Global
Accounting Regulation in Australia
Today we discover: 1. Why accounting regulation is becoming a bigger issue for business and society. 2. What are ‘Accounting Standards’? 3. What is the ‘conceptual framework’ and what is its purpose? 4. Which entities need to produce GPFRs? 5. What criteria must be met before an item is included on a GPFR?
Regulation and the Development of Accounting Standards
Accounting practice has evolved to meet society’s need to record and report financial transactions. The rules of accounting that have developed are called the ‘Generally Accepted Accounting Principles’ or GAAP. Users of GPFRs rely on the information to make and evaluate investment decisions. These users need to be confident that the information in published financial statements is ‘true and fair’. Since the 1960s, there has been an increasing recognition that the rules of accounting need to be more than ‘generally accepted’; they need to have the force of law.
Why is accounting regulation important?
An economy relies on business investment to grow and prosper. Investors will only provide funds for this investment if they are confident of ‘true and fair’ financial statements, since they are separate from management, and cannot command their own reports. The increasing complexity of business, and the separation of ownership from control are key drivers of accounting regulation
1
Some facts about accounting regulation
Australia adopted the ‘International Accounting Standards’ on 1 January 2005. The IAS are re-issued as Australian Accounting Standards (AASB). Examples include:
AASB 102 – Inventories AASB 107 – Cash Flow Statements AASB 116 – Property Plant and Equipment
The Corporations Act (2001) Cwth gives these standards the force of law. The Australian Securities and Investment Commission (ASIC) enforces compliance.
In Australia….
The Financial Reporting Council (FRC) identifies the priority issues requiring regulation. The Australian Accounting
Today we discover: 1. Why accounting regulation is becoming a bigger issue for business and society. 2. What are ‘Accounting Standards’? 3. What is the ‘conceptual framework’ and what is its purpose? 4. Which entities need to produce GPFRs? 5. What criteria must be met before an item is included on a GPFR?
Regulation and the Development of Accounting Standards
Accounting practice has evolved to meet society’s need to record and report financial transactions. The rules of accounting that have developed are called the ‘Generally Accepted Accounting Principles’ or GAAP. Users of GPFRs rely on the information to make and evaluate investment decisions. These users need to be confident that the information in published financial statements is ‘true and fair’. Since the 1960s, there has been an increasing recognition that the rules of accounting need to be more than ‘generally accepted’; they need to have the force of law.
Why is accounting regulation important?
An economy relies on business investment to grow and prosper. Investors will only provide funds for this investment if they are confident of ‘true and fair’ financial statements, since they are separate from management, and cannot command their own reports. The increasing complexity of business, and the separation of ownership from control are key drivers of accounting regulation
1
Some facts about accounting regulation
Australia adopted the ‘International Accounting Standards’ on 1 January 2005. The IAS are re-issued as Australian Accounting Standards (AASB). Examples include:
AASB 102 – Inventories AASB 107 – Cash Flow Statements AASB 116 – Property Plant and Equipment
The Corporations Act (2001) Cwth gives these standards the force of law. The Australian Securities and Investment Commission (ASIC) enforces compliance.
In Australia….
The Financial Reporting Council (FRC) identifies the priority issues requiring regulation. The Australian Accounting