AASB and adoption of IFRS

Table of Content

This report alms to Investigate as to whether the Australian Accounting Standards Board (SAAB) should continue with the proposed Reduce Disclosure Regime (RD) or whether It should adopt the International Accounting Standards Boards (SAAB) International Financial Reporting Standard (FIRS) for Small to Medium-Slued Entitles (Seems) by assessing both the Implications of the RD and the FIRS for Seems In Australia. Firstly this report will look at the SEEM sector and address its needs and current reporting standards.

Secondly the report will examine the FIRS for Seems set y the SAAB and compare this with the Saab’s RD. Thirdly the report will discuss what the implications of adopting either the RD or the FIRS for Seems in Australia and then finally conclude with recommendations to the SAAB on the matter. It must be stated that this Report assumes that the Saab’s RD and the Saab’s FIRS for Seems are the two primary options and will investigate as such. 2. Small to Medium-sized Entities In Australia.

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Firstly to clarify what constitutes as a small to medium sized entity in Australia, the Australian Bureau of Statistics (ABS) defines a small business as an actively trading equines with 0-19 employees and a medium-sized business as an actively trading business with 20?199 employees. Also defined by the ABS, an actively trading business is one that has an BAN and is required by the TAT to follow regulations regarding SST, or directly monitored by the ABS and is determined to be active (abs. Gob. AU). Australian small to medium-sized entities contribute to a large portion of the economy.

As at June 2007 they represented around 2 million actively trading businesses, and employed around 42% of total employed persons in Australia. As at 006 it had been estimated that Seems have contributed to around 46% of Australia’s Gross Domestic Product (abs. Gob. AU). Disclosed by the Australian Government Department of Innovation Industry, Science and Research in their 2011 report Key Statistics, Australian Small Businesses. As at Lune 2009 there were 2,051 ,085 actively trading businesses in Australia.

Of these businesses, around 96 per cent were small businesses (1 ,961 ,337), 4 per cent were medium-sized businesses and less than 1 per cent were large businesses (Australian Department of Innovation). As Small to Medium-sized entitles constitute such a large reapportion of Australian Businesses, it should be seen that they require a modified if not separate set of standards for reporting, to that of the Saab’s current FIRS which is designed for the large businesses of Australia, due to their different size and requirements.

This In turn brings us to the examination of the Saab’s FIRS for Seems and the Saab’s Proposed RD. 3. SAAB’S FIRS for SEEMS and the SAAB’S RD. Has been adopted in most countries worldwide. When the SAAB discovered that Seems required a separate set of standards to that of their full FIRS, the FIRS for Seems was plopped and solely aimed at providing “an alternative framework that can be applied by eligible entities in place of the full set of International Financial Reporting Standards (Firms) in issue”(Dolomite AS Plus Update, 2009) .

By examining FIRS for Seems and the RD it can be seen that the key difference between the two policies is related to who the standards are specified for. The FIRS for Seems as stated by Kemp, S. (2009) is for “small and medium sized entities in the private sector, which are not biblically accountable”. Whereas the Saab’s RD is aimed at maintaining comparable uncial reporting between sectors and hence is aimed at Seems of both the public and private sector. Firstly needing to be examined is the purpose for the FIRS for Seems.

When Australia adopted the Saab’s full FIRS, two key problems were discovered by the SAAB with regards to Seems; Firstly the information required by the full FIRS Nas somewhat over the top for the needs of its users, and Secondly due to the required disclosures under the full FIRS, Seems found an increase in costs and complications. Hence the driving concept behind the FIRS for Seems was to ensure an adequate level of reporting for users of Seems reports while also decreasing the level of disclosures compared to that of the full FIRS.

This leads to key factor in the Saab’s development of the RD, that under the FIRS for Seems recognition and measurement requirements of items such as revaluation of property, plant and equipment were not permitted (BAD Accounting News, 2010) and hence is an issue because it is used regularly for Seems with regard to the revaluation model, the Saab’s RD is designed to cover this. 4.

Implications of Adopting FIRS for Seems or the RD in Australia. The main cause for the examination between the two proposed options is to understand better what the implications of the options will be on Seems reporting and what effects this may bring. Firstly it can be seen that the adoption of FIRS for Seems would not allow or facilitate comparability between all sectors where as Saab’s RD would address this. His then brings up the argument that FIRS for Seems was proposed in the first place to decrease the level of disclosures required and hence decrease the level of reporting strain put on Seems by the full FIRS. By adopting the Saab’s RD, Seems are till faced with a higher level of disclosure required compared to that of the FIRS for Seems, which in turn is still an increased level of strain and hence may cause an increase risk in the level of Seems not adhering to accounting regulations.

In support of the Saab’s RD, the decreased level of disclosures required by FIRS for Seems, in particular the removal of recognition and measurement requirements of items such as revaluation of property, plant and equipment is something that is still required by some of the larger Seems, as such the Saab’s RD addresses this need while still squiring a significant decrease in the level of disclosure required by the full FIRS. Another key topic to examine is the costs involved with regards to each option.

As the RD is a reduced version of the full FIRS, additional training would not be required by the report writers of Seems whereas under FIRS for Seems, the new standards would also require additional training and hence additional costs. Assessing all of the above In turn leads to the conclusion of the report with the recommendations to the SAAB. 5. Concluding Recommendations to SAAB. As covered in section 2, Seems make up 99 percent of Australia’s businesses and once it is necessary for the SAAB to either proceed with the selection of FIRS for Seems or their own RD.

When choosing an option both the immediate implications and the future implications must be taken into account. Both options can be seen to have their own benefits and flaws. FIRS for Seems in the short term reduces disclosure significantly however has the downside of additional training costs. Long term, FIRS for SEEMS would have lower costs than the RD due once again to decreased levels of disclosure, however would not facilitate comparability between all sectors.

Saab’s RD one the other hand has the short term benefit of lower initial costs with the downside of higher costs in the future due to the higher level of disclosures required n comparison to FIRS for Seems. However RD has the long term benefits of comparability between sectors, recognition and measurement requirements along Ninth the benefit of that as Seems grow the RD allows for an increase in options available.

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AASB and adoption of IFRS. (2017, Nov 28). Retrieved from


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