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AASB S2: Regulation and Standard-Setting

The key sources of regulation for listed companies in Australia are the Corporations Act administered by ASIC, Australian Accounting Standards issued by the AASB, and ASX Listing Rules. The AASB develops accounting standards through a consultation process involving research, stakeholder consultation, and exposure drafts which often incorporate IASB drafts. Adopting IFRS-equivalent standards benefits Australia through reduced capital costs and reporting costs for companies seeking global finance, but a drawback is the "one-size-fits-all" approach imposed costs on small businesses through disclosure requirements until the recent reduced disclosure regime.

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Omisha Singh
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15 views1 page

AASB S2: Regulation and Standard-Setting

The key sources of regulation for listed companies in Australia are the Corporations Act administered by ASIC, Australian Accounting Standards issued by the AASB, and ASX Listing Rules. The AASB develops accounting standards through a consultation process involving research, stakeholder consultation, and exposure drafts which often incorporate IASB drafts. Adopting IFRS-equivalent standards benefits Australia through reduced capital costs and reporting costs for companies seeking global finance, but a drawback is the "one-size-fits-all" approach imposed costs on small businesses through disclosure requirements until the recent reduced disclosure regime.

Uploaded by

Omisha Singh
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

AF210 Tutorial 1

1. What are the key sources of regulation in Australia for a listed company?

The key sources of regulation for a listed company in Australia are:


 The Corporations Act, which is administered by the Australian Securities and
Investments Commission
 Australian Accounting Standards and the Conceptual Framework, issued by the
Australian Accounting Standards Board
 Australian Securities Exchange Listing Rules.

2. Describe the standard-setting process of the AASB.

Accounting standards are developed through a consultation process to ensure that the
accounting information prepared and presented in the financial statements following these
standards is of high quality and valuable to all users of financial statements. If an accounting
issue is added to the AASB’s agenda, AASB will start by researching the issue, then will
consider solutions and consult with stakeholders. The AASB may then issue exposure drafts,
invitations to comment, draft interpretations and discussion papers. For standards intended for
profit-seeking entities, the exposure drafts issued by the AASB typically incorporate exposure
drafts issued by the IASB, along with Australian-specific matters for comment as applicable.
The consultation process may involve focus groups and roundtable discussions with
stakeholders and responses to exposure drafts. The AASB may also draw on project advisory
panels and interpretation advisory panels.

3. Explain the potential benefits and problems that can result from the adoption of
IFRSs in Australia.

The adoption of Australian Accounting Standards that are equivalent of IFRSs is essentially an
example of implementing a global set of accounting standards. It reflects the view that doing
so is, on the whole, in the best interests of the Australian economy. These benefits may manifest
in reduced cost of capital and reduced reporting costs for Australian companies that seek
finance in global capital markets. It also make listing on the stock exchange in Australia more
attractive to multinational corporations because Australian investors’ will have greater
understanding of financial statements prepared in accordance with IFRSs.

The problem that can result from the adoption of IFRSs in Australia is the ‘one size fits all’
approach used in the implementation of IFRSs in Australia. IFRSs were initially drafted to be
used solely by large for-profit entities. In Australia, however, they have been applied across
the board to all entities, including small and medium-sized entities, not-for-profit and
government entities. This resulted in unnecessary costs to the small and medium-sized entities,
especially in regards to satisfying the disclosure requirements in IFRSs. The AASB has
recently recognised this issue and has implemented a differential system — reduced disclosure
regime — whereby certain entities may not have to abide by the full disclosure requirements
of Australian equivalents to IFRSs.

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