Chapter 1 History, current regulatory structures and processes

Prepared by Emma Holmes

Accounting standards in Australia - pre 2000

Pre 1976 various non mandatory guidance issued by ICAA, ASA and other bodies

1976
1984

Australian Accounting Research Foundation (AARF) established. Guidance non-binding.

Accounting Standards review Board (ASRB) established by the government. Role to review and approve AARF developed standards, which were mandatory under corporations law subject to true and fair override ASRB assumed responsibility for the development of accounting standards

1988

Accounting standards in Australia - pre 2000

1991 ASRB replaced by Australian Accounting Standards Board (AASB). True and fair override removed. Conceptual framework introduced. 1996 Plan for international harmonisation introduced 1997 Commencement of Corporate Law Economic Reform Program (CLERP)

Accounting standards in Australia- post 2000

Accounting standards in Australia - post 2000

Financial Reporting Council (FRC) Oversees AASB Australian Accounting Standards Board (AASB) Responsible for: development of the conceptual framework formulating accounting standards in accordance with the Corporations Act formulating accounting standards for other purposes (eg public and not-for-profit sectors)

Accounting standards in Australia - post 2000

Key objectives of developing accounting standards include:

To facilitate the development of accounting standards that require the provision of financial information that is relevant, reliable, understandable and facilitates comparability To facilitate the Australian economy by reducing the cost of capital, thus enabling Australian entities to compete effectively overseas
Maintaining investor confidence in the Australian economy and capital markets

Accounting standards in Australia - post 2000

Urgent Issues Group (UIG) Now disbanded International Financial Reporting Interpretations committee (IFRIC) now the sole body to interpret IFRS standards Previously issued UIG consensus views still applicable

Australian Securities and Investment Commission (ASIC) Corporate, market and financial services regulator Independent Government body Primary role to promoting confidence in the financial system by maintaining, improving and facilitating the performance of the financial system

Accounting standards in Australia - post 2000

Financial Reporting Panel (FRP) Commenced in 2006 Role is to resolve disputes between ASIC and companies concerning accounting treatments in their financial reports with the aim of removing the need to initiate legal proceedings in court. Australian Securities Exchange Limited (ASX) Operates the securities exchange Administers Listing Rules and requires adherence to rules by all listed entities

International accounting bodies pre 2000

International Accounting Standards Committee (IASC) Formed in 1972 Private sector non-government body Could not enforce standards that it had developed (referred to as International Accounting Standards- or IASs) By 2000 the International Organisation of Securities Commissions (IOSCO) recommended members adopt IAS rather than their GAAP

International accounting bodies post 2000

International Accounting Standards Board (IASB) Replaced the IASC in 2001 IASs => International Financial Reporting Standards (IFRSs) Independent, privately funded accounting standard setter Committed to the development of a single set of high quality, enforceable global accounting standards Currently involved in a project with the US Financial Accounting Standards Board (FASB) working towards convergence with US Standards

IASB FASB Convergence Program

International Accounting Bodies

Standards Advisory Council (SAC) Advises the IASB of priorities in its work Informs the IASB of the implications of proposed standards for users and preparers of financial statement International Financial Reporting Interpretations Committee (IFRIC) Sub-committee of the IASB Considers issues of widespread importance not covered in IFRS standards IFRIC interpretations are adapted by the AASB to suit the Australian environment

AASB accounting standards

AASB 1-99 AASB equivalents to IFRS standards issued by the IASB Have same number as their equivalent IASB standards IFRS 3 > AASB 3 Business Combinations AASB 101-199 AASB equivalents to IAS standards of the IASC Same number (+100) as their equivalent IAS standards IAS 16 > AASB 116 Property, plant & equipment

AASB accounting standards

AASB 1001-1099 Australian standards with no international equivalents Have same number as in previous AASB standard AASB 1031 Materiality AASB 2004 1 onwards Omnibus series Contain amendments to AASBs

Application of accounting standards

Australia A-IFRS standards apply to reporting entities Very broad scope Europe and UK IFRS apply to listed entities only Limited application

IASB/AASB Adopting international standards