Literature Review: Accounting Standards Change and Australian Issues

This literature review examines the process by which the Australian Accounting Standards Board (AASB) incorporates changes to international accounting standards (IASB) and addresses local, Australian issues. The review details how the AASB aligns with IASB standards, often adopting content and wording with modifications for the Australian legislative environment. It also explores how the AASB ensures high-quality financial reporting, sometimes requiring additional disclosures or providing interpretations not found in IASB standards. Furthermore, the review outlines the AASB's process for incorporating Australian issues, which includes identifying technical issues, analyzing stakeholder input, and consulting with relevant parties through exposure drafts and discussion papers. The AASB's commitment to global convergence in accounting standards is highlighted, along with the importance of stakeholder engagement and compliance monitoring. The review concludes with a discussion on the final phases of implementation and compliance, emphasizing the roles of various regulatory bodies in monitoring adherence to accounting standards.

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Accounting standards change
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Accounting Standards Change
Literature Review
Part 1
How AASB incorporate changes to international accounting standards
In the year 2004, July, AASB enacted Australian equivalents to International Accounting
standards board. Subsequently, this act was by a financial reporting council strategic direction
(Bauer, O'Brien & Saeed, 2014). In relation, the concept of Australian equivalents to IASB
standards achieve what is considered as the FRC’s directive pointing out at ensuring profit
entities conform to standards set by AASB for reporting periods traceable after January 2005 to
also comply with the IASB standards. Consequently, the AASB continues to maintain
correspondence with the IASB’s set standards to ensure that the strategic directive enacted by the
FRC’s is met. Generally, the approach adopted by the AABS ensures that it also adopts the
content and wording of the IASB standards. When there is the need to legalize an Australian
legislative environment, wordings may be changed.
A comprehensive example includes the Australian application paragraph that
accommodates the Corporations Acts in 2001. The changes, however, did not influence the
element level of the requirements. In this case, the primary focus of the IASB’s is more inclined
towards for-profit entities. The AABS, on the other hand, is in charge of setting the standards of
accounting for all of the types of reporting entities needed. Also, supplementary texts which are
identified are contained within the AASB standards so as to deal with the cases where the need
presents itself to have different or additional requirements for the non-profit entities (Budding,
Grossi & Tagesson, 2014). The additions however do not have a bearing on the requirements
with particular regards to for-profit entities.

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In other cases, a not for profit firm that complies with the equivalents of Australia to the
standards of IASB may never be in a position to concurrently be in compliance such standards of
IASB since the supplementary necessities may unnecessarily be consistent with the IASB
requirements (Barker et al, 2014). The principal focus of the AASB is also to aim for the highest
quality financial reporting in its adoption of the IASB standards. To this end, the AASB
exclusively permits only a few optional treatments available in the IASB standards. Also, the
AASB in some instances requires additional disclosure; an example includes a case where the
additional disclosure is already required under the IASB standards. In other cases also, the
existing AASB standards comprise critical interpretation which is unincorporated in the
corresponding standards of IASB. In this case, the AASB holds the interpretation as guide that is
however not share of the standard in instances whereby it is said to benefit the users of AASB
standards. However, it should not dispute the equivalents of Australia content to the set standards
of IASB.
Part 2:
How the AASB incorporate local, Australian issues into the Australian accounting
standards
AASB incorporates such issues into the accounting of Australia through the commitment
to development of public interest (Ordelheide, 2016). The AASB makes use of global accounting
standards are embedded in transparent and corresponding information found in the financial
statements. In order to exercise this objective, the body partners with others such as IASB so as
to achieve convergence in accounting standards across the globe.
International organization should first identify issue (technical)

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The IASB/IFRS recognizes a problem (technical) which is comprehensively analyzed by
the two bodies. The degree of involvement in this case, with particular regards to AASB differs
in accordance to respective issues hence can be either non-substantive/ substantive. The global
public subdivision accounting standard board can further recognize such issues. AASB carefully
monitors the work program by IPSASB as well as works on the selected topics. In relation, this
is embedded on their general implication to the public sector especially in financial reporting in
Australia.
2nd phrase- The AASB identifies and analyses the technical issue
The Board members of AASB, as well as its staff, in this level identify a technical issue
that may require consideration. Issues that are related to entities like for-profit are sent to either
IFRIC or IASB for extensive review. Also, entities related to not-for-profit entities are addressed
either domestically or are issued to the IPSASB section.
An individual or Australian Organization identifies and dissects the technical issue
The Australian stakeholders gives comprehensive advice the AASB on the issues they
consider should be reviewed or changed. A comprehensive example includes issues that are
highlighted in hopes of cultivating relevance and reliability concepts of financial info and also
reduce cost of FR (financial reporting).
Addition of the issue to agenda
There is the need for the development of proposal by the AASB. The proposal’s
assessment comprises the possible paybacks of carrying out the project, resources available as
well as the likely timing and the cost of undertaking the project (Picker et al, 2016).
Consequently, the AASB reviews the project proposal as a whole and hence decide as whether
the project and the changes made are sensible and whether it need the placement on review for

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corresponding work plan. In event that the board disputes the agenda, this decision is formally
reported as a Board Agenda Decision in the name of rejection statements.
Researching and considering the issue
Immediately an issue is added to the agenda docket, AASB discusses the agenda through
the papers previously worked on and presents them to its staff. Those papers typically address
several crucial issues, the timing of outputs and alternative approaches. Arguments and
counterarguments in this case are drawn from materials from counterpart standard setters such as
the New Zealand Accounting Standard Board, the IPSASB and the IASB. Additionally, other
issues are deliberated jointly with the help of the New Zealand Standard Board so as to develop
comparable requirements.
Consultation of relevant stakeholders
After the completion of the research, it is the duty of AASB to make available to the
public documents for public comment as well as the discussions with the relevant stakeholders as
a result of the use of the such documents as:
-Exposure Drafts (EDs)
ED is a document in which the proposed standard or an amendment to a drafted standard
is highlighted. It entails polished proposals as compared to discussion papers Invitations,
consultation papers and comments.
ITCs- Invitations to Comments
Invitation to comments primary aim is to seek feedback from stakeholders on
comprehensive proposals. It contains both discussion and consultation papers.
Draft Interpretations
A draft analysis of a projected interpretation of a given standard and is very crucial.

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DPs- Discussion Papers
It usually highlights a variety of likely policies of accounting on identified topics.
IPSASB, IASB, as well as other standard setters are the ones in charge of issuing discussion
papers, consultation papers, and other similar documents. To this regard, AASB might opt to
avail a global documents in the country for specific purposes of comments with an Australian
preface added for the exclusive purpose of explaining the text.
On the other hand, the methods used by AASB to engage its stakeholders include the
following: Focus groups, roundtable discussions, interpretation advisory panel and project
advisory panel. However, the methods are not limited to the listed ones.
Issue standard or other pronouncements
Outcomes from AABS’s consideration can be classified as the assurance of such
pronouncement as standard alongside conceptual framework (CF) document/interpretation.
Pronouncement available to for-profits entities should be constant as well as consistent with the
IFRS that is availed by the IASB. Subsequently, the primary ideology behind this is to make sure
the general financial statements that not for profit firm prepare are certainly compliant with the
standards set by AASB. Further, AASB maintains a transaction neutrality policy in which it
controls similarity in each kind of organization. However, there is exclusion of special cases
where there is a wide-ranging reason to be different.
Submission to international organizations
AASB is in charge of making formal submissions on documents issued. Also, comments
by the two respective bodies, that is IPSASB and the IASB directly contributes and influences
the adoption of global quality standards of accounting.
Obtaining Comments from the relevant stakeholders

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Formal comment letters are used to obtain requests and comment suggestions from the
relevant stakeholders. Also, other inputs from the key stakeholders on AASB’s personal proposal
about the various documents previously issued are examined. In relation, AABS examines this
involvement while submitting to institutions like IPSASB or IASB besides in the pronouncement
development.
The phrase of Implementation and Compliance
Compliance and Implementation are the last phrase in this technical process. The changes
implemented are adopted and monitored by the relevant organizations. AASB is in charge of
monitoring the implementation of accounting standards in Australia. Technically, revisions made
to domestic AASB or submissions to IASB or proposed changes to international standards are
also foreseen by the same bodies. In addition, compliance with the accounting standards is
technically monitored by institutions like:
 Institute of Public Accountants (IPA)
 Australian Prudential Regulation Authority (APRA)
 CPA Australia (CPAA)

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References
Barker, R., Lennard, A., Nobes, C., Trombetta, M., & Walton, P. (2014). Response of the EAA
financial reporting standards committee to the IASB discussion paper A review of the
conceptual framework for financial reporting. Accounting in Europe, 11(2), 149-184.
Bauer, A. M., O'Brien, P. C., & Saeed, U. (2014). Reliability makes accounting relevant: a
comment on the IASB Conceptual Framework project. Accounting in Europe, 11(2), 211-
217.
Budding, T., Grossi, G., & Tagesson, T. (2014). Public sector accounting. Routledge.
Gebhardt, G., Mora, A., & Wagenhofer, A. (2014). Revisiting the fundamental concepts of
IFRS. Abacus, 50(1), 107-116.
Junior, R. M., Best, P. J., & Cotter, J. (2014). Sustainability reporting and assurance: A historical
analysis on a world-wide phenomenon. Journal of Business Ethics, 120(1), 1-11.
Ordelheide, D. (2016). Transnational accounting. Springer.
Picker, R., Clark, K., Dunn, J., Kolitz, D., Livne, G., Loftus, J., & Van der Tas, L.
(2016). Applying international financial reporting standards. John Wiley & Sons.