AAF042-6 Financial reporting and analysis Assignment Sample
Module code and Title: AAF042-6 Financial reporting and analysis Assignment Sample
1. Introduction
Financial reports are referred to as the most essential documents of the company as based on the estimated financial statements and the reports the essential business decisions are made. Apart from that, the financial reports are further analyzed to determine whether from its operation the company is attaining loss or incurring profit. In other words, it can be said that with the help of financial reports and their analysis the financial health of the company is measured. The paper further involves necessary description in context to the background and objectives of NatWest Group plc. Apart from that the policies of corporate governance and its strength and weakness have also been discussed.
2. Brief discussion regarding the background of NatWest Group plc along with its key objectives
NatWest Group plc is identified as the company that operates banking and insurance holding organizations in the different regions of the UK. It is generally based in Edinburgh, Scotland. According to further information, it is articulated that the NatWest Group plc provides different types of banking services. It also offers personal and business banking services, private banking services, investment banking services, corporate finance and insurance service. It is further ordained that the company is owned by the investments department of the UK government. Moreover, it is recognized that it is also referred to as the bank that maintains the relationship of the banking sector with that of the digital world.
The main aim of the company is to break the financial barriers and build confidence among the people and entrepreneurs of the UK. The firm further provides services in every region of the UK and Ireland. Moreover, as per the viewpoint of the company if the customers attain success, then it reflects that the company is also attaining success. The organization further involves certain different banks that operate under the guidance of NatWest Group plc. The different subsidiary banks of NatWest Group plc are Royal Bank of Scotland, Ulster Bank, Coutts, and Child and Co. Drummonds. The slogan of the company is “We are what we do” (NatWest group. com, 2022).
On a further note, it is notified that the priority of the company is to maintain a good and highest standard of business integrity, professionalism and corporate governance. Concerning the priorities, it is also examined that the firm is focused on its goals and objectives and that can also be referred to as the reason behind the long-term sustainability of the company. The objective of the firm is to proponent potential, and provides effective assistance to its clients.
3. Limitations of the organizational accounting standard to maintain a regulatory framework
The chosen organization is Natwest Group plc which is a banking organization that provides banking services in Scotland. The accounting standards are the process or the structure that is used in this company to deal with all the accounting and organizational activity. However, the accounting standard is not able to provide a complete regulatory framework in the organization. As argued by Aswar, and Saidin, (2018), the accounting standards are a process that provides support to the organization to build accounting development. The local accounting standards are not able to maintain the complete development in the global market to build the development in organizational developments.
Relation with regulation with the accounting standards
Regulations frameworks are the accounting practices to build or develop organizations to build organizational development by providing guidance and development. As argued by Sundvik, (2019), these accounting standards are able to develop the rules in the accounting captivity to maintain similarity and authenticity in the accounting activity.
There are four main elements used in this accounting activity to develop or maintain materiality, consistency, objectivity and prudence in their accounting practices. In the regulation developing actions, the accounting standards are able to provide the support and the help to develop the regulatory factors. The main reason for using the accounting standards in the accounting framework is to build accountability in the chosen organization.
The regulatory framework of the organization develops the rules and the regulation to increase the potential of the accountability of the chosen organization. As argued by Wibowo et al. (2019), the company law, accounting standards and conceptual framework are the most important elements that are caused in this research to build the development of the organization.
The accounting standards are used in this research as the regulatory framework, but it is not able to provide a complete understanding of the advantages to maintain the organizational activity. There are also limitations to using the accounting standards as the regulatory framework. The limitations or the reason for not using accounting standards as the regulatory framework are mentioned below.
Limitations of the accounting standards to make the regulatory framework.
The accounting standards are the guidance or the structure that is used in accounting activity to build the development in the global markets to build the development in accounting activity. As argued by Gao, (2022), the accounting standards can be used as the regulatory framework in the organization to build or maintain accountability. However, there are limitations that are appearing to develop the regulatory framework in the organization to build accountability and sustainability in the global markets.
Maintain the law
The accounting standards are able to provide support to maintain accountability and accuracy in the finance-related activity of the organization. The accounting standards may be used as the regulatory framework, but it is not able to overwrite or change the law of the organization. It does not have the authority and the stability in the organization to build or develop the regulatory framework. As argued by Jurakulovna and Hodorovich, (2021), accounting standards do not have the authority or the capability to take participation in the two overwrites of national laws and regulations.
The organization does not use the accounting standards to find out the regulatory issues that have to be changed. The accounting standards are specialized as the accounting framework to develop all the accounting actions for the organization to maintain flexibility and provide guidance.
Flexibility
The accounting standards are able to maintain all the accounting functions and are able to provide flexibility in the organization to maintain the financial activity. However, in the case of developing the regulatory framework the accounting standards are able to perform or use flexibility in the regulation development.
As argued by Khan et al. (2020), the regulatory framework is a list of rules, and the limitations of the organization’s accounting standards are not able to use the accounting knowledge to develop the regulatory framework. The use of the accounting standards is able to provide the necessary data that is required to maintain the regulatory framework.
Expensive
The use of the accounting standards as the regulatory framework is an important action and these actions are able to maintain organizational development. However, using the accounting standards to maintain or develop the regulatory framework is an expensive activity (Cordery et al. 2019). Many small organizations are not able to perform this activity in the organizational action to develop the regulatory framework. The traditional process of developing the regulatory framework is much easier and less expensive compared to the use of accounting standards.
4. Necessity of corporate reporting in context to the capital markets
Corporate reporting is reporting and it is a combination of all kinds of organizational reporting like corporate governance, Integrated Reporting, Financial Reporting, and corporate responsibilities. According to Orazalin, (2019), this reporting is the most important element of the organization to build or develop the values of stakeholders to build the responsibility of the development. This reporting is able to maintain development by providing complete information about the organization.
Corporate reporting is mainly developed in the organization to provide important information about the finances, management, corporate governance and the responsibility of the organization. The main objective is to develop corporate reporting to attract investors and shareholders. This is an important element in the financial purport of the organization and this reporting can provide help for the organization to build the development in the capital markets. The importance of corporate reporting is:
Complete understanding of the organizational position
Good corporate reporting can connect the resources and the capital restructures of the organization to increase the number of investors. The shareholders and the interested investors use the corporate reports to develop a complete understanding of the organization to make decisions about the investments. As per the viewpoint of Lewis and Young, (2019), corporate reporting provides details about the statements about the organization to build development in the organization to attract investors.
In the corporate reporting, the financial position of the organization is provided and these details are able to maintain the progress of the organization to attract investors. Not only the financial information but the information related to corporate governance and the corporation’s responsibilities are also mentioned in this report. This reporting is able to maintain the progress in the organization by developing the details about all kinds of information related to the organization. This information is important in the capital market and forces the organization to develop capital from the capital market.
Trust building
The organization used this process to develop the organization to build trust in the capital market on behalf of the organization. The trust-building activity can develop the organization’s position by increasing the number of investors and shareholders (La Torre et al. 2018). This activity develops or increases the capital of the organization and provides support to maintain progress in the organization.
Corporate reporting is able to develop the organization’s position by maintaining or providing the organizational financial data to build or develop the organizational position to maintain the progress in the capital market. Corporate reporting is able to maintain the authenticity of the organization to increase the investment in the chosen organization. Corporate reporting provides support to the organization to build trust in the organization’s development.
Indicators of the organizational performances
Corporate accounting is a report that is able to provide complete data about the organization and its current performances. As per the viewpoint of Abuselidze, (2018), the capital structures the financial progress can be determined by using this reporting in the global markets. In order to understand the financial stability, the investors can rely on the corporates reporting in the decision-making activity. This reporting is able to maintain the development activity in the organizations and provide help to bring the capital to the organization.
As argued by Kılıç and Kuzey, (2018), the capital structure of the organization is displayed in this research to build development in the global markets. Financial performances are an important factor for the investors and the corporate reporting is able to develop a complete understanding of the organization. The main function of this reporting is to provide complete details about the organizational performances and remove the queries of the investors about the investment.
Importance in the capital market
Corporate reporting provides important details about the cushion organization and helps the organization to build the development to increase the capital. As argued by La Torre et al. (2018), investors are able to take all kinds of necessary data to perform investment activities in the global market. Financial and corporate data are available in this financial reporting and the organization can develop the financial reporting as an accounting practice.
The organization is able to get investors for the capital market with the help of corporate reporting and the other investors are capable of understanding the organization’s potential to critically evaluate the possibilities and scope of development of the organization through corporate reporting (Unerman et al. 2018). In the capital market, the corporate reporting performed as the information provided is able to influence and attract new customers to the organization.
5. Critical analysis and discussion regarding the corporate governance
Corporate governance is identified as the system or method through which business companies are controlled and directed regarding their operation (Khatib, and Nour 2021). In the business company, the board of directors is considered responsible for the governance of the business operations. Different stakeholders play different roles in the business organization in the context of corporate governance. It is articulated that the shareholders of the company also play an important and significant role in the governance of the company.
The directors and auditors of the business organization are appointed by the shareholders of the company (Almaqtari et al. 2020). It is also the role of the shareholders to satisfy themselves that the governance structure of the company is effective. Corporate governance further involves different types of principles that play an important role in the governance and controlling of the operations of the business organization. More details concerning the principles of corporate governance have been provided below.
Discipline: Corporate governance is also demonstrated as the commitment that is made by the senior management department of the company. The commitment is further pursued to adhere to the organizational behavior. The commitments are further accepted and recognized to ensure higher efficiency of the company. In other words, it can be said that the implication of discipline in the business organization is necessary to bring out correctness and authentication in the working procedure (De et al. 2019).
Lucidity: In the business, transparency or lucidity is very essential as concerning and analyzing the transparent feature of the business the outsiders make meaningful decisions (Acharya et al. 2018). Lucidity in the business as per the corporate governance viewpoint is also referred to as the appropriate non-financial aspect and the economic fundamental aspect of the business. With the help of transparency, it is measured whether the management of the company is good or not. As per further discussion and research, it is identified that the business activities need to be transparent so that inspection and effective decisions can be formulated easily.
Independence: Moreover, it is perceived that independence is demonstrated as a significant mechanism of corporate governance that is placed in the business operation or in the organization to avoid potential conflicts of interest that might occur. According to the provided illustration, it is advocated that as per the principle of corporate governance the firm should be independent in context to make an effective and profitable decision to minimize any sort of conflicts in the business (Gao, and Yu 2020).
Responsibility: Concerning the management of the company it is ordained that the responsibility management or the implication of responsibility policy is very essential to ensure that the activities are being performed effectively. In the business procedure, it is essential to ensure responsible management to ensure that the company is on the right path (Visnjic et al. 2018).
Accountability: According to the policies of corporate governance it is advocated that in a company it is important to inspect the individuals who make effective business decisions for their decisions and activity. It is further recognized that in the business organisation mechanism must exist and it must also allow accountability to ensure effectiveness (Mittelstadt et al. 2019).
Fairness: It is further essential to balance the systems of the company by identifying the systems that have an interest in the company and its goals and objectives. In other words, it can be said that it is essential to maintain fairness in the business operation to ensure that all the activities are being performed as per the goals and objectives of the business.
Social responsibility: It is also a role or responsibility of the organisation to maintain good and effective relationships with society (Ciobanu, 2021). It is also a kind of job of the organization to look after and respond to social issues on ethical standards. It is further articulated that by maintaining a good social responsibility the company can further experience indirect economic benefits.
6. Identification and analysis of some of the major strengths and weaknesses of current cost accounting
Cost accounting is identified as the method of financial accounting through which the cost incurred in the business can be recorded (Napier, and Stadler 2020). Further, the cost accounting report is also analyzed and based on the analysis the management improvement decisions are formulated. Based on the provided illustration it is further advocated that in the business management or whole managing the financial status of the company cost accounting plays an important role. It further involves certain advantages and disadvantages that have been provided below in great detail.
| Advantages of cost accounting | The disadvantage of cost accounting |
| It helps in the assistance of business management. | The weakness of the cost accounting method is that it only records the past activities of the business. |
| Moreover, it is articulated that the strength of the cost accounting system is it helps the business organization to reduce unwanted business costs. | Another weakness or disadvantage that is identified is that the cost of the commodities fluctuates every year due to which making an effective business decision concerning the cost accounts becomes very risky. |
| Further, it is perceived that the method of cost accounting also obliges the business to forecast its financial reports. | Effective cost accounting further also requires proper maintenance (Yagi, and Kokubu 2019). |
| Cost accounting also helps the business or the managerial department of an organization to prepare or construct the financial statements of the business. | To record reliable data in cost accounting expertise guidance is required. |
| With the help of cost accounting procedures, the possibility of fraud in the business can also be reduced easily and to a great extent. | It is also referred to as a complex procedure. |
| Cost accounting further obliges the administrative department to inspect and detect any loop in the financial stability of the business. | The maintenance of cost accounting also requires high-cost maintenance. |
| Moreover, concerning the reports of cost accounting, the loss or profit of the business can be determined easily (Ichsan et al. 2021). | In some cases, the cost accounting report is also found unreliable. |
Table 1: Strengths and weakness of cost accounting (Source: Self-developed)
7. Conclusion
Concerning the provided description and the overall research, it is identified that business reports and their analysis are very important in the business organization to ensure that all the activities are being performed effectively and as per the goals and objectives of the business. Moreover, it is concluded that to make the business profitable it is important to analyze and maintain its financial reports.
In context to NatWest Group plc, it is identified that it is one of the most reputed organizations in the UK therefore to make the operations more effective it is important to maintain its financial statements. Concerning the corporate governance policies, it is concluded that in the business the implementation of such policies is very important to enhance the position of the business.
References
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