Impact of IFRS on Australian Local Governments

This assignment analyzes the impact of adopting International Financial Reporting Standards (IFRS) on Australian local governments. It examines annual reports from 2004 and 2006 to compare financial performance before and after IFRS implementation. The research explores the effects of IFRS on surplus amounts, equity changes, and asset/liability values, highlighting its significance for international accounting practices.

Running head: THE IMPLICATION OF INTERNATIONAL ACCOUNTING IN AUSTRALIA AFTER IFRS PERIOD 1
The Implication of International Accounting in Australia after IFRS Period
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THE IMPLICATION OF INTERNATIONAL ACCOUNTING IN AUSTRALIA AFTER IFRS PERIOD
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Introduction
This research aims at analyzing the consequences of the International Accounting in the
Australian local government entities after the International Finance Reporting Standards (IFRS)
implementation. Our study will entail examining the effects of the international accounting in all
the entities within the entities of Australian local governments after the adoption of the IFRS.
Our research will focus on the significant changes in the AASB (Australian Accounting Standard
Boards) concerning their policies in accounting before the employment the IFRS regime and
after its implementation. The Australian government adopted IFRS in 2004 for its local
governments’ entities, and it was fully operational in the 2005/2006 financial year. We will use
the annual reports of the period before the IFRS’s implementation and the reports after its
implementation. We will then access the effects of IFRS's adoption on the international
accounting practices, focus on the significant changes under the Australian Financial Accounting
Board (AASB) and the accounting policies, and study the contrast before and after International
accounting practices regime.
Collection of data
According to the IFRS and the accounting standards that were already operating, all the
individual units (entities) were crucial in the preparation of good financial records. The entities
of the Australian local government were required to allow AASB to prepare and compare
revenue (earnings), equity, and the value of assets and liabilities before the end of 2005. After
the IFRS became fully operational in the 2005/2006 financial year, it aided in the preparation of
the 2006 financial report. Their deviation resulted from a change in accounting policies. We will
compare the account records which both the AASB and the IFRS will prepare for the same set of

THE IMPLICATION OF INTERNATIONAL ACCOUNTING IN AUSTRALIA AFTER IFRS PERIOD
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local governments’ entities concerning the entities’ revenue and income, changes in equity, and
the values of assets and liabilities (Hanson M. 2006). The following tables show the comparison
Between the annual records at the end of years 2004 and 2006 done with the AASB and IFRS
(Taylor, Tower and Neilson, 2010).
Description The amount of a million dollars

THE IMPLICATION OF INTERNATIONAL ACCOUNTING IN AUSTRALIA AFTER IFRS PERIOD
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Depreciated/amortized amount 1231.21
Amount of revenue and materials 1253.68
Benefits of employees 449.85
Cost of borrowing 138.28
Profit and loss expenses -226.6
Available assets 2334.76
Disposable assets 24981.70
Solid assets -31405.90
Total AASB 36561.32
Equity amount as per 31st December
Description Amount of a million dollars
Depreciated/amortized amount 1231.21
Amount of revenue and materials 1253.68
Benefits of employees 449.85
Cost of borrowing 138.28
Profit and loss expenses -226.6
Available assets 2334.76
Disposable assets 24981.70
Sold assets -31405.90

THE IMPLICATION OF INTERNATIONAL ACCOUNTING IN AUSTRALIA AFTER IFRS PERIOD
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Total AASB 36561.32
Surplus amount as at 31st December 2004
Description An amount of a million dollars
Loss 22765.37
The accumulated amount of the surplus 4011.49
Correction of errors 3257.37
.Capital amount -1884.20
Value of the assets that are recognized -1014,0
Reserves -14232.90
An interest of the council 12200.0
Total AASB 1973419

THE IMPLICATION OF INTERNATIONAL ACCOUNTING IN AUSTRALIA AFTER IFRS PERIOD
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Value of assets and changes in equity as at 31st December 2004
Description The amount of a million dollars
Receivables 18976.56
Investment 13474.93
Other assets 18945.83
Inventories 4828.67
Land and employee 2371.48
Assets for sale 748.36
In corporal assets -230.57
Adjusting assets -859.46
Investments of fixed deposit -1949.00
Cash -679.34
Total AASB assets 1894675.87
Changes in equity as at 31st December 2006
Description The amount of a million dollars
Depreciated/amortized amount 1231.21

THE IMPLICATION OF INTERNATIONAL ACCOUNTING IN AUSTRALIA AFTER IFRS PERIOD
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Amount of revenue and materials 1253.68
Benefits of employees 449.85
Cost of borrowing 138.28
Profit and loss expenses -226.6
Available assets 2334.76
Disposable assets 24981.70
Sold assets -31405.90
Total IRFS 33748.71
Equity amount as
Value of liabilities as at 31st December 2004 (Taylor, Tower and Neilson, 2010)
Details The amount in US Dollars
Payable loan 2734.83
Long-term and others 2903.05
Benefits of the employee 56.38
Long terms provisions 27.778
Payables 2647.38
Total IFRS 41412.37

THE IMPLICATION OF INTERNATIONAL ACCOUNTING IN AUSTRALIA AFTER IFRS PERIOD
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Surplus amount as at 31st December 2006
Description An amount of a million dollars
Loss 22744.39
The accumulated amount of the surplus 4015.09
Correction of errors 3567.37
.Capital amount -1544.20
Value of the assets that are recognized -1614,0
Reserves -19832.90
Interest of the council 12200.0
Total IFRS 19894620
Value of assets as at 31st December 2006
Description An amount of a million dollars
Receivables 18976.50
Investment 13474.03
Other assets 18945.73

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Inventories 4828.60
Land and employee 2371.67
Assets for sale 748.67
In corporal assets -230.34
Adjusting assets -859.23
Investments of fixed deposit -1459.09
Cash -896.37
Total IFRS 195099.53
Value of liabilities as at 31st December 2006 (Taylor, Tower and Neilson, 2010)
Details The amount in US Dollars
Payable loan 2334.83
Long-term and others 2503.05
Benefits of the employee 56.38
Long terms provisions 257.778
Payables 2877.38
Total IFRS 44486.83

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Summary of the outcome
From the collection of the data, we came up with an overview of the comparison between
annual reports of the two years regarding their changes in equity, surplus amounts, assets, and
liabilities (Taylor, Tower and Neilson, 2010)
The accounting
policy
Changes in
equity
Surplus amount Assets Liability
AASB 1973419.0 36561.32 1894675.87 41412.37
IFRS 19894620 33748.71 1950099.52 44486.83
There is a difference between the accounting results of the two accounting policies. When
the accounting policy of the IFRS is used, it shows positive results. For instance, the value of the
changes in equity is higher than when AASB model was used. . The surplus amount reduces
considerably when the model is used, but this is a definite contribution since the surplus amounts
marks losses. The value of the assets and liability also increase after the implementation of the
IFRS. This is a significant contribution shows that the activities and profitability of the local
government entities are growing.
Significant implications from the annual reports
The effects of implementing the IRFG over the AASB are that it has led to financial
growth among all entities of the Australian local governments. The increase is clearly shown by

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the diversity of the financial records before and after the adoption of IFRS. After employment of
the IFRS, the changes in equity showed a considerable gain of over 1000m dollars. The
difference between the liabilities of the two periods is over 3.05 million, and it has resulted from
the raised long-term benefits, benefits of the employees, and many others (Taylor, Tower and
Neilson, 2010). The financial position of the Australian local governments’ entities has improved
considerably over the two years (Taylor, Tower and Neilson, 2010). It is thus clear that the IRFG
accounting technique is the best over the AASB because it brings more income, and ensures a
cleaner record of financial statements.
Interpretation and evidence that the local government entities adhere with the
International accounting topic
The IFRS implementation has a significant impact on the financial report systems of
Australia. They promote the financial position of a firm at hand and in general control the market
situation, which in turn controls the economy of their area. The International accounting
practices also makes auditing work and preparation of any company’s financial accounts easier.
Changes in policies of International accounting system are aimed at correcting the company’s
financial and accounting errors as well as discovering new opportunities of growth, this in turn
promotes the financial position of the company. These Australian local government entities
through their implementation of the IRFS showed their adherent to the internationally agreed
accounting (Annual reports 2004, 2006). They presented all their account records and assisted to
clarify the impact of employing the IRFS accounting technique

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Conclusion and findings
According to annual reports of the year 2004 and 2006, the implementation of the IFRS
as an important accounting tool to be used for on the international accounting practice has been
fundamental in describing the history of Australia's local governments' annual reports. It has
brought about the debates concerning the effects of the International accounting practices before
and after the IFRS adoption and how these practices have affected the financial performance of
the local governments' entities. These transformations in the standards of accounting in the
individual local government's units have compelled major alterations to the mode in which these
local governments' entities describe their financial performance. This research has contributed to
the knowledge of the effects of employing the IFRS on the International accounting for
Australia's local governments' entities after the IFRS period (Hanson, 2006). The annual reports
of 2005 of all the Australian local government entities provided prove for the positive effects
adopting the IFRS. The reports clearly showed the contrast between the effects of International
accounting on the financial performances of the entities before and after the IFRS period. From
the research’s findings, we comprehend the implications of adopting the IFRS because it has
positively affected the surplus amount, changes in equity, as well as the value of assets and
liabilities.
The results have provided insights of the effects of other countries implementing the
IFRS for their local governments' entities. This case study is crucial not only because it has
shown the effects of the implementation of the IFRS on the International accounting for
Australia's local governments' entities, but also because it has provided other countries with the