on Accounting Practice
Critically discuss the regulatory environme
concerning Australian external ﬁnanc
Describe the main regulatory bodies th
encompass the Australian reporti
Review some of the arguments proposed f
and against regulation of the accounti
Outline the relevance of potential econom
political and social impacts to the account
A process involving the collection and processing of
ﬁnancial information to meet the decision-making
needs of parties external to an organisation.
The information rights of outsiders, who are not
involved in the day-to-day operations of the
organisation, must be protected.
What is Regulation?
The Oxford Dictionary deﬁnes regulation in terms of a
prescribed rule or authoritative direction
The Macquarie Dictionary deﬁnes regulation as a rule
of order, as for conduct, prescribed by authority; a
governing direction or law
the basis of these deﬁnitions we can say that
regulation is designed to control or govern conduct
regulations relate to the rules that have been
developed by an independent authoritative body that has
been given the power to govern how we prepare ﬁnancial
statements, and the actions of the authoritative body will
Change in the development of accounting standards and regulation wi enhanced emphasis being placed on government rather than accou profession — reducing ability of accounting profession to ‘self-regulate’.
There are four main bodies that create and/or enforce accounting regulat Australia
The Australian Securities and Investments Commission (ASIC)
The Australian Accounting Standards Board (AASB)
The Financial Reporting Council (FRC)
The Australian Securities Exchange (ASX)
Australian Accounting Standard Setting
Financial Reporting Council
Oversees activities of AASB – provides direction.
Advises Govt. on standard setting.
Responsible for decision that Australian reporting
entities would adopt accounting standards issued
N ow also oversees Auditing and Assurance
Standards Board (AUASB).
Functions (under s. 227 of ASIC Act) to include:
developing a conceptual framework
making accounting standards under s. 334 of the Corporations Act
formulating accounting standards for other purposes relating to organisations governed by the Corporations Law.
participating in and contributing to the development of a single set of accoun standards for worldwide use
Majority of standards underwent change in 2003–0
Reports to the Financial Reporting Council (FRC)
Has one full-time chairperson and the balance a
Formerly the Australian Securities Commission (ASC
Name changed to reﬂect increased responsibility fo
regulating investment products
Regulatory Watchdog - Responsible for
administering corporation legislation
Independent of state ministers or state parliament
Reports to the Commonwealth Parliament and
Investigates companies suspected of non-compliance
with the Act or accounting standards
Australian Securities Exchange (ASX)
ne nationally operated securities exchange with a set of listing rules fo rading ﬂoors in each capital city
ets out the listing and trading rules that apply to nationally listed secur ailure to comply may lead to removal from the Board.
ules help ensure that information is disseminated in an efﬁcient and t anner.
SX Listing Rules divided into 20 chapters—key chapters are Chapt ontinuous disclosure) and Chapter 4 (periodic disclosure).
or example, Listing Rule 3.1
Once an entity is or becomes aware of any...