Adoption of IFRS in Australia and UK: A Comparative Analysis

Accounting theory and Current Issues

Part 2 (v): Similarities and differences in the adoption of IFRSs faced by Australia and the
UK
The IASB (International Accounting Standards Board) is fostering the adoption of IFRS
at an international level for promoting homogeneity and improving the comparability in the
financial reporting process of companies across the world (Holloway, 2014). The UK and
Australia have similar objectives in adoption of IFRS that is to develop a single accounting
framework leading to increase in the comparability and credibility of the financial information at
a global level. However, the major difference in the adoption process is that UK listed companies
are required to report as per the IFRS standards as mandated by the European Union while
Australian listed entities have been directed by the Financial Reporting Council (FRC) for
complying with the IFRS standards (Miková, 2014).
The Australian Accounting Standards Board (AASB) have required all the ASX listed
entities to comply with the all the requirements of the IFRS and prepare the financial reports that
provides complete disclosure in accordance with the standards. On the other hand, the IFRS
standards followed by the UK listed entities are in support of the UKGAAP. As such, IFRS is
not followed to a complete extent within UK listed entities as it does not address the complicated
transactions and therefore there is less disclosure of financial information in the context of IFRS.
The UK GAAP is also applied for reporting of accounting transactions that are complex in
nature. Thus, the adoption of IFRS standards within the UK listed entities has resulted in
increasing the complexity of financial reporting by making it more expensive for preparers,
auditors or regulators. The major reason for the difference in the extent of compliance with IFRS
in Australia and the UK is due to the wide difference between UK GAAP and IFRS as compared
to the AASB and IFRS and therefore there is large difficulty faced in their convergence as IFRS
is principle based while GAAP has advocated rule based standards (Policy Pulse June 2018
compendium, 2018).
Part 3: Extent of Success Achieved by IFRS Adoption in the two countries
The IFRS adoption in Australia can be regarded as largely successful as it has lead in
improving the quality and comparability of the financial reporting of businesses against the
global peers. The Association of Chartered Certified Accountants (ACCA) report has praised the