ITC35/AASB Invitation to Comment - Disclosure Initiative – Principles of Disclosure - Financial Assignment

Internal Code: MAS5016

Principals Of Disclosure - Financial Assignment

Discuss which of the seven principles of effective communication you feel are lacking the most in the note disclosures contained in the 2016 financial reports of Westpac and ANZ (and hence which principles you think that the IASB needs to put the most work into, in order to make significant improvements to communication in financial reports). State whether you think that the guidance on the use of formatting in the financial statements (as discussed in section 2.16 – 2.22 of the Discussion Paper) should be developed, and whether you think that it would improve the effectiveness of information communicated in the notes. Explain why or why not. One of the projects that the International Accounting Standards Board (IASB) is currently undertaking is the Disclosure Initiative project, with the aim of improving communication in financial reports. The IASB has identified three main concerns about disclosures in financial statements, namely: there is not enough relevant information in the notes, there is irrelevant information in the notes, and there is ineffective communication of the information provided. The IASB released a discussion paper in March 2017, DP 2017/1 ‘Disclosure Initiative – Principles of Disclosure’ and is currently seeking feedback on the disclosure issues identified and on the Board’s preliminary views on how to address them. You are an investor who, for years, has struggled to work through and understand all of the note disclosures when analysing and comparing the financial reports of companies that you are considering investing in. You are currently considering investing in either Westpac Group or ANZ. After reviewing and comparing the note disclosures provided in their 2016 annual reports, you plan to make a submission in response to the IASB’s discussion paper. In your submission, you plan to provide feedback in response to ‘Section 2 – Principles of Effective Communication’ of the discussion paper, given the difficulties that you have faced due to ineffective communication in financial reports. In section 2 of the Discussion Paper, the IASB has proposed that a set of principles of effective communication be developed. The seven principles identified in the Discussion Paper are that information in the financial reports should be Questions: 1.Discuss which of the seven principles of effective communication you feel are lacking the most in the note disclosures contained in the 2016 financial reports of Westpac and ANZ (and hence which principles you think that the IASB needs to put the most work into, in order to make significant improvements to communication in financial reports). 2. State whether you think that the guidance on the use of formatting in the financial statements (as discussed in section 2.16 – 2.22 of the Discussion Paper) should be developed, and whether you think that it would improve the effectiveness of information communicated in the notes. Explain why or why not.