International Financial Reporting System Accounting Standards Board

Question: Describe about the Report for International Financial Reporting System of Accounting Standards Board. Answer: 1. IFRS International Financial Reporting Standard or IFRS is defined as an internationally recognized set of standards used by various business organizations to prepare their financial statements. As per the standards, the assets, income, liabilities of a business organization are recognized; the process of their measurement is indicated; the way in which they need to be presented are also set out in the standards (Greuning, 2006). The related disclosures about these particular items are mentioned in the standards so that there is no confusion about them. The main objective of IFRS is to create a single set of financial standard reporting of very good quality, easily understandable, enforceable and one that can be easily accepted globally accepted on the basis of some concrete and clearly articulated principles (Insights into IFRS, 2008). The board is of independent nature and is supervised by both geographically and professionally diverse members of trustees who are accountable for the work done by them to Monitoring Board belonging to the authorities of the public capital market. An external Advisory Council of IFRS is also present to support IFRS (International Financial Reporting Standards, 2003). An Accounting Standards Advisory forum includes national standards setters along with the IFRS Interpretation Committee are present in order to guide IFRS members in the situation where any divergence of practice occurs. The whole process of preparing the report of the financial statements is very open, transparent and participatory (International financial reporting standards, 2011). At each and every stage of the process, the business leaders, investors, global accountancy professionals and regulators are involved with the process of making the financial statements. IFRS takes help from the world wide community of stan dard setting and collaborates with them in order to enhance the process of the preparation of the financial statement (International Financial Reporting Standards (IFRSs), 2005). The IFRS is developed by the IASB and consists of 14 full-time members who hail from 11 different countries and a range of professional backgrounds. The Trustees of the IFRS Foundation are given the responsibility of selecting the best technical expertise available to it along with a wide range of professionals who are experts in international business and have market experience. UASB itself consists of a total of approximately 150 people from thirty different countries all over the world, and its main office is situated in London, United Kingdom (International financial reporting standards (IFRSs) 2004, 2004). Another office of IASB is located in Tokyo that mainly looks over the coordination between Asia and Oceania. During the development of a standard by the IFRS, there are opportunities given to the public at various stages so that they can give their frank feedback and that could be incorporated if it has any relevance. The deliberations of the IASB at the various meetings held by them are also open for the public to observe and are webcast (Mirza, Holt and Orrell, 2006). Therefore it quite clear how the IFRS has taken various steps in order to make the standards set by them understandable and acceptable by all the communities all over the world without any problem (Mirza, Holt and Orrell, 2006). Consultation on Agenda The comprehensive review of the technical agendas are conducted by the IASB every three years but if any urgent issue comes up then will rapidly address to it without much delay. Along with conducting reviews of the work done by it, IASB constantly evaluates each and every request received by it for the interpretation and amendment of the standards set up by it (WoÃÅ'ˆltje, 2008). Research Programme After recognizing a project as a candidate for a possible Standard, the staffs of IASB take the responsibility of conducting a research programme in order to collect information and evidence about the same project and thereby endeavours to identify and define a problem and search for any matter of financial reporting that would help in justifying an effort by the IASB. In the case of major projects the staffs of IASB gathers the evidence and information through soliciting public input by taking the help of a discussion paper or any other document of a similar kind. In this research the national accounting standard setters are also invited so that they can provide their insight on the matter (Zingel, 2006). The result of the research program is either to make a proposal for the project or give a recommendation about not developing a particular standard. Standards Programme In case of the situation where the IASB takes the situation of developing a Standard, the staffs review the result of the research along with the comments that they have received on the Discussion Paper. After going through all the information and data IASB develops the proposed solutions for the problems and issues that have been recognized and identified. Many a time, a working group of experts is appointed by IASB in order to assist in the development of the proposed solution. The Advisory Council and the ASAF are also consulted by the IASB on this matter. The proposals are them published by the IASB in the form of an Exposure Draft where comments from the public are invited. It is through the issue of a new or amended standard that the standards program culminates. Implementation The implementation of new or amended Standards is constantly monitored by IASB in order to recognize and identify if there are any problems occurring because of it. These problems or issues are addressed by IASB through the form of interpretation which is a narrow scope amendment to the Standard. It is the Committee of Interpretation that takes the charge for the development or amendment of a final clearance by IASB. In this case, too, the public comments are invited. 2. Current accounting regulatory framework of Australia Current accounting regulatory framework of Australia is governing by Australian Accounting Standard Board. Therefore, the procedures of detecting, calculating as well as communicating financial information to the interested parties are conducted with the rule and regulation of Australian Accounting Standard Board (AASB) (Amendment to International accounting standard IAS 19, Employee benefits, 2004). AASB creates the accounting standard for the public organizations, private organizations, and non-profit organization and participates in the making of international accounting standards. Under AASB there are several governing bodies, which are in charge of regulating the accounting services in the country. The entities or governing entities are associated with the guideline and maintenance of different arms of the accounting profession as well as with other professional activities where an accountant maybe engaged are listed below: Regulatory body Entities under the regulatory body Australian Securities and Investment Commission (ASIC) Auditors and Liquidators via the Corporate Auditors as well as Liquidators Disciplinary Board Financial planners Directors of the Company Tax Practitioners Board Tax practitioners Australian Prudential Regulation Authority Trustees/ Auditors of the Superannuation funds Directors as well as the senior managers of the insurance firm Australian Financial Security Australia Trustee in the case of bankruptcy The co-regulatory accounting framework Ethic is basic to the responsibility and accountability of accounting field of profession as well as its consent to regulate within the wider co-regulatory functions in the country. The procedures of jointly working all the regulatory bodies The co-regulatory atmosphere includes the regulators, the entities, which establish government standards, the professional of accounting field, Ethical Standard Board, and professional accounting bodies; subsequently CPA Australia, CA ANZ as well as Institute of the Public Accountants (Amendment to International accounting standard IAS 39, Financial instruments, recognition and measurement, 2004). Here, the most important are the Code of Ethics. Accounting Professional Ethical Standard Board Limited publishes 110 APES Code of Ethics for Accounting Professionals. The code is enforced from the 1st July 2011 and it takes the place of 110 APES Code of Ethics for Accounting Professionals, published on June 2006 as well as subsequently modified in February 2008. Earlier implementation of the code is allowed (First-time adoption of Australian accounting standards, 2009). Transitional stipulation connecting to public interest Bodies, partner rotation, fees, non-assurance services and relati ve size, compensation along with the evaluation policies implement from the specified date in the relevant transitional provisions (APES 110 Code of Ethics for Accounting Professionals- APESB). The entire members of accounting profession in Australia shall act in accordance with APES 110 comprising at the time of delivering professional services in an honorary capability (Guidance on implementing International Accounting Standard 39, 2003). All the members, who are practicing exterior of the country Australia shall also act in accordance with APES 110 to the level of which they are not restricted to perform by specific needs of domestic laws and regulations. This code is not meant to detract from any accountability, which may be enforced by the laws or regulations (IFRS 8, Operating Segments, 2006). AUASB has published auditing standards as governmental instruments under the Corporation Act 2001. Those auditing standards have lawful enforceability in order to audit as well as reviews under the Corporation Act 2001. To the level of those auditing standards prepare reference to respective ethical needs; the requirements of APES 110 have lawful enforceability owing to the Auditing Standard ASA 102 acquiescence with the ethical needs at the time of performing Audits and Reviews along with other Assurance involvement (IFRS 9, 2013). The code of ethics is vital as the center of the designation of Chartered Accounting or posit ion is a liability to work in the interest of the public. It is similar to social responsibility or contract which provides assurance of ethical practices, supported by principle of reliability and objectivity along with professional capability and the needed care, confidentiality as well as behaving professionally. The professional standards need members in order to achieve technical benchmarks supervised by Australian Accounting Standard Board (AASB) along with Auditing and Assurance Standard Board (International Accounting Standard 23, Borrowing costs, 2007). The Code of Ethics prescribed by the Australian Accounting Standard Board supports the standard as well as rules and regulations, which contain the compulsory ethical along with professional needs of the entire member of the group establish in the by-laws and regulation. Because of the standard setting entities of the Government like CA ANZ involve with APESB and prepare submissions for the development along with the reviews regarding standards, in order to secure their line up with the best practices in respective global benchmark standard along with regulatory framework development (International Accounting Standard 24, 2009). Progress of the accounting regulatory framework towards standardizing on IFRS The Australian Accounting Standard Board (AASB) has taken several initiatives in order to improve the standard their accounting regulatory framework so that it can match with the international accounting standard. The accounting regulatory board of Australia wants to keep their accounting standard aligned to the international standard level of International Accounting Standard Board (International accounting standard IAS 1 Presentation of financial statements, 2007). The most important attempt in this matter taken by the Australian Accounting Standard Board is to make a financial reporting standard, which is equivalent of International Financial Reporting Standards (IFRS). Australian Accounting Standard Board implements A-IFRS, which is equal to International Financial Reporting Standard. However, there are few significant differences between the International Financial Reporting Standard (IFRS) and A-IFRS as it is made according to the Australian standard. As the international busin ess is increasing due to globalization thus, the requirement of a standard accounting system, as well as an international financial reporting standard, has been felt (International accounting standard IAS 32, Financial instruments, disclosure and presentation, 2003). Therefore, all the countries have adopted standards are in compliance with International Financial Reporting Standards. Australia has also adopted some standards and make few amendments in their existing accounting reporting system so that, they can be able to match with International Financial Reporting Standards. In this way, Australia matches with the international standard. The Australian Accounting Standard Board (AASB) deemed the issuance of IFRS in Australia, and there are many amendments made to the IFRS in order to make it for Australian accounting standards. The Australian entities or business firms that have still not adopted the modified AASB 3 are needed to carry out some additional works in order to comply with the standards of the AASB 3. This includes that of identifying an acquirer, finding out the fair values of the net assets along with that of the contingent liabilities. The Australian treatment, therefore, may give the consequence of different outcomes in case of the listed company financial reports given to IFRS where the transaction of "business combination" take place before the organizations are split up, floated, demerged etc (International Financial Reporting Standard for Medium and Small -sized Entities, 2009). In case of the Australian treatment, it is bound to affect the future profitability as combinations lead to substantial increase in fair value or goodwill. Alternative accounting policies are being applied by the international entities under the standards set by IFRS. This will contribute to limit the comparability of the financial information present between the Australian Organizations and the international counterparts that they have. The business organization s present in Australia will then need to incorporate more rules and regulations on the basis of the accounting standards while the international entities ore business organization will have the opportunity to apply accounting policies based on the principles and will also be able to argue about substance instead of form and thereby be able to give fair presentation (Teixeira, 2014). Higher cash flows will be disclosed by the Australian entities in comparison to the international entities that have the chance of electing to disclose the dividends paid as a part of the activities that are being operated. It is to be noted that there will be no impact or effect on the total increment or decrement of cash and the equivalent amount of cash that have been disclosed (Vafaei, Ahmed and Mather, 2015). With the step taken towards standardizing on IFRS, the dividends may be paid in a classified manner as a part of the flow of cash that occurs from the various operational activities so that the users can be assisted about determining the ability that an enterprise has about paying the dividends out of the operating cash flows. The differences that exist between Australian entities and international entities can only be eliminated if rules are regulated towards standardizing on the IFRS. This is the reason why the present accounting regulatory framework of Australia is making an endeavor to change the scenario and comply with the international financial reporting standards. References Amendment to International accounting standard IAS 19, Employee benefits. (2004). London, U.K.: IASCF Publications Dept. Amendment to International accounting standard IAS 39, Financial instruments, recognition and measurement. (2004). London, U.K.: IASCF Publications Dept. First-time adoption of Australian accounting standards. (2009). Melbourne: Australian Accounting Standards Board. Greuning, H. (2006).International financial reporting standards. Washington, D.C.: World Bank. Guidance on implementing International Accounting Standard 39. (2003). London: International Accounting Standards Board. IFRS 8, operating segments. (2006). London: International Accounting Standards Board. IFRS 9. (2013). London: International Accounting Standards Board. Insights into IFRS. (2008). London: Thomson. International accounting standard 23, Borrowing costs. (2007). London: IASCF Publications Dept. International Accounting Standard 24. (2009). London: International Accounting Standards Board. International accounting standard IAS 1 Presentation of financial statements. (2007). London, U.K.: IASC Foundation Publications Dept. International accounting standard IAS 32, Financial instruments, disclosure and presentation. (2003). London, U.K.: IASCF Publications Dept. International Financial Reporting Standard for Small and Medium-sized Entities. (2009). London: International Accounting Standards Board. International financial reporting standards (IFRSs) 2004. (2004). London: International Accounting Standards Board. International Financial Reporting Standards (IFRSs). (2005). London, U.K.: IASCF. International financial reporting standards. (2003). London: International Accounting Standards Board. International financial reporting standards. (2011). London, U.K.: International Accounting Standards Board. Mirza, A., Holt, G. and Orrell, M. (2006).Wiley IFRS. Hoboken, N.J.: Wiley. Teixeira, A. (2014). The International Accounting Standards Board and Evidence-Informed Standard-Setting.Accounting in Europe, 11(1), pp.5-12. Vafaei, A., Ahmed, K. and Mather, P. (2015). Board Diversity and Financial Performance in the Top 500 Australian Firms.Australian Accounting Review, 25(4), pp.413-427. WoÃÅ'ˆltje, J. (2008).IFRS. MuÃÅ'ˆnchen: Haufe Verlag. Zingel, H. (2006).IFRS. Weinheim: Wiley-VCH-Verl