Review Wespac Banking annual report Essay Example

The Westpac Group Annual Report 2010

Westpac Group is an Australian based banking institution with branches in various countries all over the world. As at end of September 2010, Westpac Group was ranked fifth among companies listed in the Australian Securities Exchange Limited. It incorporates five major divisions namely, the Westpac Retail and Business Banking, Westpac Institutional Bank, St. George Bank, New Zealand Banking and the BT Financial Group Australia (The Westpac Group, 2011, para. 4). This article focuses on analysis of the company’s annual report for the year 2010.

There are various financial accounting standards that are important in the process of evaluating the value of any given company. Companies have a set of rules called the Generally Accepted Accounting Principles, which they follow in preparation of their financial statements. They are a set of standards that provides a road map on what should constitute a financial statement. Preparation of financial statements becomes the primary concern of any accounting process. There are four components of financial statements (White, 2010, para. 3). They include a balance sheet, an income statement, statement of cash flows and notes to financial statements.

First, a balance sheet is a crucial document that gives comprehensive information on the company’s assets, liabilities and equity. The balance is based on a fundamental financial equation which suggests that; total amount of assets should be equal to the sum of total liabilities and the shareholder’s equity. Assets are materials that a company owns and have value such as physical properties and account receivables (White, 2010, para. 9). Income statement is the other financial document that provides the outcome of a firm’s operations over a particular time frame. Besides, another financial document known as the statement of cash flows is used to link a balance sheet and the income statement of an organization. It helps to give information about an organization’s inflows and outflows.

Another component that is important in financial statements involves inclusion of notes to the financial reports. This is the information which is normally added to financial report to provide further explanation of the firm’s financial operations (Westpac Group, 2010, p. 134). The additional information sheds more light on the long-term debt, financial auditing of environmental liabilities and company branches in other areas as well as insubstantial assets.

Finally, the other aspect included in financial accounting standards is the auditor’s report. This is a document containing information that attests to the status of an organization’s financial statement. An audit report helps to present audit information to the entire group of shareholders, for the time period mentioned under the audit. The report clarifies that the information of the organization represents a true picture of the situation of the firm (Sharma and Kumar, 2005, p. 306). It also helps creditors and potential investors with credible information regarding the financial status of the company.

In a nut shell, an audit report summarizes and gives credibility to all the financial information about the company. It is a very important document where the auditor gives the scale and nature of the audit and at the same time, it provides recommendations regarding the financial status of the organization being addressed. Nevertheless, it should be noted that the audit report can never be a guarantor in securing credit facilities. The report does not certify that every information contained in the books of account is correct.

In order to meet the required accounting standards, a company is expected to have detailed information in terms of additional notes to the financial statements. The importance of the details is to assist those who are not well acquainted with some terminologies and other complexities, be in a position to understand them. Examples of additional notes include explanatory notes already mentioned above as well as a summary of accounting policies (Westpac Group, 2010, p. 134). A summary of accounting policies is usually provided in the first note to the financial report. It is also presented differently before the notes. The summary of the accounting policies provides information about the principles of accounting employed in preparation of the financial statements.

Inclusion of additional notes to financial statements helps not only in calculation of specific particulars of the financial statements, but also provides a detailed explanation of the financial situation of the company. These notes comprise information on debt, dependent liabilities, and shareholder’s equity among others. Information contained in the notes helps to clarify issues that are unclear in addition to complementing financial statements (Westpac Group, 2010, p. 137). For instance, if an organization suffers a loss on a particular asset due to its damage, information from the note will elaborate the cause and status of damage to the asset.

At Westpac Group, information provided through the additional notes helps the shareholders, creditors and other interested stakeholders such as financial institutions to understand better, the status and operations of the company. Additionally, items in the financial statements that are valued through approximation further constitute the contents of the notes. The notes also include the variations existing between the estimated values and the actual financial results (Westpac Group, 2010, p. 144).

Financial reports should be offered in a manner that is precise and presentable. A balance sheet has several columns that are tailor-made for specified particulars which are supposed to be filled by specific information. Such a format helps in easier interpretation of the information contained in the financial document. If every detail was to be included in these reports, the information would become very much clouded. Therefore the additional information should be separately hidden in notes rather than be included in the financial report.

The notes should then be attached to the financial statement for clarification purposes. Adherence to the set of rules in preparing financial statements gives room for substantial amount of flexibility in reporting financial information (White, 2010, para. 5). Notes containing details on accounting principles and lease commitments among other information is important for disclosure and elaboration of crucial information.

Works Cited

The Westpac Group. «The Westpac Group: Company overview .» 2011. 12 September 2011 <http://www.westpac.com.au/about-westpac/the-westpac-group/company-overview/about-us/>.

Westpac Group. The Westpac Group Annual Report 2010. Annual Report. Sydney: Westpac Printers, 2010.

Sharma, Virender and Ravinder Kumar. Auditing: principles and practice. New Delhi: PHI Learning Pvt. Ltd, 2005.

White, Malcolm E. «Reporting Financial Results.» 2010. 11 September 2011 <http://www.middlecity.com/ch05.shtml>.