Australian Accounting Setting Board Analysis

IASB. 2010, "The Conceptual Framework for Financial Reporting" IFRS, pp. A21- A38, viewed 23 April 2014,

UK’s IFRSs are designed to make it easier to compare the performance of organizations in different countries, rather than each country maintaining its own GAAP, which makes such comparisons difficult. All listed EU companies have been required to use IFRSs since 2005. The adoption of IFRSs by the private sector is expected to have various benefits for both companies and investors; including (1) UK’s IFRSs will remove the need for companies with foreign subsidiaries to translate the accounts for consolidation with the parent company accounts. Also (2) it will be easier for investors to make informed decisions about the performance of companies in different countries because of the increased transparency and a better understanding of financial statements.

Despite those enormous advantages, it has been argued that IFRSS adoption lead to significant costs. The main argument is that IFRSs do not consider local needs and priorities as every country has their own ‘business environment, legal systems, cultures, language and political environment’ (Henderson and Peirson, 2000 cited from Malthus, S., 2004). However, to overcome this problem, IASB can accommodate flexible reporting standards that enable companies to choose alternatives that are more suitable for their external condition. It is opinion of some opponents of IFRS adoption that IAS is ‘insufficiently detailed’ (Uddin,M.S., 2005, p.4) that require accountants’ and auditor’ professional judgment. However, overly detail might be contra productive and not flexible in anticipating every changes and differences.

Cruz  5 States. Companies should report income, liability, equity, and assets. Many people (stockholders, investors, etc.) who have a stake in the company want to know this information before providing a service. In this paper, International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles (GAAP) will be compared for

As the responsibilities of the global harmonization of accounting standards IFRS and GAAP transfer to IASB, FASB’s influence is waning. Advantages of the convergence include high quality financial reporting, which lowers cost of capital for investors and the cost of borrowing for companies. However, there are disadvantages to be noted, such as the costs of introducing IFRS to current and potential accountants and the risk of reducing the uniformity of financial reports due to the lax rulings of IFRS, which promotes earnings management amongst companies. Although arguments regarding the convergence remain prevalent, the completion of IFRS and GAAP is inevitable. Come year 2015, accountants, investors, and companies alike will discover whether or not the pros outweighed the cons; or vice versa.

According to FASB, to achieve any improvement to the effectiveness will require a framework that supports consistent decision about disclosure requirement by the board. Also the reporting entities will be required to exercise discretion appropriately with the main objective of enhancing effectiveness. In pursuit of this objective FASB came up with a proposed disclosure framework project that comprises of the board decision process and the entity decision processes. The objective of FASB is to improve the

According to the research, Accounting standards exist to facilitate the preparation of high-quality and consistent general purpose financial statements to convey the useful information about the general financial condition and results related to reporting entities, such as companies, non-profit corporations and governments. And Australia adopted International Financial Reporting Standards (IFRS) in 2005, as directed by the Financial Reporting Council in its 2002 directive to the AASB. The Australian Accounting Standards Board has published AASB 15 Revenue from Contracts and Customers, the Australian equivalent of its international namesake, IFRS 15. And the purpose of the new Standards is to provide (except in relation to some specific exceptions, such as lease contracts and insurance contracts) a single source of accounting requirements for all contracts with customers, thereby replacing all current accounting pronouncements on revenue.

1. Requierments to record revenue under AASB 15 In May 2014, IFRS 15 regarding revenue from contract with customers is released by International Accounting Standards Board (IASB) and Financial Accounting Standard Boards (FASB). Since Australian Accounting Strandard Boards (AASB) comply with IFRS, subsuquently, AASB issued AASB 15 replacing AASB 111 and AASB 118.

IFRS seems to separate the property, plant and equipment into more detail for classification by the nature and intention of usage. For the users of financial statements, they might not aware of the detail, but for the preparers, they need to gather more detail information to account it into the right section.

c) Disadvantage of adopting IFRS IFRS employs principle-based instead of rules-based philosophy, which allows companies to choose the methods they prefer to use, giving the companies the chances to reveal the information in their financial statement based on their best interest. This will provides more opportunities for managements to hide the companies’ financial difficulties that may eventually cause an internal fraud (Small Business - Chron.com, 2015). Another major drawback of adopting IFRS is that it incurred considerable cost to convert the current standards to international

The IFRS are superseding GAAP as the official reporting structure of many countries and as of July 2014, 283 have adopted the IASB’s new rule book (PricewaterhouseCoopers, 2014). The transition to IFRS has spawned a worldwide dialog of investors and analysts discussing the effects it will have on reporting and the implications this move carries into the future. This paper will review some financial reporting standards, the major distinctions between the U.S. GAAP and IFRS, and the competitive advantages and disadvantages of altering the U.S. reporting structure.

a) For that entities who are seeking for profit and have public accountability. b) The Australian Government and State, Territory and Local Government. (AASB 1049) TIER2:- Tier 2 reporting requirements are applicable for the financial statements of following entities:- c) Private sector entities that are seeking for profit and do not have public accountability. d) Not for profit private sector entities. e) Public sector entities both for profit and non-profit entities excluded Australian Government and State, Territory and Local Government.

The current reporting entity concept adopted: In Australia the current reporting entity concept to abide by for reporting entities is the Corporations Act 2001. It and AASB101 determine who must compile financial reports (SAC 1), what financial statements companies must produce (AASB101.10), when (AASB101.36) & details of the company 's financial records (AASB101.112-124) are to be reported to its shareholders & customers. There is no one way to display this information, an entity can choose from up to 3 different costing methods, and 2 different analysis methods (AASB101.102). (ICAA Financial Reporting Handbook 2014)

1. INTRODUCTION The IFRS is basically a set of accounting rules which are issued by the IASB based in London, UK. These accounting standards have originated from its predecessor IASC defining the term IAS, which occurred in the 70’s. it was only after 2000’s that the IASB took a strong hold under the label IFRS claiming to be a lot more independent even though pertaining to its predecessor, efficiently staffed and better funded. Caffermen and zeff (2006) discuss about the gradual spread of accounting has made a considerable progress over time, and with the adoption of IFRS worldwide, accounting procedures could be smoothened.

Chapter 2 Conceptual Framework for Financial Reporting · 2–1 CHAPTER 2 CONCEPTUAL FRAMEWORK FOR FINANCIAL REPORTING This IFRS Supplement provides expanded discussions of accounting guidance under International Financial Reporting Standards (IFRS) for the topics in Intermediate Accounting. The discussions are organized according to the chapters in Intermediate Accounting (13th or 14th Editions) and therefore can be used to supplement the U.S. GAAP requirements as presented in the textbook. Assignment material is provided for each supplement chapter, which can be used to assess and reinforce student understanding of IFRS.