ANZ was alleged to set the interest rates on business and other commercial loans to the benefit of the bank. Australian Securities and Investments Commission started to investigate this breach in March 2016. ASIC is the regulator of the financial market, which is responsible to provide a fair and transparent financial market and protect the interests of investors.
1.a) How should business and other commercial loans be reported in ANZ 2016 financial statements? Your answer should refer to supporting paragraphs presented in relevant accounting standards.
b) Will ANZ need to report ASIC allegation regarding Bank Bill Swap Rate (BBSW) in 2016 financial statements? How should this be reported? You should provide appropriate paragraphs from AASBs as evidence of your answers.
c) Identify and explain two (2) factors relevant to banking sector that would impact on the value of financial assets in ANZ.
ANZ are required to pay $212,500 by ASIC for breaching the lending laws and market manipulations when it offered ANZ assured overdraft to its customers.
$212,500 penalty for breaching responsible lending laws when offering overdraft
2.a) How should the fine payment be recorded and reported in ANZ financial statements?
Explain your answers with supporting paragraphs from relevant accounting standards.
2.b) How would ASIC investigation over ANZ assured overdraft be reported in ANZ 2015 and 2016 annual report?
It was reported that ANZ is exposed to bad debt risk due to high debt ratio in energy and oil service companies, according to SMH article ANZ, CBA face debt risk as energy producers
3.a) What is the appropriate accounting treatment for ANZ to write off bad loans from its books as shown in 2016 financial statements? Explain and support your answers by relevant paragraphs of AASBs and 2016 annual report.
b) Discuss the impact of the potential default on ANZ future year financial position and performance.