ACCT5015 Contemporary Issues in Accounting Assignments

ACCT5015 Contemporary Issues in Accounting Assignments

ACCT5015 Contemporary Issues in Accounting Assignments

Identification of the Two Companies in Brief

The two companies, which have been selected for the same industry of Banking, are the Australian Finance Group, from the Australian Securities Exchange (ASX) and the Agricultural Development Bank Ltd. listed under the Nepal Stock exchange Ltd. The former company i.e. Australian Finance Group acts as a mortgage broker to its customers. There are more services that are offered by the company to its clients such as personal loans, mortgage brokerage services, commercial financial services and insurances. Throughout Australia, this particular bank serves majorly for the institutions, individuals and organizations. The company has started its operations in the year 1994 with its headquarters based in West Perth of Australia (Bloomberg L.P., 2018). Agricultural Development Bank Ltd. is another company, which has been taken from the country of Nepal. This bank serve as a cooperative bank, which is aims to provide proper and required banking solutions to the people. The services that are offered by this bank to its clients fall in the dimensions of saving accounts, current and fixed deposit accounts. The company has therefore been founded in the year 1968, which mainly operates in Kathmandu, Nepal (Bloomberg L.P., 2018 a).

Comparison of the Basis of Preparation of the Financial Statements

Financial statements are prepared so as to be able to accurately present the financial reports by the company’s management. This further helps to identify the financial performance and position of the company at a specific period of time. There lies a great future of financial statements in the future days (Barth, 2006). It actually serves as a guide that can enable the business professionals to understand the financial situations of the organizations throughout the financial years (Ittelson, 2009). The basis of preparation of the financial statements in the Australian Finance Group are divided into five major factors, which involves the statement of compliance, functional and presentation currency, basis of measurement, alterations in disclosures and accounting policies and lastly through the utilization of judgments and estimates (AFG, 2017).

Firstly, in the statement of compliance, a company’s financial report complies with the International Accounting Standards (IFRS) and Australian Accounting Standards as issued by the International Accounting Standards Board. The financial statement of a company incorporates the consolidated financial statements. Secondly, the factor named functional and presentation currency precisely identifies that these consolidated financial statements have been presented in Australian Dollars. The third factor that constitutes the basis of measurement identifies the fact that the consolidated financial statements are formed on the basis of the historical cost except in case of some of the material items, which primarily comprises the payables and the receivables, which are related to the trailing commission and are firstly measured at fair value followed by amortised cost. The fourth factor deals with the changes taking place in accounting policies and disclosures. The accounting policies that are implemented in the financial statements are mostly dependent on the previous year, except in two cases, the first of which includes acceptance of revised and new accounting standards, while in the second cases, the interpretations and accounting standards are issued but are not effective till date. The last factor that explains the preparation of the financial statements involves utilization of judgments and estimates. It actually identifies the preparation of the financial statements in accordance with the AASBs, which compels the management to form assumptions, estimates and judgments that would have a direct influence on the implementation of accounting policies and amounts of expenses and income along with the liabilities and assets (AFG, 2017).

The financial statement of Agricultural Development Bank Ltd is consolidated type. It comprises all the factors that are required to be present in the financial statement. It consists of total capital and liabilities, total assets, net interest income, total operating income, operating profit before provision, operating profit, profit from regular activities, profit before bonus and taxes and lastly the net profit or loss that is attained by the company. It also provides a thorough understanding of the financial statement of the company, which makes it easy for the decision-makers to access it at the time of urgency (Agricultural Development Bank Limited, 2017). On the other hand, the financial statement as presented by the Australian finance group, points out the necessities of the financial statements, which are associated with the company. It precisely identifies the assets, liabilities, net assets and equity, which misses out to represent the income that has been gained by the company and creates a hurdle for the decision makers or the investors to evaluate it properly (AFG, 2017).

Source: (Agricultural Development Bank Limited, 2017)

Source: (AFG, 2017)

Comparison On The Basis Of the Accounting Policies in the Companies

The accounting policies that are implemented by Australian Finance Group Limited are performed on the basis of consolidation. The financial statement of the company is managed by the company and its subsidiaries. The control is imposed by the company in situations, where the institution imposed power over the investee or at situations, in which the company has the potential of utilizing its power electonics to influence the returns (AFG 2017).

The accounting standards that are followed in the Agricultural Development Bank Ltd. are entirely based on the Accounting Standards Board (ASB). It is actually an independent body that has been established based on the requirements of Nepal Chartered Accountants Act of 1997. The objective that is oriented with ASB is this that it tends to serve the interest of the public by evolving the accounting standards for the country of Nepal so that it can be successfully used in the preparation of the financial statements (Agricultural Development Bank Limited 2017).

References

1. AFG 2017, ‘Annual report’, Afgonline, pp. 1-78.
2. Agricultural Development Bank Limited 2017, ‘Annual report 2073’, Doc, pp. 1-106.
3. Barth, M.E., 2006, ‘Including estimates of the future in today's financial statements’, Accounting Horizons, vol. 20, no. 3, pp. 271-285.
4. Bloomberg L.P., 2018 a, Company overview of agricultural development bank limited, Bloomberg, viewed 26 September 2018, <https://www.bloomberg.com/research method/stocks/private/snapshot.asp?privcapid=59462892>
5. Bloomberg L.P., 2018, Company overview of Australian finance group limited, Bloomberg, viewed 26 September 2018. <https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapid=22815461>.
6. Ittelson, T.R., 2009, A step-by-step guide to understanding and creating financial reports, Career Press, USA