Executive remuneration and community concerns
QBE insurance service is identified as one of the most well-known general insurance and reinsurance companies in the world, with its operations in key insurance markets. The company has been further seen to be listed in the Australian Securities Exchange, headquartered in Sydney. The company is seen to employ more than 14,500 people in 37 countries. The report aims to discuss on various facets of the notes to the financial statement, remuneration report and auditors report.
The recognition of executive remuneration and concerns for the community has been seen with incentive structures aligned with the evolving corporate strategy of QBE. The main recognition process for executive remuneration has been considered with consultation from the independent advisers, internal stakeholder, external stakeholder, and regulators. The profitability aspect of the company has discerned with strong alignment between incentive outcomes and performance (Suhányiová et al. 2015)
As per the proposed economic policy and the large tax cuts for the business as well as individuals, the additional spending on defence and infrastructure has been viewed with infrastructure and defence pertaining to the new trade barrier. The spending on the infrastructural facilities by the company is conducive only in the short term and treated as a short-term decision making (NEAG 2016).
The GPFR aspect of the reporting has been maintained with preparation of the financial report in accordance with “Australian Accounting Standards Board (AASB)”, “International Financial Reporting Standards (IFRS)” which has been duly issues by IASB and “Corporations Act 2001”. The report has followed historic cost basis with measurement of the derivative and investments at a fair value and measuring the net outstanding claims for the liabilities at present value (Marabel-Romo et al. 2017).
The various types of the values of the financial report has been further seen to be presented in terms of U.S. Dollars. It has been further discerned that the various types of the values presented are rounded to the nearest million dollars, which is seen to be in accordance with the “ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191”.
The trade and other receivables are considered as the amounts which are primarily owned by QBE with the various types of the policy holders or reinsurance counterparts. In addition to this, the unclosed premium receivables are estimated with the amounts due with QBE for which the group must face several risks (Ebert and Wiesen 2014).
As per the information provided in the balance sheet, the medium-term note issuance in May 2016 allowed QBE to issue senior unsecured notes and total amount qualifying for $ 4 billion medium term notes. Moreover, the tender exchange for £325 million tier 2 subordinated on 24 May 2041 (Menegatti, 2014).
Overview of economic policy and spending on infrastructure and defense
Based on the analysis of consolidated balance sheet it has been discerned that the company has been able to maintain the overall amount for property plant and equipment from 2015 to 2016. This has been evident with an amount of 263 in 2015 which reduced to 257 in 2016. Based on the information of the consolidated cash flows, under the investing activities the company is seen to consider the proceeds from Property Plant and Equipment.
The main form of tools for depreciation and amortisation of the asset is taken into account with “AASB 2014–4, Clarification of Acceptable Methods of Depreciation and Amortisation”. The computation method for depreciation has been further applied with straight line method. This has been seen to vary between 20% to 100% and 50% and 100% (Jouini, Napp and Nocetti 2013).
The company excludes the adverse impacts which is caused by lower risk-free rates and discount on the various types of the outstanding claims for the liability. This is further combined with operating ratio with significant increase from 93.2% from 94.3% 1 in 2015 and compares favourably with our 2016 targeted combined operating ratio range of 94-95%.
The recognition of the leases for QBE is done as per the guidelines prescribed under AASB 16. This ensures that the leases are classified based on their nature as either finance leases. This has been recognition of all the leases in the balance sheet in form of the right of the use of asset which corresponds to the finance leases. The various types of the low value assets and leases has been further seen to be considered with a term of 12 moths. The new standard application has been classified under operating leases of the group (Rossing 2014).
The intangible and other non-cash items have been valuated as per the carrying value of the intangibles. This carrying value has been further based on the costs associated purchase activities.
In general, the group is exposed to the contingent liabilities, which are in relation to the litigation arising from insurance and reinsurance of the transactions. This may be further considered exposed to the possibility of contingent liability into non-insurance litigation. In normal course, if the expected liability is seen to become probable then the provision is recognised (Breaban, van de Kuilen and Noussair 2016).
The main features of the revenue recognition have been seen with fair representation of the same. This has been seen to be considered as per the premium charged for providing coverage for insurance services. The premiums are classified as direct or those paid by the policyholder to the insurer. QBE’s revenue is seen to be considered as per the capacity of the independent directors (Bauer, O’Brien and Saeed 2014).
Preparation of financial report and adherence to accounting standards
The company is seen to review the structures of insurance as per the ongoing assumptions of market expectations and developments by the legislations. The different activities pertaining to the sales return has been seen to be considered as per ROE forecasts and implemented with the drive plan achievability.
To maintain a fair representation of the wages the key remedial initiative has been comprised with revised policy terms and conditions. This has been further aided with improved risk selection process and focused supplier management. The motes to the financial statement has been also seen to include the pre-tax amortisation expense is included in underwriting expenses (M?ciuc?, Hlaciuc and Ursache 2015).
The important approach of QBE for the recognition of the investment risk has been evident with the achievement of the pre-defined risk under taxation. The main strategy has been seen with the requirement for the taxation strategy with business strategy of QBE.
The various types of the policies for the transactional serviced has been taken onto consideration as per adjustment done with North American operation. This allows the management to automatically supervise the liabilities.
As QBE complies to all the required guidelines prescribed under the “Australian Accounting Standards Board (AASB)” and “International Financial Reporting Standards (IFRS), the reporting of the various types of the financial information is discerned to be fair.
The adherence to the conceptual framework has been evident with preparation of the financial report in accordance with “Australian Accounting Standards Board (AASB)”, “International Financial Reporting Standards (IFRS)” which has been duly issues by IASB and “Corporations Act 2001”. The report has followed historic cost basis with measurement of the derivative and investments at a fair value and measuring the net outstanding claims for the liabilities at present value.
Conclusion
The main recognition process for executive remuneration has been considered with consultation from the independent advisers, internal stakeholder, external stakeholder, and regulators. The spending on the infrastructural facilities by the company is conducive only in the short term and treated as a short-term decision making. Trade and other receivables are considered as the amounts which are primarily owned by QBE with the various types of the policy holders or reinsurance counterparts. Based on the analysis of consolidated balance sheet it has been discerned that the company has been able to maintain the overall amount for property plant and equipment from 2015 to 2016. The computation method for depreciation has been further applied with straight line method.
Values in U.S. dollars and rounding
This has been seen to vary between 20% to 100% and 50% and 100%. QBE excludes the adverse impacts which is caused by lower risk-free rates and discount on the various types of the outstanding claims for the liability. The recognition of the leases for QBE is done as per the guidelines prescribed under AASB 16. This ensures that the leases are classified based on their nature as either finance leases. The intangible and other non-cash items have been valuated as per the carrying value of the intangibles. This carrying value has been further based on the costs associated purchase activities.The premiums for the revenues are classified as direct or those paid by the policyholder to the insurer. QBE’s revenue is seen to be considered as per the capacity of the independent directors. The important approach of QBE for the recognition of the investment risk has been evident with the achievement of the pre-defined risk under taxation.
Reference
Bauer, A. M., O’Brien, P. C. and Saeed, U. (2014) ‘Reliability Makes Accounting Relevant: A Comment on the IASB Conceptual Framework Project’, Accounting in Europe, 11(2), pp. 211–217. doi: 10.1080/17449480.2014.967789.
Breaban, A., van de Kuilen, G. and Noussair, C. N. (2016) ‘Prudence, emotional state, personality, and cognitive ability’, Frontiers in Psychology, 7(OCT). doi: 10.3389/fpsyg.2016.01688.
Ebert, S. and Wiesen, D. (2014) ‘Joint measurement of risk aversion, prudence, and temperance’, Journal of Risk and Uncertainty, 48(3), pp. 231–252. doi: 10.1007/s11166-014-9193-0.
Jouini, E., Napp, C. and Nocetti, D. (2013) ‘On multivariate prudence’, Journal of Economic Theory, 148(3), pp. 1255–1267. doi: 10.1016/j.jet.2012.10.007.
M?ciuc?, G., Hlaciuc, E. and Ursache, A. (2015) ‘The Role of Prudence in Financial Reporting: IFRS versus Directive 34’, Procedia Economics and Finance, 32, pp. 738–744. doi: 10.1016/S2212-5671(15)01456-2.
Marabel-Romo, J. et al. (2017) ‘Fair value accounting in the absence of prudence in accounting standards: an illustration with exotic derivatives’, Spanish Journal of Finance and Accounting / Revista Española de Financiación y Contabilidad, 46(2), pp. 145–167. doi: 10.1080/02102412.2016.1258027.
Menegatti, M. (2014) ‘New results on the relationship among risk aversion, prudence and temperance’, European Journal of Operational Research, 232(3), pp. 613–617. doi: 10.1016/j.ejor.2013.08.003.
NEAG, R. (2016) ‘CONSERVATIVE ACCOUNTING PRACTICE – EMPIRICAL EVIDENCE ON THE PROVISIONS PRESENTED IN THE FINANCIAL STATEMENTS OF LISTED COMPANIES ON BUCHAREST STOCK EXCHANGE.’, Juridical Current, 19(4), pp. 52–63. Available at: https://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=120476226&lang=pt-br&site=eds-live&authtype=uid.
Rossing, J. P. (2014) ‘Prudence and Racial Humor: Troubling Epithets’, Critical Studies in Media Communication, 31(4), pp. 299–313. doi: 10.1080/15295036.2013.864046.
Suhányiová, A. et al. (2015) ‘Application of the Principle of Prudence in the Accounting of Slovak Businesses through the Creation of Adjusting Entries for Receivables’, Procedia Economics and Finance, 34, pp. 311–318. doi: 10.1016/S2212-5671(15)01635-4.
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