Accounting Regulations in Australia: A Literature Review

This literature review discusses the accounting regulations in Australia, including the viewpoints of authors on the theories and statements provided by the Australian Accounting Standards Board (AASB). It explores common themes and findings across four articles, as well as different themes and findings. The review also highlights study limitations and proposes future research directions.

Running head: APPLIED BUSINESS RESEARCH
Applied Business Research
Name of the Student
Name of the University
Author’s note

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Table of Contents
Literature Review.......................................................................................................................1
Introduction................................................................................................................................1
Brief Summary of Development of the Theory and progression in the field.............................1
Common themes and findings across the four articles...............................................................1
Different themes and findings across the four articles...............................................................2
Study limitations and future research direction proposed in the four articles............................3
Conclusion..................................................................................................................................3
References..................................................................................................................................4

2APPLIED BUSINESS RESEARCH
Literature Review
Introduction
The literature review presented in this paper has the objective of bringing about a
discussion of the accounting regulations that are prevalent in Australia. The paper broadly
elaborates the different viewpoints of authors with respect to the theories and statements
provided by the Australian Accounting Standards Board (AASB). In this context four
important theories will be discussed that would address some common findings related to the
theory. Other opinions of these authors will be pointed out. These viewpoints would suggest
some of the differences in opinions of these authors. At the last section, the limitations
highlighted in the research of these four articles are described followed by a futuristic
direction of the research proposed in these articles.
Brief Summary of Development of the Theory and progression in the field
The accounting concepts and accounting standards are first developed by the
Australian Accounting Standards Board (AASB) with the help of Public Sectors Accounting
Standards Board (PSASB). The purpose for constructing such a regulation is to bring about
an improvement in the quality of financial reporting by the different entities prevailing in
Australia (Newberry 2015). Another objective that led to the development of the framework
of accounting regulations in Australia was to improve the accounting standards. The
framework has been useful for carrying out the different transactions and other events which
was not presently included in the Accounting Standards (Oulasvirta 2014). Along with their
generic benefits, these accounting standards are also useful for entities of a particular
industry. Specific accounting policies are included in the framework that guide these entities
in dealing with accounting regulations of their transactions.
Common themes and findings across the four articles
The first paper that is chosen for providing an overview of the accounting regulations
of Australia is related to the ideas of accounting research, policies and practices. In this paper
concerns are raised regarding the practice of policies and frameworks in the practical fields
and the way the gaps can be bridged (Newberry 2015). In this context the needs of the
Australian Accounting Standards Board can be outlined through the strategies directed by
them. Some of these strategies include keeping pace with the International Accounting
Standards Board (IASB), improving the reporting of the private sector which is mainly of
“not-for-profit” in nature and establishment of the requirements of differential reporting. It
has been stated by AASB that the entities have struggled to comply with the accounting
standards set up by the other regulators (Cordery and Simpkins 2016). This has resulted in the
preparation of unrealistic requirements of financial reporting. As a remedy to this, AASB has
taken the initiative of mapping the financial reporting framework and to work upon the
rationalisation of the requirements.
Another paper chosen for this research work brings about a comprehensive analysis of
the Accounting Standards of Australia in the purview of experiences as well as perspectives.
From this paper it is viewed that the private sectors prevalent in Australia has dominated the
consciousness of the regulators of the professional accounting standards (Watty et al. 2014).
Considering this phenomenon, the public sector has shifted out from the development of its
own standards and has to abide by the decisions made by the private sectors.
The third paper is a discussion of the financial reporting requirements set up by
AASB for different kinds of private sector companies of Australia (Perera and Chand 2015).
There has been many concerns which are raised against the complexity of the financial

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reporting requirements for private sector companies in Australia. As a result the Australian
government has focussed in reducing the regulatory burdens (Pacter 2014). There have been
significant costs incurred by the entities for complying with the financial reporting standards
of Australia. There it is a major concern of the government to outweigh these costs through
the benefits. The benefits would be increased access to the financial information by the
investors, creditors and other users.
The fourth paper used for this research studies the differential financial reporting
which is a proposed reduced disclosure regime for the private sectors entities of Australia (Li
and Yang 2015). This regime has particularly been implemented for reducing the burden of
financial reporting by certain entities belonging to both public as well as private sectors. This
framework would be useful for them for preparing the general purpose financial statements in
an effective manner (Tanyi and Smith 2014). Other important reforms are also highlighted
that would consequently reduce the complexity of the International Financial Reporting
Standards with respect to Australia. This approach would move beyond the financial
instruments for simplifying the requirements of Australian standards. The AASB has also
supported and encouraged these efforts.
Different themes and findings across the four articles
In the first paper, other topics are also highlighted along with the impact of Australian
Accounting Regulations (Bryce, Ali and Mather 2015). The other topics are related to the
accounting research performed by the standard setting committee. In this respect there has
been an increased need in Australia to develop data that are industry specific. These data
must be able to handle different issues relate to insurance, banking, extractive and other
superannuation industries. This is crucially needed as it is seen that the policy-makers try to
avoid standards which are based on industries.
In the second paper, the author has brought about a comparative study of the
regulations that are brought about by New Zealand as well as Australia. In this context, the
functions of public sectors are also highlighted. It was stated that the public sectors were
effectively promoting their own accounting standard setting bodies (Nobes 2014). However,
the professional bodies quickly responded to this situation through the establishment of the
Public Sector Accounting Standards Board (PSASB) for working in collaboration with the
Accounting Standards Board of Australia.
In the third paper, the other topics that were exclusively stated were the requirements
of the Australian Standards that would guide the companies and also help in the comparison
of these standards with the international environment. The paper also highlights certain
international jurisdictions which would set up a benchmark for the current financial reporting
framework. This would also be a pathway for the future discussions about overcoming
criticisms about the current financial reporting framework. The companies operating in
Australia are required to abide by the Corporations Act 2001 for lodging the financial
statements with the Australian Securities and Investment Commission.
The limitation of the differential reporting disclosures as stated in the fourth paper
might be related to some of the companies who are not taken into account while preparing the
updated framework. The disclosure or the regime that is stated in this paper might
unintentionally increase the reporting burden of some of the public entities that are not
following the framework of general purpose financial statements. The entities that launch a
special purpose financial statement will be impacted as a result of this framework specifically
during situations when they have to comply with this disclosure.

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Study limitations and future research direction proposed in the four articles
The first articles states about the research, policies and the practices that are
highlighted in the accounting profession of Australia and also tends to find out the impact of
the Australian regulations on the private sector which are of “not-for-profit” in nature. The
paper describes the contemporary challenges in relation to the academic accounting research
and the professional practice of Australia and also focusses on the various contributions of
the regulations to these activities in the future days. Thus, it provides an application to the
regulations of Australia in different activities such as research works.
The limitation stated in the next paper talks about the requirement of additional
disclosures by AASB in order to maintain the current standard of reporting which is already
kept very high. This is also required in order to conform with the local conditions and the
environment (Budding, Grossi and Tagesson 2014). Specific guidelines could be formulated
in order to deal with different situations that are currently faced in the Australia and are
covered under IASB standards. It is also stated that there is a need of additional requirements
for the entities which are “not-for-profit” in nature in order to cater to their standards. All
these new modifications would pave way for a new framework of regulatory guidelines.
Other limitations that are obtained from the two other papers highlight the different
number of issues that are faced by the current financial reporting regime for the profit based
private sector companies of Australia. The issues faced are the lack of comparability of the
regulations of financial statements between the companies (Cuozzo et al. 2017). This is
something very unique to Australia. Another issue comes from the lodging of the financial
statements by the private companies. It is stated that some of their financial statements are
arbitrary in nature and hence private companies should not be given such rights. Mitigating
these issues would provide a right direction to the regulatory framework of Australia
Conclusion
From the above research paper it can be concluded that the regulatory framework of
Australia that is implemented for the profit based or the non-profit based private sectors had
certain advantages as well as disadvantages. The theories proposed by different authors in
this context are stated and the suitable inferences are drawn from them. The similarities as
well as differences between the individual theories are also reflected in the literature review.

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References
Bryce, M., Ali, M.J. and Mather, P.R., 2015. Accounting quality in the pre-/post-IFRS
adoption periods and the impact on audit committee effectiveness—Evidence from
Australia. Pacific-Basin Finance Journal, 35, pp.163-181.
Budding, T., Grossi, G. and Tagesson, T. eds., 2014. Public sector accounting. Routledge.
Cordery, C.J. and Simpkins, K., 2016. Financial reporting standards for the public sector:
New Zealand's 21st-century experience. Public Money & Management, 36(3), pp.209-218.
Cuozzo, B., Dumay, J., Palmaccio, M. and Lombardi, R., 2017. Intellectual capital
disclosure: a structured literature review. Journal of Intellectual Capital, 18(1), pp.9-28.
Li, X. and Yang, H.I., 2015. Mandatory financial reporting and voluntary disclosure: The
effect of mandatory IFRS adoption on management forecasts. The Accounting Review, 91(3),
pp.933-953.
Newberry, S., 2015. Public sector accounting: shifting concepts of accountability. Public
Money & Management, 35(5), pp.371-376.
Nobes, C., 2014. International classification of financial reporting. Routledge.
Oulasvirta, L., 2014. The reluctance of a developed country to choose International Public
Sector Accounting Standards of the IFAC. A critical case study. Critical Perspectives on
Accounting, 25(3), pp.272-285.
Pacter, P., 2014. IFRS as global standards: A pocket guide. London: IFRS Foundation.
Perera, D. and Chand, P., 2015. Issues in the adoption of international financial reporting
standards (IFRS) for small and medium-sized enterprises (SMES). Advances in
accounting, 31(1), pp.165-178.
Tanyi, P.N. and Smith, D.B., 2014. Busyness, expertise, and financial reporting quality of
audit committee chairs and financial experts. Auditing: A Journal of Practice &
Theory, 34(2), pp.59-89.
Watty, K., Freeman, M., Howieson, B., Hancock, P., O’Connell, B., De Lange, P. and
Abraham, A., 2014. Social moderation, assessment and assuring standards for accounting
graduates. Assessment & Evaluation in Higher Education, 39(4), pp.461-478.