Changes in Accounting Standards for Australian Companies

This news letter discusses the changes in accounting standards for Australian companies from 1st December 2017 to 31st March 2018. It covers topics such as materiality judgement, IFRS general disclosure standard, presentation of EBIT and EBITDA, and more.

Running head: NEWS LETTER
News Letter
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1NEWS LETTER
New Accounting Standard
The AASB bought forward three new
changes in the standard of accounting with
an improved one principle standard
(Aasb.gov.au 2018). AASB 2017-5: The
operative date for the changes made by
AASB 2014-10 is submitted to year on year
period which is commencing from 1st
January 2022 with numerous editorial
amendments. AASB 2017-6: A well scope
for changes to the AASB 9 fiscal instrument
offers authorization to profit making
corporations in assessing the charge of
amortization of fair worth through
comprehensive financial assets. AASB
2017-7: The amendments made in
accounting standard states that a profit
making entity having a long run attention in
associates and joint venture needs an
organization to account for the interest in
the joint venture and in associates by
employing the AASB 9 monetary tool
before assigning any loss and impairment
requirements.
Making Materiality Judgement:
The Australian Accounting Standard Board
has issued a statement that is concerned
with making judgements relating to
materiality. The executives and directors are
accountable for preparing the financial
statements to make continuous decisions
relating to materiality (Aasb.gov.au 2018).
A statements has been published by AASB
to make materiality judgements which
offers guidance to the auditors and
regulators.
News Letter
Changes Stated in the Accounting Standards for accounting and reporting of Australian
Companies
Period 1st December to 31st March 2018:

2NEWS LETTER
IFRS General Disclosure Standard:
The AASB has stated that even though the fundamental characteristics are referred
conceptual framework, the principles of communication can be regarded as the extension
of fundamental characteristics of the faithful presentation and relevance. In line with the
IFRS general disclosure standard profit making entities are required to include the
principles of effective communication in the general disclosure standard.
Locating information with IFRS Standard:
The AASB has received feedback relating to situations where financial
statements and annual reports have become difficult to assess and understand due
to the duplication and disintegration of information. The AASB has stated in its
preliminary view that general disclosure standard is required to be considered
with the standard of IFRS to disclose necessary information in an organizations
profit making report (Aasb.gov.au 2018). The preliminary view of AASB is that
the profit making entities yearly financial publications should address single
reporting package which should include reference to International Accounting
Standards of ISA 720.
Presentation of EBIT and EBITDA
The AASB in its preliminary view stated that EBITDA must be presented in the
financial statements as this will help in depicting the financial performance with fair
reflection of an organizations current analysis on expenses in terms of their nature. The
AASB opinion that presenting the earnings before interest, tax depreciation and
amortization in respect of their function would result in the blend in the nature of
expenses and functions of expenses causing disturbance in expenditure analysis.

3NEWS LETTER
Description of Unusual or infrequent
occurring of items in statements of
financial position:
The AASB in its preliminary view has
stated that a profit making entity is
separately required to present the materiality
event or transaction that takes place either
uncommonly or unusually (Aasb.gov.au
2018). According to AASB an unusual or
infrequent transaction or the happening of
event must be presented separately in the
comprehensive income statement or in the
notes section of the annual financial report.
Disclosure of Accounting Policies:
The AASB preliminary view states that
Board a profit making entity is required to
make the disclosure of the accounting
policies that is vital in gaining an
understanding of the financial statements
under categories 1 and categories 2. If a
profit making chooses to disclose the
accounting policies in category 3 then the
entity may consider separating the
disclosure from the significant accounting
policies. The users of the financial
information would be able to identify the
accounting policies outside the financial
reports and cross reference their location.
AASB reduced disclosure requirements:
AASB in its preliminary view has released a statement relating to reduced
disclosure requirements for the Tier-2 companies that are reporting accounting for
lease under the AASB 16. In comparison to Tier 1 an entity making disclosure
under the Tier-2 may be able to reduce their weight of disclosure together with cost
involved in preparation and reviewing of GPFS irrespective of the situation whether
they are profit making entities or non-profit making firms.
Location of significant judgements and assumptions
for disclosure:

4NEWS LETTER
AASB requires an organization to make disclosure of information regarding the
significant judgements and assumptions. AASB in its preliminary view has stated
that to make an organization accounting policy more useful for the users of
financial reports the board states that disclosure relating to significant judgements
and assumptions used in implementing the accounting policy must be made
adjacent to the disclosure of that accounting policy unless an entity judges that
another location would help in improving the understanding ability of the
financial reports (Aasb.gov.au 2018). The disclosure of the accounting policies for
which an organization is required to make significant judgements or significant
assumptions must be clearly highlighted. The board in its preliminary view stated
has stated that accounting policy disclosure must be included either as the general
disclosure standard or under the non-mandatory guidance.
Considering a single standards or single set of standards for making
disclosure:
In a preliminary view stated by the board it should develop a single centralized
set of standards for disclosure of objectives that take into the account the
objectives of financial statements. The centralized disclosure objectives could be
used by the AASB as the basis for developing the disclosure objectives and
requirements in the accounting standards which is highly unified and acts as the
better link in the overall objectives of the financial statements. An alternative of
having single set of standards for disclosure would be helpful in making
disclosure objectives and requirements into numerous standards for making
disclosure (Aasb.gov.au 2018). The AASB has stated that a single standard for
disclosure would help the stakeholders in thinking regarding the objectives of
disclosure and requirements as the package in a more unified manner. This
means that the relationships among the different disclosure requirements would
help in more readily identifying and making sure that the disclosure
requirements are created with the consistency that may result in more effective
disclosure of the accounting policies.

5NEWS LETTER
Reference List:
News. (2017). Aasb.gov.au. Retrieved 30 March 2018, from
http://www.aasb.gov.au/News.aspx
Media releases. (2018). Aasb.gov.au. Retrieved 5 April 2018, from
http://www.aasb.gov.au/News/Media-releases.aspx