Accounting Theory and Contemporary Issues: A Report on AASB and IASB

This report delves into the intricacies of accounting theory, specifically examining the relationship between the Australian Accounting Standards Board (AASB) and the International Accounting Standards Board (IASB). It investigates how AASB implements transformations from IASB and assesses whether AASB addresses domestic issues effectively. The report analyzes the AASB standard-setting process, including the role of stakeholders and the treatment of technical matters. Furthermore, it explores the Exposure Draft 116, focusing on the accounting treatment of property, plant, and equipment in Australia. The assignment highlights the importance of aligning with international standards while also addressing local concerns, ensuring fair and efficient financial reporting.

Running head: ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Accounting Theory and Contemporary Issues
Name of the Student:
Name of the University:
Author’s Note:

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ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Executive Summary
The paper has been prepared in order to gain knowledge about the transformations that
have been introduced by the Australian Accounting Standard Board (AASB) on the International
Accounting Standard Board (IASB). The paper has revealed that AASB has a crcuail effect on
the IASB and has been successful in implementing the transformations within the standards. this
paper has even tried to evaluate whether AASB has been able to look in to the domestic or the
local Australian problems and issues and have been able to solve the issues within the AASB.
The next part of the assignment is in respect to the Exposure Draft and the process with
the help of which rectifications have been made by AASB. This has been significant in gaining
knowledge about the effect on the countries who are exposed to increased manufacturing
activities and has even assisted in understanding the fairness and the efficiency of one-size-fir
process.

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ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Table of Contents
Introduction......................................................................................................................................3
Part A...............................................................................................................................................4
Part B...............................................................................................................................................9
Conclusion.....................................................................................................................................12
Reference List................................................................................................................................13

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ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Introduction
This assignment comprises of two sections. The first part of the assignment has been
framed in order to gain knowledge about the Australian Accounting Standards. This paper has
even looked to gain knower about how the AASB implements transformations in their standards
in regards to the International Accounting Standards Board (IASB). The AASB has been
assessing the several local issues of Australia from various time periods and has tried to
implement several transformations so that authentic measures can be undertaken in order to
implement these concerns and issues within the standard (Pawsey & Crase 2013).
The next part of the paper consists of recording for the call for the comment with respect
to the exposure draft. This part therefore would describe the fact that whether the standards in
relation to national accounting would in compliance with the international accounting standard
and would even make changes in their own standards if any requirement gets highlighted.

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ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Part A
This section of the assignment tries to resolve the transformations that AASB has tried to
introduce within the International Accounting Standards. The standards and polices of AASB has
given out the roles, powers and functions and the methods used by AASB in order to perform
their task in an effective manner (Ao 2015). The following figure reveals the AASB standard
setting process.
The method of setting standard by AASB involves the recognition of the technical
matters and then introduces these matters to the agenda. The next examination is in regards to the
research and the consideration of the issue. The conclusion of this step leads to the consultation
with the stakeholders because after the process of consultation, the changes can be given out to
the international bodies (AASB 2015). This process leads to other pronouncement or the
issuance of the standard. It is seen that a technical matter can be identified by the IFRS
Interpretation Committee or can even be handled by the IASB.
The Australian Accounting Standard Board has implemented the transformations within
the IASB and this process is in accordance to the strategic path that has been derived from the
Financial Reporting Council (Ferguson et al., 2014). Therefore, the problems with respect to the
IASB working program and the IFRIC work program that is even included in the functioning
program of AASB. It is even seen that the level of involvement by Australian Accounting
Standard Boards is different with respect to various matters and these issues can be substantive
and non-substantive.
It has been observed that there are various technical matters and these may have been
identified by the IPSASB. The AASB supervises the working performance very closely of

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APSASB and then works in accordance to the selected subjects that are on the basis on their
significance to the financial reporting of the public sector of Australia (AASB 2015).
The AASB members can identify the technical matters that require to be considered. The
issues and the concerns that have been identified in accordance to the profit making entities are
basically transported to the IASB and the IFRIC for consideration and identification. The matters
that have an effect on the non-profit individuals in the public and private sectors can be
addressed locally and can be given out to the IPSASB (Pacter 2014). The Australian stakeholders
can advise and comment to the AASB that are regarding the problems that in their idea needs to
be considered by the international makers of standard and the AASB. There are even problems
and issues that can ask in accordance to the idea of enhancing the authenticity and the reliability
of the financial statements and the information and lowering the cost that are in accordance to the
financial reports and their reporting.
During the adoption or the implementation of the IASB standards, the general approach
of Australian Accounting Standard Board has been to introduce the content and the words of the
IASB standards. The statements are the ones that are altered when there is a need to
accommodate the Australian legislative atmosphere. This can be understood in the case that
during the need to implement an Australian statement or paragraph of any application within the
Corporations Act 2001(http://probonoaustralia.com.a 2017). It has been observed that these
changes do not have any effect on the elements of the demands and the needs. The main focus of
IASB has been on the profit based entities. There has been an observation that AASB is liable for
framing the standards of accounting for each and every type of entities. The additional texts that
are identified is included in the standards of AASB in order to manage and supervise the
restricted cases where there is a requirement to have various demands for the not for profit

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individuals. The new requirements do not have an impact on the requirement in accordance to
the profit entities (Patrício 2014).
There are conditions during which the not for profit entities that complies with the
national accounting standard of Australia and with the International Standards and does not have
the capability of complying concurrently with the IASB standards and as the additional demands
for entities that are in nature non-profit are volatile in accordance to the demands of IASB.
AASB even has the function of recognising the local problems that are in association to
Australia so that they can bring in those transformations in their standards of accounting and
assisting the companies to work efficiently. It has been observed that AASB even undertakes the
suggestions and recommendations of the stakeholders and looks to gain knowledge about the
problems and concerns and looks to add these concerns in the agenda (Budding et al., 2014). The
accumulation of the problems can be taken once the technical matters have been identified. The
discovery of these issues can be helpful in developing a project proposal by AASB. The scheme
of the project consists of the assessment of the feasible advantages of framing the project, costs
and the expenses of not undertaking it, the resources that are obtainable and the feasible timing
of it (Suhaimi 2015). It is seen that the next action of AASB is to analyse the proposal of the
project and then decide on a decision in accordance to the area that whether the project and the
concerns are commendable and whether these should be added within the agenda.
If AASB takes a decision of not including the topic to the agenda, the AASB may take a
decision in order to report officially the decision as the “decision of the Board Agenda”, which is
even regarded as the items that have not been added in the agenda or the agenda statement
rejection. The decisions that have been agreed upon in the meeting are recorded in the minutes
and it is seen that whether an official agenda of the decision has been delivered. There are

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specific issues that may be considered with the assistance of the New Zealand Accounting
Standard Boards and where these problems have been of any significance so that comparable
requirements can be framed (Bian 2016).
After the end of the research, AASB establishes a related document that is accessible for
discussion in public and the suggestions of the stakeholders with the assistance of the documents
that have been explained below:
Exposure draft
An exposure drafts typically a draft of a constructed standard and the other statement and
the modification of the draft in accordance to the standard. Such drafts are likely to include more
precise proposals in accordance to the invitations towards the discussion papers, comments and
papers for consultation (Pham 2015).
Invitation to the comments
Invitations for the comments distinctively try to discover the feedback on the broadened
proposals. The invitations to the comments can have a discussion paper and even comprise of a
consultation paper.
Interpretation of the draft
Interpretation of the draft consists of the draft of a proposed standard that has to be
interpreted.
Discussion Paper
These are the paper that specifically outlines the broader degree of the accounting
policies on a topic that has been specified. The consultation papers, discussion paper and the

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ACCOUNTING THEORY AND CONTEMPORARY ISSUES
comparable documents can be given out by IASB, IPSASB, AASB and other letters of standard
(Hamilton-Jessop 2014). The AASB may even look to issue the international statements in
Australia for suggestions and can even include an Australian preface that may have been added
in order to describe the content.
The final outcome for considering the AASB in accordance to an issue can be a statement
issuance like the conceptual framework, a standard and an understanding. However, on the other
hand, the AASB may even look to address an issue by giving their viewpoint of the problem in
the meetings of the minutes and even in legitimate Board Agenda Decision.
The documents that are appropriate for the profitable entities would be dependable with
the IFRS that has been addressed by the IFRS. This has been constructed in order to ensure that
the common intention of the financial documents framed by the profitable entities in accordance
to the standards of AASB and will even be in line to IFRS (Khokan Bepari et al., 2014).
It has been seen that AASB manages the implementation of the standards of accounting
and the clarifications that are seen in Australia. This may result to the improvements of the
domestic or the national standards and even to the resubmissions given to the IASB in order to
recommend the alterations in accordance to the international standards. There are several
councils and commissions who are given the role of supervising the changes of the compliances
in accordance to the standards of accounting (Al-Rassas 2015). The AASB obtains feedback
from the councils and the commissions that is aids in assessing the transformations in these
standards are crucial. Thus, it can be stated that along with introducing the transformations from
the IASB, AASB even needs to introduce these changes by evaluating the domestic issues so that
the AASB can in accordance to the international standards and even with the domestic problems.

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Part B
This part of the assignment comprises of a report that has to be constructed with the help
of the Exposure Draft 116. The concerned draft is associated to the equipment, plant and
property of Australia. The main aim of the concerned draft has been to suggest the various
accounting treatment for properties, plants and equipment so that the users of the financial report
can differentiate that data of individual investment within their concerned equipment, plant and
properties and the alterations in such investments (Federal Register of Legislation. 2017). The
principle problems in the accounting of equipment, property and plants have been the recognition
of the assets, analysis of the carrying costs; depreciation charges and the impairment loss are
needed to be discovered with this regard.
There have been several amendments in AASB 116 and it is seen that there have been
introduction of additional paragraphs in the draft. With respect to this statement, paragraph 56
describes the future economic profits that are incarnated in an asset are expended an individual
specifically by utilising it. Additionally the other characteristics like the technical and
commercial wear and tear and undesirability when the assets are not utilised, which can lead to
the decrease of the economic benefits that may be obtained from an asset (Zori 2015).
It is seen that paragraph 62 A has implemented the process of depreciation that is based
on the profit that is computed by an action that are inclusive of the exploitation of the asset,
which is not appropriate. The profit that is procreated by any activities that are inclusive of the
utilisation of the asset distinctively duplicates the reasons other than consumption of the
economic advantages of any asset.
It is even seen that paragraph 81 I are inclusive of the amendments of AASB and the
explanation of the processes that are acceptable for the depreciation and the amortisation that

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was given in the year 2014 and later improved paragraph 56 and then included the paragraph 62
A. It is described that every article should seek for the improvements effectively during the span
of annual reports that initiates on or after 1st January 2016. The implantations that have been
done before are allowed. If anybody makes applications for these improvements for any earlier
period and the standards would disclose the data (Andriansyah 2015).
The rectifications that are implemented have an effect on the organizational accounting
due to the alterations in AASB 116. It is seen that as this standard is associated to equipment,
property and plants, there would be an effect on the primary costs. The products that are
associated to property, equipment and plant can be gained for secured environmental reasons.
The bodies had an effect on the subsequent costs as the standard will not recognise the carrying
amounts in the daily servicing of the products but is recognised during the loss or profit that has
been computed. The costs are taken as maintenance and repairs of the items of the equipment,
property and plants. There may be specific segments of the property that may require
replacements at every interval and thus may have an effect on the organizational accounting
(Marques 2017). The effect of the rectifications has a crucial effect on company accounting as it
can be observed that this has led to the framing of an efficient cost framework and a model of
revaluation. This has led to crucial alterations in the models and even in the process of
accounting. It is seen that the implementation of these changes has a crucial effect on the
countries that exposed more to the manufacturing operations.
The manufacturing companies are linked with the equipment, property and plants and
thus alterations in the costing frameworks and the revaluation models, which leads to the
alterations in the operational and accounting process (AASB 2015). The modifications enhances
the manufacturing approach of the countries that are related with the manufacturing activities as

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the new framework leads to the decrease of the risks and conclusion of the process of accounting
an authentic manner.
The process of one-size-fits all is an efficient process because with the implementation of
this process, all the standards will become a bit similar and thus the process of accounting of
each and every country would be alike thus abolishing the probabilities of any disparities and the
gaps among the standards (Nguyen 2016). It is seen that the implementation of one-size-fits all
would become enhanced efficiency and fairness among the standards of accounting as it would
assist the companies that are globalised in order to frame their financial reports in an effective
manner thus removing the probabilities of any variations among the financial reports of the firm
performing in two countries.
It is even seen that there are various domestic concerns in regards to each country and
thus it significant for the standards of accounting of every country to introduce these problems to
the standard so that the domestic issues of accounting can be terminated. Thus, the domestic
accounting standards need to have that substitute that during the development of a need, the
board can introduce certain changes and improve the standards accordingly (Jesus & Jorge
2016). Thus, it is said that amendments in AASB 116 can be a significant factor for the
enhancement of the organizational accounting policies, which can enhance the activities of the
manufacturing companies.

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Conclusion
The conclusion of the paper explains that in part A of the assignment tries to gain
knowledge regarding AASB and they can bring in transformations in the IASB. The assignment
has even looked to recognise how AASB tries to analyse the domestic problems of Australia and
how the board can bring in changes within AASB.
Part B of the assignment comprises of exposure draft 116 and the amendments with
regards to the call for draft. The draft has played a crucial role for rectifications in the AASB,
which has an effect on company accounting of several firms. The assignment has even looked to
recognise the effect on the countries that are exposed highly to the manufacturing activities.
AASB 116 has been vital for the development of precise and authentic financial reports.

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Reference List
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