Accounting Analysis of the 2011 Annual Report for Bank of Queensland Limited

Topics: Balance sheet, Financial statements, Asset Pages: 7 (2293 words) Published: October 7, 2012
Table of Contents
1. Executive Summary2
2. Overview2
3. Description of key accounting policies and standards2
3.1 Loans and advances at amortised cost (Asset)2
3.2 Deposits and borrowing (Liability)2
3.3 Employee benefits (Expense)2
4. Flexibility of Management in Selecting the Key Accounting Policies3
4.1 Loan and Advances at Amortized Cost3
4.1.1 Flexibility Analysis3
4.1.2 Accounting policies analysis3
4.2 Deposits and Borrowing4
4.2.1 Flexibility Analysis4
4.2.2 Accounting Policies Analysis4
4.3 Employee Benefits4
4.3.1 Flexibility Analysis4
4.3.2 Accounting policy analysis4
5. Quality of Disclosure Made in BOQ Accounts5
5.1 Business Strategy and Economic Consequences5
5.2 Notes to the Financial Statements – Explanation of Policies5
5.3 Explanation of Current Performance5
5.4 Accounting / Financial Rules6
5.5 Segment Disclosure6
6. Questionable Accounting Numbers6
7. Undone Distortions7
8. Financial Press Discussions7
9. References8

1. Executive Summary
The aim of this report is to provide an accounting analysis of the 2011 annual report for Bank of Queensland Limited (BOQ), and a critique of the reporting of their performance. The report discusses the choice of accounting policies and the flexibility of these policies. The main objective of this report is to evaluate and recognise the possibility of using creative accounting within the company, recognise and questionable accounting numbers within items listed previously. A number of items have been selected from Income Statement, Balance Sheet and Cash Flow Statement. 2. Overview

Bank of Queensland Limited (BOQ), has history of 137 years with network of over 280 branches operating in Queensland. It offers core banking (commercial/retail), equipment finance, wealth management and insuranceservices. BOQ is listed on the ASX and uses its unique concept of the Owner-Managed Branch (OMB),a partnership between the Bank of Queensland (franchisor) and experienced bank managers (franchisees) to provide banking services. 3. Description of key accounting policies and standards

3.1 Loans and advances at amortised cost (Asset)
As shown on BOQ’s Balance sheet in FY11, loans and advances at amortised cost are big-ticket itemsin its assets accounting for approximately 98 per cent. According to the significant accounting policies explored by BOQ annual report 2011, loans and advances are originated by the bank and are recognised upon cash being advanced to the borrower. Based on AASB13, loans and advances are initially recognised at fair value plus incremental direct transaction cost using the effective interest method. 3.2 Deposits and borrowing (Liability)

Deposits, as the one of the most important cash inflows of the bank, follow ruleAASB13 as well. They are initially recognised at fair value plus transaction costs and thenby using the effective interest method, they are measured at amortised cost. It is classified in two concentrations: retail deposits and wholesale deposits. 3.3 Employee benefits (Expense)

This item follows AASB119Employee Benefits which has been amended in its accounting rules affecting the measurement of its obligations and the timing of recognition of termination benefits. Employee benefits can be classified to four categories: wages, salaries and annual leave; long service leave; superannuation plan and share based payments. 4. Flexibility of Management in Selecting the Key Accounting Policies It is undeniable that having flexiblemanagement can exert positive effects on the presentation of company’s annual financial report. Specifically, from the Bank of Queensland´s perspective, if mangers have considerable adaptability in selecting the key accounting policies, the financial performance of Bank of Queensland Ltd can be improved; therefore more investors and customers would give priority to cooperating with them in the future. 4.1 Loan and Advances at Amortized Cost


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