Sector Neutral
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Is the move from sector neutral to sector specific effective?
6/3/2014
Abstract:
The International Financial Reporting Standards were adopted with idea of providing the private sector entities access to the international capital markets; have not focused on reporting needs of the public sector. Public sector entities also have financial reporting needs and are required to produce high quality reports. The central point of argument is that to maintain sector neutral accounting, there will be a need for significant changes in the IFRS; however, this is likely to result in higher costs and the quality will not be necessarily high. It concludes that sector specific is beneficial for both the sectors. The public sector can adopt the International Public Sector Accounting Standards while the private sector may continue with IFRS. In the end, essay also recommends research on the impact of the adoption of IPSAS on the public sector.
Introduction:
This essay aims to assess the effectiveness of the move from sector neutral to sector specific accounting. Specifically, the assessment is of maintaining sector neutrality in the presence of the IFRS. It is a trade off between keeping sector neutral accounting with minor changes to IFRS to increase their adaptability for the public sector entities versus taking a sector specific approach; where standards written for the public sectors are applied. The approach of making minor changes will result in entities comprising on the quality. It is not recommended to comprise on the quality since public sector reporting is equally important for they are accountable to their users. In this sense the essay can also be titled as 'Is it better to move from sector neutral to sector specific '?.
The process undertaken is as follows. Part I defines sector neutrality. Part II looks at the impact of adoption of IFRS on both the public and private sector. Part III studies the differences
Is the move from sector neutral to sector specific effective?
6/3/2014
Abstract:
The International Financial Reporting Standards were adopted with idea of providing the private sector entities access to the international capital markets; have not focused on reporting needs of the public sector. Public sector entities also have financial reporting needs and are required to produce high quality reports. The central point of argument is that to maintain sector neutral accounting, there will be a need for significant changes in the IFRS; however, this is likely to result in higher costs and the quality will not be necessarily high. It concludes that sector specific is beneficial for both the sectors. The public sector can adopt the International Public Sector Accounting Standards while the private sector may continue with IFRS. In the end, essay also recommends research on the impact of the adoption of IPSAS on the public sector.
Introduction:
This essay aims to assess the effectiveness of the move from sector neutral to sector specific accounting. Specifically, the assessment is of maintaining sector neutrality in the presence of the IFRS. It is a trade off between keeping sector neutral accounting with minor changes to IFRS to increase their adaptability for the public sector entities versus taking a sector specific approach; where standards written for the public sectors are applied. The approach of making minor changes will result in entities comprising on the quality. It is not recommended to comprise on the quality since public sector reporting is equally important for they are accountable to their users. In this sense the essay can also be titled as 'Is it better to move from sector neutral to sector specific '?.
The process undertaken is as follows. Part I defines sector neutrality. Part II looks at the impact of adoption of IFRS on both the public and private sector. Part III studies the differences
References: Aggestam-Pontoppidan, Caroline. (2011). Selecting International Standards for Accrual-Based Accounting in the Public Sector: IPSAS or IFRS? Journal of Government Financial Management, 60(3), 28-32. Bernadette, Devonport, & Tony van, Zijl. (2010). STANDARD SETTING FOR FINANCIAL REPORTING IN THE NEW ZEALAND PUBLIC SECTOR. Bradbury, Michael E, & Baskerville, Rachel F. (2007). Sector-neutral accounting standards: A ten-year experiment. Victoria University, Wellington, NZ, Centre for Accounting, Governance and Taxation Research Working Paper(48). Bradbury, Michael E, & Baskerville, Rachel F. (2008). The ‘NZ’in ‘NZ IFRS’: Public benefit entity amendments. Australian Accounting Review, 18(3), 185-190. Bradbury, Michael, & Van Zijl, Tony. (2007). International financial reporting standards and New Zealand: loss of sector neutrality. Research in Accounting Regulation, 19, 35-51. Trewavas, Kathryn, Botica Redmayne, Nives, & Laswad, Fawzi. (2012). The Impact of IFRS Adoption on Public Sector Financial Statements. Australian Accounting Review, 22(1), 86-102.