Development of accounting standards in Australia and role of political factors

Running head: PRINCIPLES OF ACCOUNTING
Principles of accounting
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1PRINCIPLES OF ACCOUNTING
Table of Contents
Development of accounting standards in Australia and role of political factors.......................2
Government’s involvement in the process of accounting standard setting................................4
Depreciation on machinery........................................................................................................6
Reference....................................................................................................................................8

2PRINCIPLES OF ACCOUNTING
Development of accounting standards in Australia and role of political factors
Accounting standards are the technical pronouncements those are set out required
disclosures and measurements associated with accounting for specific kinds of material
events and transactions. Accounting requirements have impact on the presentation and
preparation of the financial statement of any entity. With regard to the financial statements,
the accounting standards have force of law on the commonwealth entities as per section 42(2)
(a) of PGPA Act. Further force of company law is applicable for the entities those prepare the
financial reports as per the law. On the other hand, with regard to budgeting, section 12(3)(a)
of Charter of Budget Honesty Act requires that the budget shall be prepared on the basis of
accounting standards (Firth & Gounopoulos, 2017).
Procedures for establishments of regulatory arrangements with regard to setting of the
accounting standards in Australia has been exposed frequently towards the conflict among
professional accounting bodies, private sector bodies and government bodies as each of them
try to dominate the procedure for gaining the favoured outcomes. Hence, for any proposed
changes in the accounting standards are supported by those who will gain more influence
from that and will be opposed but those who will not get any favour (Stamford, 2015).
Political influence on accounting standards setting is considered as purposeful
intervention in the process of standard setting by the economic entity with the objective of
impacting the outcome of the procedure for enhancing the economic value and wealth of the
entity or achieving the self-interested purposes that is not consistent with the mission of
AASB (Aasb.gov.au, 2019). Political nature with regard to setting of accounting standards is
reviewed with – (i) 2 fold characteristics of the political intervention that is desire and the
power equivalency for the political consensus and (ii) focussing on the lobbying researches.
Most common political impact on standard setting is political lobbying that takes place only