Essay: Medibank's Annual Report & Customer Dissatisfaction Analysis.

The company is medibank so you must refer to annual report of the company . Make sure you focus on plagiarism.

Discussion

The assessment aims to evaluate the annual report of Medibank for the year 2018 for the purpose of assessing the conceptual framework which is followed by the business. The assessment also aims to analyze a new article which is related to the company and the article is related to the dissatisfaction of the customers and also loss of market shares from the core products of the business. The article clearly states that the business is well run by a successful management but the business is not able to satisfy the customers with the core product which is offered by the business and therefore tend to lose out on market shares.

Medibank is regarded as one of the leading private health insurer company which provides different range of health insurance services to the clients as per the requirements of the clients. The company has a range of brands and also ahm brands along with different types of health services which is offered by the business across Australia (Medibank.com.au. 2018). The company has vast experience of 40 years in delivering better health services to the resident of Australia. The company is estimated to cover around more than 3.7 million customers through Medibank and ahm brands.

The issue which is faced by the business is related to compliance with the AASB standards ion reporting which is minor in nature but the major problem is the lack of proper services which is provided to the customers of the business and therefore the business in recent times has faced record breaking complaints from clients.

There have been significant changes which are being brought about by AASB in reporting framework in order to comply with the IFRS standards (Nobes 2014). These are important in order to ensure that the business has protection from frauds and errors in a business. The management of Medibank company needs to follow conceptual framework while reporting financial information of the business.

The assessment aims to show the problems and issues which are faced by Medibank Company and also establish whether the business has followed conceptual framework while reporting of financial information. In addition to this, the assessment would be including the stakeholder’s theory which will state the responsibility of the business towards the clients.

                                           Overview of the Problem Faced by Medibank

                                              Source: (Australian Financial Review. 2018)

                  Image showing Changes in the Market Price of the Share of Medibank Company

                                      Source: (Australian Financial Review. 2018)

The above figures shows that the business of Medibank is significantly affected by fall in the share prices of the business and also there is an issue that the business has inefficient client management system which is the main reason that the customers of the business are dissatisfied with the services which is provided by the business. The above graph shows that the share prices of the business increases, however the company is losing out on market shares which is a major concern for the business (Australian Financial Review. 2018). The main reason due to which the business is losing out on market shares is due to unaffordable prices which is charged by the business for the health services which is offered by the business and also due to the ineffective customer grievance system. This can be attributed as the major reasons for the fall in the market shares of the business (Weil, Schipper and Francis 2013). The management of the company needs to focus on maintaining the market shares and also ensure that the business is customer oriented in order to maintain the status which the company has in Australian market. The high prices which is charged for the health services is the reason why some of the customers are switching products or even opting for the competitor’s products.

Issues/ Problems faced by the Business

In a business, a general conceptual framework is required to be followed by businesses in case of reporting for financial information in the annual report of the business. The annual report of Medibank for the year 2018 shows that the business has followed all relevant accounting standards which are applicable to the business for the purpose of preparing the financial statements of the business (Beattie and Smith 2013). The annual report of the business also confirms that the business has appropriately followed all rules and regulations of Corporations Act 2001 and also with all requirements of AASB (Palea 2013). The financial information is also presented in the standard manner as classified as items of income statements, balance sheet and cash flow statement respectively.

                                      Image showing Disclosures of Annual Report of Medibank

                                                   Source: (Medibank.com.au. 2018)

The above image which is shown reflects that the business of Medibank appropriately follows all relevant accounting standards for the year 2018 and the business has prepared the financial reports complying with all Australian regulations.

The management of the company has also shown the five elements of the conceptual framework which are income, expenses, assets, liabilities and equity in appropriate manner and in respective statement. In addition to this, the management has also provided a list of accounting standards which is followed by the business in preparing the financial statements and also provided appropriate disclosures for all transactions which are undertaken by the business (Henderson et al. 2015). The business has also appropriately reported on different segments and reporting criteria which is followed by the business in financial reporting. The annual report which is prepared by the management of the company shows that all relevant segments and reporting which is required as per insurance accounting standard is followed by the business.

The annual reports of the business is as per conceptual framework which is generally followed for the purpose of reporting of key information in the financial statement of the business (Zeff 2013). The conceptual framework states that the annual report which is prepared by the business should contain fundamental and enhancing qualitative characteristics in order to ensure that the financial reports contains all the valuable information of the business.

The fundamental qualitative characteristics states that a business needs include information which are faithfully represented in the annual report of the business and also information which are relevant for the process of decision making (Barth 2013). The annual report which is prepared by Medibank Ltd for the year 2018 shows that all relevant information which is related to the business is appropriately included in the financial statements. The information which are included in the financial statement would help the users of the financial statement to effectively take decisions for the business. The annual report of the business also faithfully represents the information which are accurate and the same is confirmed by the report of the auditor.

The enhancing qualitative characteristics of a financial reports are understandability, comparability, verifiability and timeliness. These characteristics allow the business to further enhance the quality of reporting which is included in the annual reports of the business. The annual report of Medibank company shows that the information which are included are easily understandable as the business has included all the relevant information in the form of disclosures (Abernathy et al. 2014). The information which is included in the annual report are also verifiable and comparable in nature and therefore the same confirms with the conceptual framework of the business. Thus, it can be said that the annual report which is prepared by the business of Medibank appropriately follows fundamental and enhancing qualitative characteristics which should be present in an annual report.

Accounting Requirements

The theories which are applicable to the business and which are related to the problems which are faced by the business are discussed below:

• Agency Theory: The theory states that the organization should be considered as an agency and the same represent association with complicated groups of contracts and due to this the agency costs increases which is mainly owing to such contracts and various aspects which are included in such contracts. As per this theory, the management of the Medibank company should act as an agent of the business of Medibank. The theory also states that the management should take all the decisions with regard to the benefit of the organization (Bosse and Phillips 2016). As per the problem which is faced by the business of Medibank, the business losing out on market shares which is a serious concern and the management needs to formulate plans which reverse such a situation (Song, Wang and Cavusgil 2015). The management can give confidence to the shareholders that all relevant accounting standards are being followed and the business is including all information in the financial reporting framework so that the confidence of the public is restored in the company.
• Stakeholder Theory: The theory states that the stakeholders are the main concerns for the business and they have legitimate interest in the overall operations of the business. The theory further states that the stakeholders of the business should be made a primary concern for the management while taking any decisions. In other words, the stakeholder’s interest is to be considered while undertaking any activity of the business (Jensen 2017). One of the main problems which is faced by the business of Medibank is that the business does not effectively solve the grievances of the shareholders of the business and thereby the customers are highly dissatisfied with the company. The stakeholder theory states that the interest of the stakeholders which also includes the shareholders should be the primary concern for the business. The management needs to follow strategies which would ensure that the shareholders of the business are satisfied with the business.

The theories which are discussed above shows that the shareholders of the company are the major concerns for the business. Both agency theory and stakeholder’s theory aim at ensuring that the interest of the shareholders are the primary concerns. The main problems which are faced by the shareholders of the business are related to the shareholders itself and therefore the management needs to formulate strategies in order to ensure that the shareholders are satisfied with the overall management and reporting framework which is followed by the business.

The management of Medibank Company needs to formulate strategies which can help the business to restore the confidence of the public in the company and thereby also lead to increase the market share of the business. The management can effectively prepare the annual reports of the business following all relevant AASB accounting standards and generally accepted framework for the purpose of reporting of financial information. The information that are contained in the annual report should be accurate and relevant so that the users of the financial statement can use them for the purpose of taking decisions for the business. This strategy would invoke confidence in the stakeholders of the business and ensure that the management of the company is maintaining transparency in reporting and thereby attract and retain investors.

The management needs to formulate strategies in such a manner that the customers of the business is satisfied with the services which is provided by the business. The management needs to reduce the complaints and effectively respond to the needs of the shareholders. This will help the business in restoring the confidence of the public and thereby increase the market share of the business.

Conclusion

The above discussion clearly show that the business of Medibank effectively follows all relevant accounting standards and conceptual framework for the purpose of reporting of financial information of a business. The above discussion also shows significant problems which are faced by the business which is related to fall in the market share of the business and dissatisfaction of the customers of the business. The theories which are linked to the problems faced by the business are Stakeholder Theory and Agency theory and the management need to follow such theories in order to take care of the problems and issues which is faced by the business. The assessment concludes with recommendation as to how the business can restore the confidence of the public.

Reference

Abernathy, J.L., Beyer, B., Masli, A. and Stefaniak, C., 2014. The association between characteristics of audit committee accounting experts, audit committee chairs, and financial reporting timeliness. Advances in Accounting, 30(2), pp.283-297.

Australian Financial Review. (2018). Medibank at mercy of structural headwinds. [online] Available at: https://www.afr.com/business/banking-and-finance/bull-and-bears-medibank-at-mercy-of-structural-headwinds-20180202-h0sesb [Accessed 20 Dec. 2018].

Barth, M.E., 2013. Measurement in financial reporting: The need for concepts. Accounting Horizons, 28(2), pp.331-352.

Beattie, V. and Smith, S.J., 2013. Value creation and business models: refocusing the intellectual capital debate. The British Accounting Review, 45(4), pp.243-254.

Bosse, D.A. and Phillips, R.A., 2016. Agency theory and bounded self-interest. Academy of Management Review, 41(2), pp.276-297.

Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial accounting. Pearson Higher Education AU.

Jensen, M.C., 2017. Value maximisation, stakeholder theory and the corporate objective function. In Unfolding stakeholder thinking (pp. 65-84). Routledge.

Medibank.com.au. (2018). [online] Available at: https://www.medibank.com.au/content/dam/medibank/About-Us/pdfs/Medibank_Annual_Report_2018.pdf [Accessed 20 Dec. 2018].

Nobes, C., 2014. International classification of financial reporting. Routledge.

Palea, V., 2013. IAS/IFRS and financial reporting quality: lessons from the European experience. China Journal of Accounting Research, 6(4), pp.247-263.

Song, J., Wang, R. and Cavusgil, S.T., 2015. State ownership and market orientation in China's public firms: An agency theory perspective. International Business Review, 24(4), pp.690-699.

Weil, R.L., Schipper, K. and Francis, J., 2013. Financial accounting: an introduction to concepts, methods and uses. Cengage Learning.

Zeff, S.A., 2013. The objectives of financial reporting: a historical survey and analysis. Accounting and Business Research, 43(4), pp.262-327.