Factors Affecting The Australian Economy, Financial Sectors, Role Of Financial Institutions, Public Sector Bank

Activity 1

Australia is slowly rising as a global market player in today’s world economy. Though it is a relatively small open economy but the recent trends have shown much improvement in the growth curve of Australia’s economy. But still there are certain factors that have impacted the economy of Australia in the long run.

More specifically the rise in the global market price of the commodities led by the Chinese market has affected the Australian economy. This is because the sudden price rise has hit the two major exportable commodities of Australia that is coal and iron ore. This has hugely boosted the export prices of Australia. This though apparently looks like a good start for the Australian economy but as it is known these expansionary effects may result in an inflationary boom which is totally not healthy for a rising economy.

But thankfully this has not been the case with the Australian economy as the domestic demand has slowed down eventually and resorted to a sustainable pace. However there have been certain indications that the inflationary pressures are not bringing about the results as quickly as expected. This is majorly because of the housing sector in Australia. The rapid increase in the house prices and mortgage lending has led to an increase in house building activity. This effectively has slowed down the pace of the inflationary pressures.

Secondly another issue that affects the Australian economy is the labor markets. Flexibility of the labor markets can help in the growth of a healthy economy. Highly regulated labor markets often hamper the flow of work of the organizations thus affecting the economy in a negative way (Butlin 2013).

The three financial sectors that will be discussed below are commercial banks, investment banks and insurance companies.

Commercial banks play a major role in the financial sector. They accept deposits from the customers and in return provide financial security to them. They also serve their customers by providing them loans. Business holders can borrow loans from banks in order to expand or support their business. Commercial banks play an important role of channelizing the economic finance and controlling the flow of money in an economy.

Investment banks on the other hand though are called banks, act as a financial intermediary and perform a number of services for business and the government. These services namely are making markets, performing the role of an intermediary between the institution issuing securities and the investors and underwriting debt. They also provide advisory services to companies. Investment banks generally are less subjected to regulation in comparison to commercial banks.

Activity 2

Lastly insurance companies largely deal with the general public. This is because they provide services to individuals by collecting regular premiums from them for the purpose of protecting the individual himself or the near and dear ones against illness, death, or any other kind of issue. Insurance companies thus also play a major role in channelizing the inflow and outflow of cash in an economy (Joshi et al., 2013).

Answer to part a

Banks or authorized deposit taking institutions play an important role as a financial intermediary in the financial system of the economy. The major services provided by banks are that they act as a transferor of funds from savers to borrowers; they also provide financial security to its customers by safeguarding their money and paying an interest on them as well (Lodhia 2015).

Answer to part b

The role of insurance companies lies in the fact that they generate financial resources and provide them to the government and invest them in government securities and stock. The service provided by the particular sector is that they create funds by collecting funds from individuals or entities against protecting them from specified risks.

Answer to part c

A mortgage broker essentially plays the role of an intermediary by the process of brokering loans against mortgage on behalf of his clients. The services provided by a mortgage broker may be retail banking, corporate banking, land mortgage banking and investment banking.

Answer to part d

A person having enough knowledge about stocks or other securities may be hired by a company or an individual to buy or sell securities, such a person is known as a share broker. He may also be associated with a brokerage firm. He receives a fee or commission from his client and provides advisory and brokering services to his client (Lodhia 2015).

Answer to part e

Credit unions are essentially non-profit institutions that are especially created for the purpose of supporting the financially challenged group. They provide loans at a meager interest rate and even provide a competitively high rate of interest on the savings accounts of their customers. The services provided by a credit union revolve around providing loans and taking in deposits from its customers (Lodhia 2015).

Answer to part a

For the purpose of discussion the financial service provider that has been chosen is the public sector bank.

Answer to part b

The major responsibility of a public sector bank primarily revolves around the welfare of the public. Public sector banks are generally controlled by the Government as it holds the majority of shares of the entity. The rights and responsibilities of a public sector bank ranges from public welfare to providing the Government with an effective tool to control the cash flow in the economy.

Activity 3

The financial reporting in a public sector bank is done accurately in order to fulfill the gap between the bank and its external stakeholders. In other words the financial reporting is done in such a way that the external stakeholders get a clear view of the financial conditions of the entity so as to enable the stakeholders in taking decisions. For this purpose, the banks in Australia strictly follow the International Financial Reporting Standards as well as the standards set by the Australian accounting board. The consumer credit policies of the banks are also monitored and controlled by the regulations set by Australian Securities and Investments Commission (ASIC). In case of any consumer credit related issues or issues in relation to customer complaints, the matter is handled by the Australian Competition and Consumer Commission (ACCC). The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 also regulates the operations of a bank accordingly.

The banks maintain the privacy policy by adhering to certain acts and principles laid down for this purpose. These are the privacy act, 1988 and the Australian privacy principles (APPs). The banks also have an established code of conduct which is referred by each and every employee and constitutes of ethical principles strictly followed by the bank.

The public banks as mentioned by Government play a crucial role in performing their corporate social responsibility. The management of the banking body also take an initiative in picking up major environmental issues like global warming and invest a part of the collected funds in order to research and minimize the effect of such global calamities (Bronitt 2013).

Answer to part c

Yes the policies and practices followed by the banks are appropriate and seem very relevant. This is because the primary focus of a public sector bank is welfare of the common mass and all the laid down principles and guidelines seem to lead the bank towards that same goal.

They are sufficient but the only area where improvements can be made is that there should be a clear set of guidelines regarding the sustainability policies that has to be adopted by every bank so that this particular matter is handled by the management with utmost care and sincerity (Bronitt 2013).

Financial Regulator	Role	Financial information provided	This particular regulator addresses:	Recent decision taken
The Reserve Bank	It is the central bank of Australia. It structures the financial policies in order to build a strong financial system and issues currency.	The information that it provides that would be useful for an accountant is that the Reserve Bank regulates the financial policies of an economy thus sets a revised guideline of accounting according to the need of the nation (Stevens 2016).	Financial Services	The recent decision that has been taken by the Reserve bank is that it along with ASIC have welcomed the publication of ASX BBSW Trade and Trade Reporting Guideline.
Australian Securities and Investment Commission	It plays the role of regulating and establishing corporate policies and regulations in order to safeguard the consumers, creditors or investors of Australia.	The information that it provides that would be useful for an accountant is that it lays well researched methods in order to minimize errors in the financial statements (Schwartz 2013).	Consumer Credit	The recent decision that has been taken by ASIC is to cooperate with Swiss Financial Markets Authority in order to innovate the financial sector.
Australian Prudential Regulation Authority	It monitors a huge number of financial institutions like credit unions, banks, insurance companies and most members of the superannuation industry.	The information that it provides that would be useful for an accountant is that APRA acts a national statistical agency for the financial sector thus providing relevant data to an accountant (Schwartz 2013).	Financial Transaction Reporting	The recent action that has been undertaken by APRA is that it has discussed further on the role of Appointed Actuary and actuarial advice to the insurers.
Australian Taxation Office	The ATO is an agency of the Australian government responsible for monitoring the taxation system and collecting taxes.	The information that it provides that would be useful for an accountant is that it lays down the standards for levying taxes on individuals or entities (Schwartz 2013).	Corporation (Accounting Standard)
Australian Competition and Consumer Commission	The ACCC focuses primarily upon setting regulations in relation to business houses or companies in the Australian market in order to safeguard the investors, consumers and creditors.	The information that it provides that would be useful for an accountant is that it lays down clear and simple rules for businesses that have to be followed while preparing the accounting statements in order to favor the stakeholders of business.	Financial Transaction Reporting	The recent action undertaken by ACCC is that it has issued a draft in order to provide fee free ATM services in remote indigenous communities.
Australian Transaction Reports and Analysis Centre	The role of AUSTRAC lies in regulating anti-money laundering and counter terrorism financing.	The information that it provides that would be useful for an accountant is that it lays down the principles for mitigating fraudulent activities in the financial statements (Schwartz 2013).	Financial Transaction Reporting	The recent action undertaken by AUSTRAC is multimillion dollar plan in order to stop terror funding in South East Asia.

Answer to Part a

For the purpose of discussion the customer service policy of a gymnastics centre has been chosen. The key areas covered in it are identifying the needs of the customers; greeting them cheerfully and promptly; listening to the complaints, grievances or suggestions by customers with fullest sincerity and concentration; communicating about the problems and the actions taken by the management honestly and courteously to the customers.

Answer to Part b

Activity 4

Though most of the key areas have been covered by the customer service policy of the gymnastic centre but the part regarding the service provided to the customers and also strategy to retain customers have been omitted. Addition of policies subjected to these areas will make the customer service policy of the business perfect.   

Answer to Part c

The Customer Service Policy of Darwin would be such that it covers all the major areas that a customer or a consumer is usually worried with but most importantly it would lay down strict rules regarding behavior with the customers by the employees because that is what sets the impression of the business as a whole. The key areas in the customer service policy would be:

• Cheerful and positive behavior with the customers – Such a behavior would not only strengthen the image of an organization in front of its customers but would also help to retain the potential customers.
• Providing in-depth knowledge to any kind of query of the customers – The workers hired for the purpose of the business should be so trained that they acquire an in-depth knowledge about the organization, its service and other related associates.
• Listening to the customers – This is the most important pillar of a customer service policy. This is because listening to a customer with utmost sincerity solves more than half of the issue faced by a particular customer, he or she feels that the entity is really concerned with the trouble that the individual is facing and therefore feels relaxed and happy. Thus complaints, grievances or even general feedback by customers should be treated with utmost care.
• After sales service – The services provided to the customer both prior and post sales should be as promised. Rather the customers would be receiving a document specifying all the benefits that he would get post sales.
• Effective communication – Filling up of survey forms by the customers does not necessarily frame hold effective communication between the organization and its customers. Informing the customers about the steps taken to mitigate the problems faced by them. Initiating or inspiring customer opinion and communicating with them with absolute sincerity and truth so as to maintain a relationship of dignity and respect is very important.

Thus these are the key areas or headings that the customer service policy would include (Fan, Miao and Wu 2013).

In order to act as a role model the perfect reactions to the provided situations would be as following

As the petty cash fund is out by $3.75 dollars, this means that the fund has to be replenished with an amount that is determined by the company. For instance if the petty cash fund is determined to be maintained at a value of $80 and presently the petty cash is showing that it is out by $3.75 then a journal entry has to be passed debiting the expenses that were executed out of the petty cash fund and the cash account will be credited with that amount, thus replenishing the petty cash fund. But the problem lies in the fact that a petty cash fund is always replenished at the end of an accounting year as the expenses and other proceedings are recorded only after proper verification. Therefore the proper reaction on the part of a senior bookkeeper would be noting the specific expenses that were paid out of the petty cash fund and then inform the situation to his boss along with the explanation as to why the cash balance of the petty cash fund was not maintained and ask for recommendation regarding what further should be done.

When the senior bookkeeper observes that certain items that are listed on the bank statement have not been recorded in the system, he should immediately bring this to the notice of the management or his boss, but prior to that he should take a genuine effort to investigate the reason for such a grievous mistake. If this is due to his fault then he should rectify it and apologize to his boss for such a mistake but if the particular items have not been recorded due to reasons like that these items had not been forwarded by specific departments to the accounting department for the purpose of recording them in the books, then this feedback should be provided to the senior bookkeeper’s immediate boss or the management.

Activity 5

If the tax invoices are missing for checks written out then this should be consulted with the clerk or department responsible for authorizing the checks and then proper steps should be taken in order to mitigate these careless mistakes. Until and unless the tax invoices are passed the checks cannot be approved for payment.

Even if the business brings in a restaurant docket as because it is not related to the business clients this particular expense will not be recorded in the books of accounts of the company. This is because of the fact that this is a personal expense of the business owner and cannot be credited from the company funds. The business owner bringing the restaurant docket to the senior bookkeeper violates the code of ethics.

A laptop which was purchased for personal use but was put through for business should also not be included in the books of accounts. This is because purchasing a laptop for business purpose includes many steps like verifying the model, then approval from the management, collection of the purchase invoice and other related activities. Moreover the price a laptop purchased for the purpose of personal use should never be credited from the business funds.

The treatments for the components of the accounting statements have been stated in the Australian Accounting Standards Board. In case of errors in the financial statements the Australian Securities and Investment Commission also sets the standards for spotting or minimizing errors in the financial statements. The Corporations Act, 2001 can also be highlighted for this purpose. The errors like items that have not been recorded but appear in the banking statements are covered under the regulations laid down by the Australian Accounting Standards Board and the error of tax invoices missing is covered by the Australian Taxation Office.  

The issue with the restaurant docket and laptop purchased for personal use can be solved by referring to the ethical code for companies in Australia which is established by the government.

A professional development plan refers to a plan that is created in order to achieve progression in a particular career path. Setting up of a plan helps an individual to focus on the particular areas where he needs to concentrate in order to progress further. For the purpose of discussion the job for which a development plan has to be prepared is orator or public speaker. The table below presents the plan that is to be undertaken.

Development Goal	Actions To Be Taken (e.g. PD opportunities)	Due Date	Success Measure
Understanding the Basics	A public workshop for understanding the basics of public speaking should be undertaken. If needed more and more venues conducting similar programs should be attended. Public Speaking Australia being an institute of repute may be considered.	This entire workshop should not take more than six months.	After understanding the basics, the acquired skill should be practised in front of the mirror or a restricted audience.
Acquiring in depth knowledge	Read at least three to four books that list down the tips and tricks of being a public orator	This should not take more than a month.	Reading books should not only help an aspirant in learning the tips and tricks of the trade but also provide him with the required confidence boost.
Taking the final preparation	Attending a short term course on vocabulary and speaking skills and finally choosing the subject that truly interests the speaker and inspires him enough to speak on it.	This should not take more than three months	The entire process of acquainting oneself with speaking courses will make the aspirant familiar with the environment and will surely help him to come out of the initial fears.
Practising	Practising with friends and family and attending informal venues of public speaking.	This entire process should be continued for a period of two months.	After practising for two months, the aspirant will much hopefully become a professional public speaker and with the certificate of a globally acclaimed institution the individual will surely able to start a successful career.

According to the Tax Practitioner’s Board (TPB) a particular agent in order to maintain his or her license should have to fulfill certain given conditions. These conditions are that the agent should either have a minimum certificate IV in financial services along with a course approved by the Board in basic BAS taxation principles and a 1400 hours of related experience in the last four years or in addition to the previously mentioned conditions the agent should be a voting member of the recognized tax agent or BAS association which reduces the count of relevant work experience to 1000 hours in the last four years.

Annabelle as described in the question has completed the required courses to obtain a BAS license. She presently works for a second tier public practice but has received an offer from a local company to be the Finance Manager. Annabelle also has plans to start a business on her own using the BAS license. After reviewing the present conditions it is recommended that Annabelle should join the local company as a Finance Manager and obtain a work experience of 1400 hours in the next four years. This is because in order to reduce the work experience hours to 1000 hours Annabelle should be a voting member of a recognized BAS or tax agent association but as this is not the case Annabelle should join the local company. She should also not start her own business right now because it would take much more time to complete 1400 hours because of her being inexperienced in the related field and also that work experience as a BAS agent would not be considered by the Board (Doyle, Hughes and Summers 2013).

An ideal team as observed consisted of five members in total out of which three members are male while the other two members are female. This justifies the criteria of maintaining equity in gender in the team.  The team is a job team that is it has the responsibility of maintaining the accounts department of a specific organization. Out of the three gentlemen, John, Riley and Christian the fastest in spotting errors in financial statements is Christian. He is in charge of checking the accounts and spotting the respective errors. However when the task of rectifying these errors come, Christian loses his expertise, here is where Riley steps in. Once all the errors are spotted Riley does not take much time in resolving them. John’s area of expertise lies in the extraction of relevant data. For instance a particular sales entry has been credited in the sales account but no such information has been forwarded by the sales department to the accounting department. This gap in communication is removed by John by communicating the issue effectively by tracking back to the exact point where the miscommunication happened. The female members on the other hand, Joanne and Diana coordinate the entire process. Diana essentially looks into the implementation of internal controls in the organization, recording the trends in profits or losses due to the implementation of such controls. She also is in charge of chasing the irrecoverable debts of the company. Joanne on the other hand regulates and coordinates the work done by all the members of the department. She has a vast range of knowledge in all the domains of the accounting department and all the team members look up to her. She is an ideal role model for all of them and is a wonderful human being. Joanne as a leader holds the team together and has a keen eye over the issues faced by her team members. She is always ready to help and is a perfect leader altogether.

All the team members are very energetic and share a common wave length. This is the basic reason for the team to excel. Another reason is that each and every team member know their area of expertise and work accordingly in order to obtain desired results.

There are a number of instruments which are legislative in nature along with the regulatory bodies that monitor environmental regulation in Australia. The pollution control structure in Australia does not have a common assessment scale. This means that each and every project that is conducted by a specific organization has to be checked individually depending on the nature of the project, the component of the environment that is exposed to risk for this project and the processes undertaken by the particular organization in order to mitigate the risks.

After the implementation of the statutory legislations such as the National Greenhouse and Energy Reporting Act 2007 and the Clean Energy Legislation (Carbon Tax) Act 2014, the organizations have undertaken certain environmental implementation policies like using bio degradable materials for manufacturing the products. Recycling the waste produced by the companies in order to minimize their damaging rate has also been undertaken. Industries that deal with paper have reduced the wastes by reusing and recycling the paper waste.

Industries mainly dwelling in the energy sector has also shifted from choosing energy sources that are non-renewable in nature to renewable sources of energy.

The real estate industry has now focused on developing housing societies that are created in a sustainable and bio-diverse nature.

To summarize the importance of the environment has been integrated in almost all the processes undertaken by an organization in order to improve the sustainability policies of an organization (Benn, Dunphy and Griffiths 2014).

Answer to part a

Yes the Commonwealth Bank’s sustainability policy covers the environment, economy and society. This is because the Commonwealth Bank use paints and carpets that are highly recyclable. Even the kitchen wastes are recycled using a technology named Earth Power. These initiatives fulfill the environmental sustainability policies. Such sincere efforts taken by the bank is appreciated by the government by rewarding an amount of $5.1 million to the bank. This has made the bank an inspiration or ideal example for the society thus fulfilling the sustainable policies in regards to the society. Thirdly the bank has also constructed wind turbines on the top of a 41-storey tower resulting in a 30% improvement in energy efficiency, thus impacting the economy in a positive way. Thus it fulfills the sustainable policies in regards to the economy also.

Answer to part b

The bank is reducing their ecological footprint by using energy saving features in the bank. Food waste is also recycled by converting them into green energy and nutrient rich fertilizer. The other category of waste produced by the bank that is toner cartridges and spent light globes are recycled.

Answer to part c

By having environmentally designed office buildings the bank has created an ideal image in the society. Other banks in the society should follow the Commonwealth Bank in executing their sustainable policies. Therefore such efforts in the short term have collected huge appraisal from all sectors of the society. In the long term the bank employees get an environment that is perfect for working. Environmentally designed office buildings improve the working environment or surroundings of a particular employee thus boosting the rate of production of an employee, therefore positively impacting the organization in the long term.

Answer to part d

The Commonwealth Bank’s strategies involve green purchasing. This is because the bank resorts to utilization of products and services that have reduced damaging effects on the environment.

Answer to part e

The two other sources of renewable energy that banks might use are solar energy in the form of solar panels for generating electricity and biomass for the purpose of day to day proceedings of the bank.

Answer to part a

The tangible benefits that VicSuper’s policies have on the environment are that it has established a Sustainability Covenant to protect the environment. The policies also include utilization of energy efficient lights and giving up the e-waste to charities or recycling them.

In terms of the staff and local community VicSuper has taken enough initiative in conducting fundraising activities with local charities. It has also tried to make the community aware about the current issues faced by them in their daily lives and conduct discussions on how to resolve them.

Answer to part b

VicSuper’s approach impacts the profitability of the organization in a negative way. This is because the basic funding for supporting the sustainability policies is debited from the company’s own funds. Therefore in comparison to all the costs incurred like the cost for setting up energy efficient lights, recycling computer equipment, purchasing hybrid cars, the amount saved by using 8% less electricity is much less and do impact the profit in a negative way. But another point to be noted is that it is a not for profit fund.

Answer to part c

The challenges of applying Triple Bottom Line accounting is that though it is a sustainable accounting system, it shifts the focus of the company from profitability to welfare of the surrounding components. Therefore it is apt for profit organizations only.

TASK: (an example of a task you do/have done at work)	Matching the day’s expenses and income with the ones that are recorded in the books at the end of an working day.
Priority (how is this determined?)	It is a very important process that is done manually in order to mitigate the chances of material misstatement and fraud.
Time (how do you know how long it should take  you?)	It depends on the day’s business and expenses incurred and also on the complexity of the entries.
Timeframe (how is the due date determined? How long do you have?)	The time frame is till the entries for the next day are recorded.
Type of Technology used (Include planning tools)	The checking is done manually. However in order to check the amount that has come in accurately a note counting machine is utilized.
Use of other Resources	With the revolution of technology in the industrial sector a computerized accounting system is soon to be introduced in the business.
Working Conditions (where is the work carried out, what is the environment like?)	The work is carried out in a private room as much liquid cash is handled in the process. The environment of the room is employee friendly.

Yes it is a good method to organize and manage information. This is because it is focused upon making the entire process mechanized. Initiatives have been taken in order to make the working of employees easy and quick by removing the provision of hand written documents. A TO DO file is an excellent idea for chalking out the day’s plans by an employee and also helps him to self assess the percentage of tasks successfully completed by him within that day. Discarding the irrelevant information is also a commendable decision on the part of the bank. The only area of concern is that there should be a proper backing up system for backing up the important data that if deleted by mistake by an employee can be restored back without fail.

Answer to part a

The data from the Annual Report and the Reserve Bank of Australia tell about the growth of bank fee revenue over a period of the past 8 years that the revenue incurred from bank revenue has increased over the years especially from the business sector.

Answer to part b

No the bank fees have not increased in the same proportion as the rate of profit growth. The rate of  increase in the bank fees has always been more than the rate of increase in profit. This indicates that with increased profitability the bank has increased its fees that is more the profit more are the fees charged.

Answer to part c

The increase in bank fee revenue is the reflection of an increase in the volume of transactions.

Answer to part d

The average prices for banking services must decline in order to let the customers bank with less cost involved. The increase in bank fee is generating a negative impact on customer satisfaction which is absolutely not desirable and therefore the banking fee should be declined. 

References

Butlin, N.G., 2013. Investment in Australian economic development, 1861-1900. Cambridge University Press.

Joshi, M., Cahill, D., Sidhu, J. and Kansal, M., 2013. Intellectual capital and financial performance: an evaluation of the Australian financial sector. Journal of Intellectual Capital, 14(2), pp.264-285.

Ennew, C., Waite, N. and Waite, R., 2013. Financial services marketing: An international guide to principles and practice. Routledge.

Lodhia, S., 2015. Exploring the transition to integrated reporting through a practice lens: An Australian customer owned bank perspective. Journal of Business Ethics, 129(3), pp.585-598.

Bronitt, S.H., 2013. Policing Corruption and Corporations in Australia: Towards a New National Agenda.

Fan, Y.W., Miao, Y.F. and Wu, S.C., 2013. Customer complaints and service policy in electronic commerce. South African Journal of Business Management, 44(3), pp.15-20.

Doyle, E., Hughes, J.F. and Summers, B., 2013. An empirical analysis of the ethical reasoning of tax practitioners. Journal of Business Ethics, 114(2), pp.325-339.

Stevens, G., 2016. Reserve Bank of Australia. Education, 9, pp.4-0.

Schwartz, C., 2013. G20 Financial Regulatory Reforms and Australia. RBA Bulletin, September, pp.77-85.

Benn, S., Dunphy, D. and Griffiths, A., 2014. Organizational change for corporate sustainability. Routledge.