Accounting

AASB & international Accounting Standards (IASB & FASB)

AASB & international Accounting Standards (IASB & FASB)

Introduction

Globalization and technological advancement has leaded the business world towards highly competitive market, which requires the businesses to follow more strict financial standards in order to adequately and soundly cater their stakeholders. To fulfil this requirement, International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) are established, where, Australia has developed its own government agency Australian Accounting Standard Board (AASB). This paper highlights the AASB Framework and its role in standard setting in Australia, while evaluating whether the framework supports global accounting standard setting or not. Additionally, using the joint project on the standard for leasing, the convergence of standard setting between IASB and FASB is also analysed, while taking into consideration the potential impact of financial reporting on stakeholders.

Discussion

AASB Framework and Its Role In Standard Setting In Australia

The AASB is an Australian Government agency under the Australian Securities & Investment Commission Act 2001. According the act the key functions of Australian Accounting Standard Board include the development of conceptual framework in order to assess proposed standards, the making of accounting standards under the section 334 of the Corporations Act 2001, formulating accounting standards for other objectives, participating in and contributing to the creation of a particular accounting standard set for global use, and advancing as well as promoting the main elements of Part 12 of the Australian Securities and Investment Commission act that involves the reduction of capital cost; ensuring the ability of Australian companies to work efficiently in global markets; and maintaining the confidence of investors in Australian economy (www.aasb.gov.au). AASB's vision is to be identified as an international centre of excellence, to deliver a truly exclusive participation in developing high quality standards for financial reporting. Similarly, the agency is developed with the mission of developing and maintaining high quality financial disclosing standards for all the sectors included in Australian economy, and using leadership and talent for participating in developing an international standards for financial reporting in order to facilitate the inclusion of the Australian economy in international setting of standards (www.aasb.gov.au).

The standard setting process of AASB in Australian economy is illustrated by the figure given below:

(Source: www.aasb.gov.au)

The role of AASB in standard setting in Australian community is effective as it has adopted the Australian accounting standards that are similar to those issued by IASB as well as the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC). Furthermore, AASB also pursue the harmonization of Government Finance Statistics (GFS) and Generally Accepted Accounting Principles (GAAP) disclosing (www.frc.gov.au/). Thus, the AASB is aimed at achieving an accounting standard for Australian economy which is auditable, comparable among jurisdiction, and in which the resulting disclosures are directly in comparison with the related budget disclosures.

AASB Framework & Global Accounting Standards (IASB & FASB)

The AASB has made Australian accounting standards equivalent to International Accounting Standards Board (IASB), and in order to do so, AASB acted as per the strategic direction of Financial Reporting Council ...