Accounting Environment: Newsletter on Recent Changes and Amendments

This newsletter addresses the recent changes and amendments in the accounting and financial reporting environment, focusing on developments between May 1, 2017, and August 4, 2017. It highlights the alignment of Australian accounting standards with international standards, including new interpretations and standards issued by the AASB, such as those concerning income tax, insurance contracts (AASB 17), and leases (AASB 16). The newsletter also covers the issuance of new standards AASB 9 and AASB 15, dealing with financial instruments and revenue recognition, respectively. Internationally, it discusses the IASB's new conceptual framework for small and medium-sized entities and proposed amendments to IAS 16. The newsletter is aimed at informing staff involved in preparing financial statements about these crucial changes.

News Letter: Changes in Accounting Environment

Changes/ Development in the Financial Reporting
Environment
This news letter is issued to the staff involved in preparation of the financial statements. It is essential
for the staff to be aware of the changes taking place in the accounting and financial reporting
environment.
The Australian accounting standard board is taking initiatives to harmonize the
accounting standards and make them comparable to the international accounting
practices.
It has been
endeavored since
long to bring in
accounting
standards that
makes the
accounting
practices of all the
countries
comparable. The
IASB has taken
measurable
initiatives in this
regard.
Changes and Developments in Financial Reporting in Australia
Changes Made by IASBChanges Made by AASB
1. The AASB has issued an interpretation in July 2017 to provide for resolution to the accounting
treatment of income tax. The primary focus of this interpretation is to provide for the
accounting treatment for income tax in the cases of uncertainty regarding tax treatment of
certain items of financial statements (AASB, 2017).
2. Further, a new accounting standard AASB 17 has been issued by the Australian Accounting
Standard Board in July 2017 to provide for the accounting of insurance contracts. Therefore, the
insurers are required to take note of this standard (AASB 17, 2017).
3. A new accounting standard on Leases has been issued namely AASB 16. The new accounting
standard has been issued to harmonize the accounting treatment of leases with the international
standards. The new standard replaces the old AASB 117 (EY.Com, 2016).
4. Three new accounting standards namely AASB 9 and AASB 15 would be issued by the board
and the same would be applicable from the financial year 2017-2018. AASB 9 deals with
accounting treatment of financial instruments in the books of public companies. It provides new
rules in regards to presentation and measurement of the financial instruments. The AASB 15
provides for recognition of revenues from the contract with the customers. This accounting
standard replaces the existing AASB 118 construction contracts (EY.Com, 2016).
This newsletter is
aimed at
addressing the
changes and
amendments taking
place in the
accounting and
financial reporting
environment. In
the recent years, it
has been seen that
the accounting
bodies all around
the world are
changing the
financial reporting
norms. The local
accounting
standards of the
countries are being
endeavored to
align to the
international
accounting
standards (AICPA,
2017). This
newsletter will
focus on the
changes in the
Australian
accounting
standards and the
international
accounting norms
occurring between
the periods from 1
May 2017 to 4
August 2017.
Contact Us:
119, Black Street,
London, UK.

5. There is a clarification on AASB 116, Property, plant and equipment that
clears the treatment of proceeds before the intended use of an item of the
property, plant and equipment (AASB, 2017). The clarification provides that
now the entities would not be allowed to deduct the sale value of items from
the cost of property, plant and equipment until the asset has been put to the
intended use.
Changes and Developments in Financial Reporting Internationally
6. The international accounting standard board has issued new conceptual
framework for the small and medium sized entities. This conceptual
framework would provide basic foundation to the small and medium sized
entities for financial reporting (IFRS. Com, 2017).
7. The IASB has proposed amendments in the IAS 16, “Property, Plant and
Equipment” to reduce diversity in accounting treatment of items of property,
plant and equipment. Now, the sale value of goods before putting the item of
property, plant and equipment to intended use would not be allowed to be
deducted from the cost of property, plant and equipment (IFRS. Com, 2017).
8. The IASB has at its meeting proposed that the financial asset having
prepayment features and that may result in negative compensation would be
measured at the amortized cost.
9. The international accounting standard board has met to provide for a model
that will regulate the Rate-regulated activities.
10. PWC has issued its manual that guides the entities in interim financial
reporting (PWC, 2017).

References
AASB 17. 2017. Insurance contract. Retrieved 19 August 2017 from,
http://www.aasb.gov.au/admin/file/content105/c9/AASB17_07-17.pdf
AASB. 2017. News. Retrieved 19 August 2017 from, http://www.aasb.gov.au/News.aspx
AASB. 2017. Uncertainty over income tax treatments. Retrieved 19 August 2017 from,
http://www.aasb.gov.au/admin/file/content105/c9/INT23_07-17.pdf
AICPA. 2017. Convergence with international accounting standards. Retrieved 22 August 2017, from
http://www.ifrs.com/updates/aicpa/Convergence_Accounting_Std.html
IFRS. Com. 2017. IASB proposes amendments to IAS 16 to reduce diversity in practice. Retrieved 19
August 2017 from, http://www.ifrs.org/news-and-events/2017/06/iasb-proposes-amendments-to-
ias-16-to-reduce-diversity-in-practice/
IFRS. Com. 2017. June 2017 IFRS for SMEs updates. Retrieved 19 August 2017 from,
http://www.ifrs.org/supporting-implementation/supporting-materials-for-the-ifrs-for-smes/ifrs-
for-smes/june-2017-ifrs-for-smes-update/
KPMG. 2017. 17RU-001 Not-for-profit entities: income recognition guidance. Retrieved 19 August 2017
from, https://home.kpmg.com/au/en/home/insights/2017/02/17ru-001-not-for-profit-income-
recognition.html
PWC. 2017. Manual of Accounting. Retrieved 19 August 2017 from, https://www.pwc.com/gx/en/audit-
services/ifrs/publications/2017-manual-of-accounting.pdf
EY.Com. 2016. New Accounting Standard and Interpretations. Retrieved 19 August 2017 from,
http://www.ey.com/Publication/vwLUAssets/new-accounting-standards-and-interpretations-31-
december-2016/$FILE/ey-new-accounting-standards-and-interpretations-31-december-2016.pdf