There are two main sections in the Bank of America annual report of the 2010. These include shareholders’ report, and financial review sections (Bank of America, 2010). The shareholders’ report section starts with a report to the shareholders from the Chief Executive Officer, Brian Moynihan. In this sub-section, the CEO reports to the shareholders about the company’s mission, vision, principles, and strategies. In addition, the CEO describes the company’s goal for the year 2010. The CEO’s report is followed by the Board’s report, which is written and signed by the Chairman of the Board. Other sub-sections include the bank’s reports concerning online and mobile banking, wealth management, financing of small businesses, business expansion financing, equity and debt capital raising, and global research. The financial review section is comprised of financial statements of the year 2010: statement of financial position, income statement, cash flow statement, and statement of retained earning. Other sub-sections are made of explanations of the items reported in the aforementioned financial statements (Bank of America, 2010).
According to the CEO’s report to the shareholders, the key factors that influenced the bank’s financial performance during the year were the global economic downturn in mortgage financing, and the company’s emphasis on strengthening its balance sheet (Bank of America, 2010). The CEO states that the collapse of Lehman Bothers in 2007, which led to the global economic crisis in 2008, had a major effect on the bank. The bank had issued quite a number of mortgages to families across the US, UK and Canada. Due to the economic crisis, many of the families were unable to finance their mortgages in 2008 and 2009. This affected the bank’s balance sheet and the income statement negatively. However, the CEO states that the bank had started to record progress since the beginning of the year 2010. On the other hand, the CEO reports that the bank has been capitalizing on strengthening its balance sheet, through focusing on equity capital as opposed to debt financing (Bank of America, 2010).
A review of the bank’s balance sheet for the year 2010 indicates that the bank has four major assets. They include federal funds sold and securities borrowed under agreements to resell, debt securities, loans and leases, and trading account assets. In the year 2010, the total value of the bank’s assets was US$2,264,909 millions. The value of federal funds sold and securities borrowed was US$209, 616 millions, US$194,671 for trading account assets, US$940,440 for loans and leases, and US$338,054 for debt securities. The value of other assets, including properties, plants, and equipments, was US$624,013 millions.
The Board’s report, by the Chairman of the board indicates that the management of the Bank of America played an important role in ensuring the bank’s financial statements for the year were prepared in conformity to the generally accepted accounting principles/standards. In every organization, the role of management in internal controls is to develop, implement, and maintain internal controls, which are used to ensure compliance with financial reporting laws and regulations, and efficiency in financial operations (Management Responsibility in Internal Control, 2004). The role of the management at the Bank of America is to identify improvement areas within the organization, to assess the adequacy of the existing internal control systems, and provide corrective actions in areas where problems are identified. For instance, in the credit control department, the management of the bank is involved in developing a system, which allows screening of a customer’s credit history, before such a customer is guaranteed a loan. In addition, the bank’s management works in liaison with the bank’s internal auditors, in ensuring that the accountants observe all the concepts of accounting, while preparing financial records. These concepts include materiality, prudence, consistency, revenue recognition, accrual, and matching concepts.