HI6025: Impact of IFRS Adoption on Australian Financial Reports

This report examines the implications of International Financial Reporting Standards (IFRS) adoption in Australia, focusing on its impact on financial reports. It analyzes the effects of IFRS on earning management, conservatism, and the overall quality of accounting. The report draws from various sources, including a peer-reviewed article on the financial reports of local government entities, to compare the pre- and post-IFRS eras. Key findings indicate that IFRS adoption has led to increased assets and liabilities, with a relatively stable general position of accounting in the administration. Despite initial concerns about smaller firms, the implementation of IFRS has generally had a positive impact, increasing net profits and income for many organizations. The report concludes that IFRS has been central to the Australian financial reporting system, sparking debate about its effects on reporting quality and affecting stakeholders in various ways. This report provides valuable insights for understanding the effects of IFRS adoption in Australia.

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IMPLICATION OF IFRS ADOPTION IN AUSTRALIA ACCOUNTING
Executive Summary
International Financial Reporting Standards (IFRS) are universal accounting rules and
merits for the revealing of event in Financial Statement (FS) which were provided by IFRS
Foundation and International Accounting Standards Board (IASB). They were established
because of endeavoring to coordinate the accounting norms in EU. Their primary reason for
existence is to give a general accounting international language in providing reports for accounts
accordingly empowering organizations to be understood internationally.
Introduction
This paper is based on the article, "The effect of IFRS adoption on the financial reports of
local government entities" published by Ahmed and Manzurul in 2011. The IFRS standard has
been implemented in various nations particularly the European Union’s members aside from the
USA that employs US GAAP. However, the US has recognized critical areas in this standard and
fused them in their models. These standards that were implemented in Australia in 2005 have
attempted to supplant the International Accounting Standards (IAS) that were produced by
IASC. Its prosperity has been sent even universally where it is gradually replacing the current
national accounting standards.
Implication:
1. Earning management

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Concerning this paper, firms need to actualize the utilization of IFRS to benefit from its
numerous positive impact on accounting. Prevalence of little loses have ended up being low
because of the usage of the standards. Subsequently, the income for various companies has
significantly enhanced and turned out to be steady. In this regards, consistency remains a
reasonable proof from the GAAP. This means the company profits to be stable, firm accounting
practices must follow IFRS standards.
Accounting standards have significantly enhanced through the usage of the IFRS. This
has increased the accounting organizations’ relevance value. This indicates earnings are much
steady and of substantial value. As reported by various Australian organizations, the vast
capacity of equity book has enormously demonstrated effectiveness in accounting after IFRS
implementation. The outcome of the IFRS implementation points towards effectiveness in
providing stakeholders with relevance information for sound financial decision making. This
solidness demonstrates the centrality of significant worth of relevance value in various
Australian firms concerning models of accounting.
2. The implication of IRFS on Conservatism
Conservatism can be understood as the slant of associations to distinguish terrible news
in the income in the opportune manner than the profits appreciation. Thus, it implies that the
organizations tend to perceive losses before real profits appreciation. In accounting,
conservatism is understood as oversight of auspicious losses from the FS at the right time. IRFS
direction and the desires are that, for a business to accomplish control, it needs to recognize boo
of the liabilities and the advantages. Subsequently, the power must be performed when the
underestimated book estimation of the benefits must be of a higher sum than the overestimated
opinion of obligations (Edeigba and Felix 17). The fulfillment of conservatism subsequently

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relies upon the figuring of both under and overestimated fundamental book estimation of both
the advantages and liabilities in every one of the associations (Hong, Mingyi and Gerald 1383).
Financial reporting in Australia over the circumstances previously the sanctioning of the
standard leading body of IRFS has turned out to be moderate. Unqualified conservatism has in
this manner, expanded with a diminished restrictive moderation after the selection of the IRFS.
For a compelling financial investigation thus, financial reporting clients, for example, the chiefs
and all financial specialists are required to upgrade changes in the conservatism perfect.
Implications of IFRS on the financial report
IFRS has forced impacts in money related report is apparent in three financial viewpoints.
These angles are the nature of the budgetary articulations, impact on the equivalence of the
announcements of the fund in the universal culturally diverse market and additionally, the get
together of both monetary examiners and partners (Tran and Ying 39).
The implication of IFRS on the quality of accounting
The impact on the financial reporting of the economic consequences on the income,
conservatism, report consistent quality, assessment of the revenues and costs, accumulation
dependability and also resources hindrances acknowledgment (Morris 156). The ramifications of
the financial report points on the financial outcomes of the varieties to the individual standards
and the way in which different money related associations has a record on various association's
amalgamation. The variations of the nature of documents in the financial reports exhibit from the
variety in singular norms to change in conceded assesses in the association and the immaterial
resources.
The exploration thus can find that different associations have the positive attitude in the
adoption of the IRFS rules in accomplishing quality accounting in different business

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organizations. A proposal is sketched out that the progressions prompt a constructive outcome of
expansion in intangible resources of the firm (Firth and Dimitrios 83). The impact institutes an
increase in intangible resources in in line with price estimation. The assets stood considered as
identifiable from the organizations’ amalgamation. This meant that the degree of the purchase
price was never regarded prior to IFRS adoption in many firms. This likewise means as of now,
the business has to upgrade the post-acquisition of performance (Bryce, Muhammad and Paul
170).
Before the launch of IFRS, there was a consensus among researchers that smaller firms
would have problems with companies like Australia Institute of Company Directors and The
Institute of contracted Accountants in Australia. They claim that this structure would diminish
the balance sheet of their organization (Zeghal and Zouhour 152). Despite what might be
expected, the CEO at the AASB firm, David Boymal contended that they would be amazed to
understand the positive effect it would carry with it. He said IFRS would maintain hold or
enhance their business. A study of 135 firms revealed that for the more significant percentage of
the organizations, the advancement was steady even after they actualized the new guidelines
(Liu, Hsiao-Tang and David 73). The shock was in the 50% of the firms as they recorded an
expansion in the farm size because of increment in net profit and net income. This implied that
IFRS has expanded the net profits and income of small-sized organizations (Loyeung et al. 624).
One of the real objectives of actualizing IFRS was that of the need to build the nature of
lack of instruction, they have generally majored on the consistent quality of financial related
report, dependability of collection accounting, estimation of the significance of accounting data,
coordinating amongst incomes and costs and the acknowledgment of disability misfortunes. In
an exploration did because of IFRS like monetary detailing there was a blended response of

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effect of IFRS to announcing quality, anyway nations that received this measures in cooperative
attitude had a higher shot in their execution contrasted with different countries.
To this end, the paper has demonstrated that in councils which are little and situated far
from the critical urban communities, the time consumed on IFRS’ compliance and different other
law requests brings about management accounting issues regularly being minimized. The usage
of IFRS in Australia has been central in Australian financial reporting system alongside history.
IFRS has produced a considerable debate on the effect of its reporting style on the reporting
quality. Alterations in the government’s accounting standards have subsequently affected all
sectors of the nation hence affecting stakeholders in an unexpected way (Bradbury and Kim
216).
Conclusion
This report presents discoveries from different dependable and exact sources, for
example, the article “The Effect of IFRS Adoption on the Financial Reports of Local
Government Entities and Australian Society of Certified Practicing Accountants and other peer-
reviewed sources on this matter. The paper utilized past and present in endeavor to look at the
pre-and post-IFRS era in with respect to government reports’ generation. The information
examined in this report demonstrates that even with shift from AAS to IFRS, there has been an
expansion in resources and liability with the relatively steady general position of accounting in
the administration even as this standard is centered around facilitate usage. Thus, the data gives
this report helpful in Australia as well as in a considerable measure of different nations even as
they look to assess the value of the new IFRS norms.

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Works Cited
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Edeigba, Jude, and Felix Amenkhienan. "The Influence of IFRS Adoption on Corporate
Transparency and Accountability: Evidence from New Zealand." Australasian
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Accounting Information Environment: Impact of IFRS Adoption on CIO
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Loyeung, Anna, et al. "The cost of implementing new accounting standards: The case of IFRS
adoption in Australia." Australian Journal of Management 41.4 (2016): 611-632.

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Morris, Richard D. "Discussion of: The Phoenix Rises: The Australian Accounting Standards
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