Explaining your accounts

I have mentioned in class that companies can use voluntary disclosure to explain how the accounting rules impact on their results, and also that we have seen examples of this with the adoption of A-IFRS accounting standards in Australia.

Here's one example - Westpac provided this presentation in April 2007 (note - link to pdf file).

St George Westpac takeover

Seems not all St George shareholders are happy with Westpac's proposed takeover. Here's one of the major shareholders, Orion Asset Management's Dushko Bajic, reported in The Oz.

St George had not indicated its opinion of its value. "I find it frightening that the board has not identified its own valuation of St George as a stand-alone entity. How can you be sure of the value of Westpac's scrip and, even more outlandishly, the value of a merged St George/Westpac scrip, when you haven't established your own valuation of your own stock?

"And by the way, it's not good enough to draft in an independent expert after the event -- you've already set the goalposts," he said.

Seems a fair complaint. Note though that simply providing an independent expert's report will not solve everything. See prior posts here.

A-IFRS / Westpac

Many companies are claiming that the move to A-IFRS accounting standards has made it harder to 'understand' their financial results. In my opinion, it is therefore incumbent upon these companies to explain their results to the market. Westpac has done a good job of this with their Accounting Workshop presentation back in April 2007. It nicely explains how their results are calculated and presented under A-IFRS, and how this has changed from previous standards. It maintains Westpac's good record on disclosure matters. Hopefully we will see more companies doing this sort of thing. Link to pdf file of the presenation here.