016). 

It is analyzed that Australian Accounting standards board have been set up for monitoring and issue of the accounting standards guidelines for the corporation.

Accounting standards are rules and guidelines set up by government institutions like IASB, to maintain accounting easy and understandable among all the companies and industries. It describes all the guidelines related to the doing transaction in a manner.

Accounting Standards Board of Australia (AASB) is the governmental organization that allocates the accounting standards for Australian body. Accounting standards are refined, circulate and managed by this Australian government organization.

It impersonates an essential role all over the world in framing accounting standards process. The International Accounting Standard Board (IASB) is a private organization that serves the eminent aspects regarding the accounting standards all over the world for public concern. IASB cooperate with other countries standards to set the standards world wide of financial statements and reports (Ehiedu, 2014).

AASB got start changing its working system so that he can establish his way of accounting standards globally in a different manner. It should be design in such a way so that IFRS should also be considered in this to maintain the sufficient relationship with them. AASB deals will the mechanics issues of standards that will help to IASB on the basis of this to know how standards should be adumbrated and developed. IFRS is not became in forced in some countries because of the national accounting standards of particular nation as well as the laws are not up to mark in all countries regarding new accounting standards. However, if new standards are embraced by countries it will adversely affect the accounting standards in an adverse way (Bhimani, Silvola, & Sivabalan, (2016).

Common Wealth bank of Australia  (Amount shown in AUD $ in Million)	2014	2015	2015	2017
Share capital	$ 24591	$ 25742	$ 2687	$ 34971
Reserve	$ 1564	$ 1687	$ 1789	$ 1869
Retained earning	$ 25252	$ 2589	$ 2610	$ 26330

It is analyzed that Owner’s equity of Common Wealth bank Of Australia has increased to AUD $ 34971 million which is 18% higher as compared to the data of 2013. The reserve recorded in the books of account of company also reveals the increment of 14% which has resulted to AUD $ 1869 million objectives. It has increased to AUD $ 26330 million which is .6% higher since last year before data. It has resulted to AUD $ 26330 from AUD $ 25252 in three years. The retained earnings are also kept by bank to meet its general and specific (Commonwealth Bank, (2018).

(AMP Bank Limited (Amount in Million)	2014	2015	2015	2017
Share capital	9508	9566	9619	9376
Reserve	-1888	-1886	-1972	-2010
Accumulated earning	566	819	-185	-164

Owners’ Equity

(AMP Bank Limited, 2018)

In case of AMP Bank limited, Owner’s equity of this bank has increased to AUD $ 9376 million which is 28% higher since 2013. The reserve recorded of AMP also reveals the increment of 18% which has resulted to AUD $ -2010 million.  The accumulated profit of AMP has also increased to AUD $ -164 million which is .6% higher since last year before data. It has resulted to AUD $ -164 from AUD $ 566 in three years (AMP Bank, 2018).

(Westpac) (Amount in Million)	2014	2015	2015	2017
Share capital	29251	25254	30252	34627
Reserve	112	168	210	237
Retained earning	15442	15891	16422	16442

Westpac Bank has high increment in the retained earnings. The share capital has increased to AUD $ 34627 million which is 18% higher since 2013. The reserve recorded of AMP also reveals the increment of 18% which has resulted to AUD $ 168 million. The retained earnings of AMP Company has also increased to AUD $ 16442 million which is .9% higher since last year. The reserve of Wetspac resulted to AUD $ 237 million in 2017 (Westpac Bank, 2017).

(Bendigo and Adelaide) (Amount in Million)	2014	2015	2015	2017
Share capital	4355	4233	4288	4448
Reserve	101	95	87.9	112
Retained earning	509	523	739	764

Bendigo and Adelaide has increased the retained earnings to AUD $ 764 million. The share capital has increased to AUD $ 4448 million which is 2.5 % higher since 2013. The share capital of Bendigo and Adelaide also reveals the increment of 3% which has resulted to AUD $ 448 million. The reserve of Bendigo and Adelaide has also increased to AUD $ 112 million which is .9% higher since last year.

The ordinary share capital is capital amount invested by shareholders. It is the also called owner’s equity.  The Westpac bank has kept high financial ordinary share capital resulted to AUD $ 34627 which is way too high as compared to other Banks.

It is equity instrument such as issue of share capital, share warrant, equity holding warrants. All these four banks do not have any other equity instrument in the equity part of the balance sheet.

It is the accumulation of the profit which has been kept by company for the particular purpose. The reserve amounting to AUD $ 1869 million is the highest reserve of the Common Wealth Bank and followed by Westpac and Bendigo and Adelaide.

Retained profits

It is the accumulation of the profit earned by company. The Westpac has kept highest and recorded AUD $ 17442 

It is the part of the capital structure which helps in determining the financial leverage and cost of capital of organization. All four banks and their capital structure have been analyzed.

AMP  (NAB) Debt and equity capital
Fiscal year ends in September. AUD in millions except per share data.	2013-09	2014-09	2015-09	2016-09	2017-09	TTM
Total stockholders’ equity	8385	8895	7541	7283	7284	52525
Total liabilities	126470	130813	132519	140802	737008	787425

The AMP bank has kept stable financial leverage. However, it has only 12% debt portion in its capital which is way too low. It should increase its financial leverage by issue of more debts. It will ultimately help Bank to lower down its cost of capital.

Common Wealth Bank Debt and equity capital
Fiscal year ends in September. AUD in millions except per share data.	2013-09	2014-09	2015-09	2016-09	2017-09	TTM
Total stockholders’ equity	42521	45521	45861	52521	52542	53542
Total liabilities	62122	67525	69521	70125	71245	78454

The debt and equity portion of Common Wealth Bank is way too high and it has kept 63% equity portion and 47% debt portion in its capital. It might result to high financial leverage. However, it has 47% debt portion in its capital which is way too high. It should lower down its financial leverage by issue of more equity.

Westpac Debt and equity capital
Fiscal year ends in September. AUD in millions except per share data.	2013-09	2014-09	2015-09	2016-09	2017-09	TTM
Total stockholders’ equity	35251	38451	39852	39925	42528	56565
Total liabilities	55251	56845	58754	62457	70241	78524

The Westpac bank has kept stable financial leverage. It has kept 31% equity portion and 69% debt portion in its capital. It might risk the sustainability of business. However, it has 69% debt portion in its capital which is way too high. It should lower down its financial leverage by issue of more equity (Mwangi, and Murigu, 2015).

Bendigo And Adelaii Bank Debt and equity capital
Fiscal year ends in September. AUD in millions except per share data.	2013-09	2014-09	2015-09	2016-09	2017-09	TTM
Total stockholders’ equity	4966	494	5115	5425	54545	78454
Total liabilities	60096	61087	63457	65989	65869	712055

The Bendigo And Adelaii Bank has kept high financial leverage by keeping 59% debt portion in its capital. It might risk the sustainability of business (Bendigo and Adelaii Bank 2017). It has increased throughout the time which is negative indicator if Bendigo And Adelaii Bank fails to have profitable business (Schaltegger, & Burritt, (2017).

Conclusion

After evaluating the debt to equity ratio of these four banks, it could be inferred that Common Wealth bank and Westpac are having the optimum capital structure. It will assist organization to strengthen its overall business functioning and increasing the overall quality. In addition to this, Bendigo And Adelaii Bank may have negative indicator if Bendigo And Adelaii Bank fails to have profitable business in terms of its sustainability.  

References

AMP Bank, (2018) Annual Report [online] Available from https://shareholder.anz.com/pages/annual-report-archive., [Accessed on 25th September 2018]

Bendigo and Adelaii Bank (2017)., Annual report., [Online]., Available from https://www.bendigoadelaide.com.au/public/shareholders/annual_reports.asp,  [Accessed 25th September, 2018].

Bhimani, A., Silvola, H., & Sivabalan, P. (2016). Voluntary corporate social responsibility reporting: A study of early and late reporter motivations and outcomes. Journal of Management Accounting Research, 28(2), 77-101.

Commonwealth Bank, (2018) Annual Report [online] Available from https://www.commbank.com.au/content/dam/commbank/about-us/shareholders/pdfs/annual-reports/annual_report_2017_14_aug_2017.pdf [Accessed on 25th September 2018]

Ehiedu, V.C., 2014. The impact of liquidity on profitability of some selected companies: The financial statement analysis (FSA) approach. Research Journal of Finance and Accounting, 5(5), pp.81-90.

Flannery, M.J., 2016. Stabilizing large financial institutions with contingent capital certificates. Quarterly Journal of Finance, 6(02), p.16-106.

Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. 2^nd ed, Australia: John Wiley & Sons.

Morris, R. D. (2017). Discussion of: The Phoenix Rises: The Australian Accounting Standards Board and IFRS Adoption. Journal of International Accounting Research, 16(2), 155-157.

Mwangi, M. and Murigu, J.W., 2015. The determinants of financial performance in general insurance companies in Kenya. European Scientific Journal, ESJ, 11(1).81-90.

Schaltegger, S., & Burritt, R. (2017). Contemporary environmental accounting: issues, concepts and practice. Routledge.

Westpac Bank, (2018) Annual Report [online] Available from https://www.google.co.in/search?ei=LEyjW-3hBs-hyAOMp56oBA&q=wetpac+bank+annual+report&oq=wetpac+bank+annual+report&gs_l=psy-ab.3..0i13k1l3j0i13i30k1l2j0i22i30k1l5.2063.4535.0.4630.14.11.0.0.0.0.288.1327.2-5.5.0….0…1.1.64.psy-ab..9.5.1320….0.3S0qMxJ0Rz0., [Accessed on 25th September 2018]