ISSUES IN FINANCIAL REPORTING

Issues in Financial Reporting

Issues in Financial Reporting

Company information

Commonwealth Bank of Australia (CBA) is the Australia's largest bank by assets and market capitalization. It offers a wide range of banking products for private and corporate clients, including mortgage loans, bank cards, savings accounts, insurance, pension, investment and brokerage services, fund management. CBA has the largest among the Australian banks' distribution network consisting of more than 1,000 branches and 4,000 automated teller machines (ATMs with Bank-West).

Financial reporting objectives

The basic financial statements must meet the objective of reporting on the financial situation of the company on a certain date and results of operations and changes in financial position for the accounting period ended on a certain date. The EF is a means of communicating the financial position and an ending that does not try to convince the reader of a certain viewpoint or position. The ability of EF is to transmit information to satisfy the user, and since there are various users of this information it should serve to:

Make investment decisions and credit, the main stakeholders of this information are those that can provide funding or granting credit to see how stable and growth of the company and thus know the yield or return on investment (Arnold, 2009, Pp. 34).

Assess key solvency and liquidity of the company and its ability to generate resources, stakeholders here are the different creditors and owners to measure the flow of money and performance. Assessing the origin and characteristics of the financial resources of the business and its performance, this area is of general interest to study the use of these resources. Finally form an opinion of how it has handled the business and evaluate the management of the administration, how to manage profitability, solvency and growth of the company. When financial information satisfies the general user is a person with some technical knowledge to form an opinion on:

The level of profitability

The financial position, including their solvency and liquidity

The financial capacity of growth

Cash flow

Notional

Fair Value

$ millions

Amount

Assets

Liabilities

As at 30 June 2010

Audited

HELD FOR TRADING

Exchange Rate Contracts

Forward Contracts

6,792

54

(64)

Options

78

2

(2)

Total Exchange Rate Contracts

6,870

56

(66)

Interest Rate Contracts

Forward Contracts

450

Swaps

53,751

1,236

(1,297)

Futures

5,496

2

(3)

Options

643

1

(1)

Total Interest Rate Contracts

60,340

1,239

(1,301)

Commodity Contracts

Options Purchased and Sold

24

Total held for Trading

67,234

1,296

(1,367)

OTHER DERIVATIVES AT FAIR VALUE THROUGH PROFIT OR LOSS

Exchange Rate Contracts

Forward Contracts

7,706

104

(91)

Swaps

8,800

198

(246)

Total Exchange Rate Contracts

16,506

302

(337)

Interest Rate Contracts

Forward Contracts

5,200

Swaps

22,035

151

(250)

Futures

1,365

(3)

Total Interest Rate Contracts

28,600

151

(253)

Total Other Derivatives at Fair Value through Profit or Loss

45,106

453

(590)

DESIGNATED AS CASH FLOW HEDGES

Exchange Rate Contracts

Swaps

3,719

42

(180)

Interest Rate Contracts

Swaps

23,500

162

(483)

Total Designated as Cash Flow Hedges

27,219

204

(663)

DESIGNATED AS FAIR VALUE HEDGES

Exchange Rate Contracts

Swaps ...