Introduction in the shares of commbank (Wolk, H.

Introduction

The selected
companies in this case are both Commonwealth bank and ANZ. They are both well-known
banks and have accounting standards, policies and procedures that are disclosed
for the sake of investment and the public who want to review the company in
terms of their structural capability and how the management is able to make
accounting decisions and the overall financial positions for the two companies
together with the assets and the liabilities of the companies at this given
point of time (Commonwealth Bank (2000).

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Commbank
products as disclosed in the information website include transactional accounts
for the clients, savings accounts, credit cards, personal loans, insurance,
term deposits, international payments and premier and private. Commbank is located
in Australia but remains a multinational bank with numerous branches and the
online banking services available for the clients from all over the world.

The share
price is publicly traded and the public can always view the share price and
make a choice on whether to invest or not to invest in the shares of commbank
(Wolk, H. I. 2016).

Some of the
products offered by ANZ as a company include what most of the banking companies
offer and include business access, loans and finance, insurance, international
business, merchants, credit cards and online banking. ANZ is based in Australia
but has its services available to all the clients either inside or outside
Australia. Being a part of the Australia and New Zealand group, the bank is
hence enlisted in the stock exchange and has its shares being traded publicly
(Underdown, B. 2011). .

Part One; Accounting Policies

The
Commonwealth Bank is authorized as an institution that takes deposits form its
clients and hence is regulated by the Australian Prudential Regulation
Authority as provided by the Banking Act of 1959. Hence, information regarding
capital adequacy, Risk Weighted Asset (RWA) as applied in the various forms of
risks that might be experienced in the day to day banking activities of
Commonwealth Bank ranging from the credit risks such as market risks all
through the rate of interest risk and the operational risks. Capital adequacy
assessment is done and reported on a level two basis as a policy in the group
policies, this means that exclusion is made on the insurance and the management
of the various entities and business through which securitization of the assets
belonging to Commonwealth bank is done (Scott, W. R. (2017).

Commonwealth
bank ensures that its policies are often aligned against the existing
regulatory standards as well as making considerations regarding the
developments on both the Australian standards 
as well as the global policies and the procedures applied
internationally, hence the world’s global policy practice remains key and
important to the Commonwealth accounting practices. Regarding the Risk Weighted
Assets, the accounting policy approach for its calculation is based on AIRB
approach where internal assessments are made or supervisory formulas are
developed in the bank and considered where relevant. The risk management
framework for the Commonwealth bank is mainly based on a dynamic nature; this
includes the risk appetite levels where the outcomes are adjusted on a daily
basis while establishing and maintaining the appropriate risk controls in the
company (Hightower, R. (2008).

The risk
management policies in the bank include a risk-adjusted-performance measurement
in the bank and an internal capital adequacy assessment process used in
conjunction with other risk management processes.

The various
accounting policies and procedures keenly observed in Australia and New Zealand
banking group include financial statements preparation according to the
requirements of companies’ act of 1993, Financial Markets Conduct Act of 2013
and it does cover and include the main and the sub branches of ANZ. The various
compliance policies for ANZ include:

·        
New Zealand’s generally accepted
accounting practices.

·        
New Zealand in conjunction with
the various international financial reporting standards(NZ IFRS)

·        
International Financial Reporting
Standards adherence (IFRS).

·        
Preparation of financial
information with a basis on historical cost.

·        
 Rounding off of the financial information to
the nearest one million dollars.

·        
Application of the equity method
while accounting for the associated to the banking company.

In the
valuation of the various assets of ANZ, the accounting consideration is made in
accordance with the policy that they are measured at a fair value through the
profit or loss.  The assets belonging to ANZ
represents the various investments backing the insurance policy for the bank
and hence the elimination and the reduction of the measurement of the
recognition of the inconsistency that would arise from the measurement of the
assets (Tiffin, R. (2007). . There also exists the use of the fair value
as the basis for the measurement of the various performances as well as the
valuations of the assets belonging to ANZ. A review on the comparison between
the accounting policies for ANZ and Commonwealth bank shows that most of the
accounting practices by both banks are derived from the international standards
as well as the banking acts that exist in Australia. Both policies as provided
by the Australian standards as well as the global standards are keenly observed
by both ANZ and the Commonwealth bank. In terms of the risk management in both
banks, the policies provide for a criterion where a day to day basis of the
determination of the risk levels while applying the day to day analysis of the
risk levels encountered in the bank, it can also be noted that regarding the
Risk Weighted Assets, the accounting policy approach for its calculation is
based on AIRB approach where internal assessments are made or supervisory
formulas are developed both Commonwealth banks and ANZ and the consequent
considerations are made on the decision making process of the banks.

As a
conclusion from the various theories regarding the policies that applies to the
various accounting policies, it is true to say that the various companies
should use similar accounting policies whenever necessary. The same accounting
policies and standards should be observed amongst the companies that undertake
the same operations such as in the case of Commonwealth bank and ANZ, this is
due to the fact that both companies deal in the same kind of products and
services and operate on the same basis whether locally or internationally. The
accounting policies used by both banks are majorly drawn from similar
legislation and acts whether in Australia or globally, hence it would be
advantageous to the clients and the customers of the companies if only a level
ground from which the policies regarding the accounting procedures was adopted.

It can also
be noted that having similar policies regarding accounting procedures will go a
long way in ensuring that competition is fair and that the financial reporting
by the various companies is based on the same basis hence eliminating cases
where investors bypass other companies on the basis of the items on the
financial statements.

Adoption of
similar financial policies will also help in ensuring that the assets valuation
procedures is similar and hence having a level ground in the various asset
classes in the balance sheet while considering the fact that appreciation or
depreciation of the various classes are based on the same policies and ration
making it easier to doe financial reporting and make a comparison between
companies that participate in the same market segment or the same products and
services.

Companies in
the same geographical location and the same area of operation such as ANZ and
Commonwealth bank have the same kind of products and services and to the same
segment of customers, elimination of unfair competition due to overvalued or
undervalued assets and components of the financial statements can only be
avoided through the use of the same accounting policies and standards in the
companies. The ratios used in the calculation of the various risks, asset
valuations and all ratios affecting the assets in the financial statement
should be based on the same accounting policies and standards.