Financial Accounting Report: AASB, IASB Frameworks Analysis

This report provides a detailed examination of financial accounting frameworks, focusing on the Australian Accounting Standards Board (AASB) and the International Accounting Standards Board (IASB). It begins by outlining the key aspects of the AASB conceptual framework, emphasizing its role in guiding financial statement preparation and ensuring consistent standards. The report then delves into the revisions made by the IASB, highlighting the objectives of financial reporting, the synchronization of national and global standards, and the refinement of financial statement element definitions. A crucial part of the report assesses the suitability of the new IASB framework for the sector-neutral environment in Australia, arguing for its adoption due to its emphasis on globally acceptable standards and improved valuation and measurement techniques. The conclusion recommends the adoption of the IASB framework by AASB for its benefits in achieving transparency and comparability in financial reporting. The report is supported by references to relevant books, journals and online resources.

Financial accounting

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
INTRODUCTION...........................................................................................................................2
ASSESSMENT 2.............................................................................................................................2
1. Key aspects involved in AASB conceptual framework..........................................................2
2. Revised IASB..........................................................................................................................3
3. Suitability of new framework.................................................................................................4
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

EXECUTIVE SUMMARY
In the below mentioned report there are various aspects which have been described in
relation to the conceptual frameworks which are made by Australian accounting standards board.
All the requirements which are to be met under it are explained so that they are understood in
better manner. After the adoption of them there were some modifications which were made by
international accounting standards board and a new framework is provided. In this the main part
which has been dealt with is that all standards shall be accepted at global level and for this
various steps will have to be taken. By them it will be implemented in most appropriate manner.
All the major modifications that have been made are specified in report which is provided below.
In this a recommendation is also made in respect whether the new policies shall be used by
AASB or not. It has been provided that they will be undertaken as they will prove to be useful in
case of neutral sector in which it will be needed that all the standards shall be such will be
acceptable by all the business and this will establish transparency.
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INTRODUCTION
Australian accounting standards board is responsible in order to frame such standards by
which all the statements will be prepared in proper manner and they are required to be complied
by all the businesses (Weil, Schipper and Francis, 2013). In this report the current as well as
new framework will be described. Also it will be determined whether the new aspects shall be
adopted in Australia or not.
ASSESSMENT 2
1. Key aspects involved in AASB conceptual framework.
AASB sets the required framework which is used by al the organisation. This is because
it specifies the manner in which financial statements are required to be prepared (Agoglia,
Doupnik and Tsakumis, 2011). As they are used by external parties so it is necessary that there
presentation shall be done in best manner. The main reason for which framework is set is to
provide help to authority so that it can develop standards or can modify current ones for further
improvement. It will be noted that all the standards shall be same for all and there shall be no
difference among them for various businesses. The framework will not be specifying standard in
relation to any particular point and if a situation arise in which the regulations of any standard
and framework are in conflict then in that case standard will be required to be complied with.
There are various such aspects or can say elements which are dealt with the help of this
framework and they are as follows:
 The main point which is considered in it is objectives that are set in respect of financial
statements (Hail, Leuz and Wysocki, 2010). It specifies that in what manner preparation
shall be done so that set goals can be attained.
 The data which is provided in financial statements is very useful for various persons and
so it sets the qualitative characteristics by which it will be identified that whether they are
providing relevant information and usefulness will be evaluated.
 Various elements are there which are to be considered in construction of financial
statements and they are identified and measured and the manner in which it will be done
is covered under this framework (Barth, 2013).
 All the concepts which are related to capital and its maintenance will also be dealt by in
the framework (Kieso, Weygandt and Warfield, 2010).
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So these are some of the major aspects which are present and on which focus is provided.
By the help of them in preparation of the annual reports. The reporting is required to be
done as by that all the information that shall be entered in report will be available and this will
beneficial. The information shall be best in quality and for this various characteristics have been
specified and in the framework. In order to maintain this it will be required that all the financial
statements elements shall be considered. They shall be recognised and measured in appropriate
manner.
2. Revised IASB.
In AASB there were various matters which were considered but there was need to modify
them so that problems in it can be resolved (Conceptual framework. 2014). For this IASB were
introduced in which following aspects were considered:
 All the objectives which are to be adopted for financial reporting are mentioned in it.
 All the requirements which will have to be met so that proper implementation can be
done is looked after under this (Chalmers, Clinch and Godfrey, J2011).
 The another matter which is focused is that there shall be proper synchronisation between
national and global level accounting standards.
 In this the new bases according to which measurement will be made is specified and also
factors that are to be considered in its selection are mentioned.
 It has been confirmed by it that the main source by which information will be collected is
income statement and the transactions which can be recorded outside it are also told in
this.
 The definitions of main elements of financial statements were refined such as in respect
of income, assets and many more (Cotter, 2012).
All of these are main amendments which were introduced by IASB in its new conceptual
framework and are required to be followed by all.
The framework by AASB and IASB are different in some manner as earlier there was no
specified method by which standards can be reviewed but with new structure it was made
possible. By the new systems it will be possible that all of the policies will be implemented as
whole and by that proper synchronisation will be made.
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3. Suitability of new framework.
In the new framework there are various measures and aspects which are covered and will
be helpful in different manners (Chua, Cheong and Gould, 2012). Sector neutrality means that
such standards will be followed which will be same for all the organisation. So for this IASB
framework shall be adopted by AASB and they will be most suitable for the sector neutral in
Australia (Clarke, Seng and Whiting, 2011). This is because of the reason that the main focus in
IASB is provided on making the standards globally acceptable so by that they will be brought at
that level where no difference will be there among them in respect of various entities. So main
goal which is to be attained in sector neutral will be fulfilled with the help of it. Valuation will be
made on proper basis as tools that will be best for this purpose will be chosen by analysing all
the factors that will be affecting the decision (Ruhl, J and Smith, 2013). Measurement will be
made in better manner as there will are various techniques which will be used and by that exact
values will be determined and they will be accepted at global level. So by this there will be no
difference which will be existing among all the amounts that are calculated by various countries.
Also the information that will be incorporated will be exact and by that decisions will be made
which will be considered by all. Therefore it will be beneficial to adopt IASB framework.
CONCLUSION
From the above report it can be concluded that there are various standards which are to be
followed by all the businesses. For this description is provided in respect of framework
established by AASB. Also the changes which are made by IASB are explained and by that
complete understanding is gained. On that basis it has been stated that adoption of new rules
shall be carried out in respect of neutral sector by AASB.
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REFERENCES
Books and journals
1. Weil, R.L., Schipper, K. and Francis, J., 2013. Financial accounting: an introduction to
concepts, methods and uses. Cengage Learning.
2. Agoglia, C.P., Doupnik, T.S. and Tsakumis, G.T., 2011. Principles-based versus rules-
based accounting standards: The influence of standard precision and audit committee
strength on financial reporting decisions. The Accounting Review. 86(3). pp.747-767.
3. Hail, L., Leuz, C. and Wysocki, P., 2010. Global accounting convergence and the
potential adoption of IFRS by the US (Part II): Political factors and future scenarios for
US accounting standards. Accounting Horizons. 24(4). pp.567-588.
4. Chalmers, K., Clinch, G. and Godfrey, J.M., 2011. Changes in value relevance of
accounting information upon IFRS adoption: Evidence from Australia. Australian
Journal of Management. 36(2). pp.151-173.
5. Chua, Y.L., Cheong, C.S. and Gould, G., 2012. The impact of mandatory IFRS adoption
on accounting quality: Evidence from Australia. Journal of International Accounting
Research. 11(1). pp.119-146.
6. Clarke, M., Seng, D. and Whiting, R.H., 2011. Intellectual capital and firm performance
in Australia. Journal of Intellectual Capital. 12(4). pp.505-530.
7. Cotter, D., 2012. Advanced financial reporting: A complete guide to IFRS. Financial
Times/Prentice Hall.
8. Kieso, D.E., Weygandt, J.J. and Warfield, T.D., 2010. Intermediate accounting: IFRS
edition (Vol. 2). John Wiley & Sons.
9. Barth, M.E., 2013. Measurement in financial reporting: The need for concepts.
Accounting Horizons. 28(2). pp.331-352.
10. Ruhl, J.M. and Smith, O.M., 2013. The Accounting Entity, Relevance, and Faithful
Representation: Linking Financial Statement Notes to the FASB and IASB Conceptual
Frameworks. Issues in Accounting Education. 28(4). pp.1009-1025.
Online
11. Conceptual framework. 2014. [Online]. Available through:
<http://www.aasb.gov.au/Pronouncements/Conceptual-framework.aspx>. [Accessed on
13th Sepetember 2017].
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