Ifrs Vs Aasb

1 Replace all but a few accounting standards

2 Unexpected and controversial

3 For general purposes

4 Consistent with the tradition of sector-neutral standards

5 Applied to not-for-profit entities (did the pre-2005 standards apply?)

6 *personal opinion: new standards were more difficult to work with than the pre-2005 set (may be subjective)

6.1 Faulty drafting

6.2 Rules based on unclear or inconsistent principles

6.3 Rules were unnecessarily complex or ambiguous

7 The standards’ continued development is largely outside the control of Australian authorities

Background to IFRS and the Australian Adoption

1 IASB: long-term goal of universal adoption of standard

1.1 Global standards’(IASCF 2000)

2 Landmark in IASB’s long-term goal

3 Australia applied; other countries have partially adopted; some developing countries fully utilizes IDRS; most countries with their own standard-marking apparatus have not adopted (not like Australia)

4 Allow IFRS for stock exchange reporting (not for general purpose)

4.1 E.g. Member of EU are required to ensure that listed companies use IFRS for consolidated reporting

5 IFRS: for globalization

6 IFRS once has been of difficulty in convincing domestic regulatory authorities that the products (standards) were up to scratch

7 At the very beginning, IFRS were too accommodating of countries differing accounting principles and practices.

7.1 Allow too many policy choices

7.2 Not sufficiently rigorous

7.3 The system had no identity of its own

8 July 2002, announced to be adopting IFRS from 1 January 2005

8.1 At that time, 2005 IFRS was still a work in progress

8.2 FRC bought a product sight unseen

9 Pressure on IASB to have IFRS improved in a way acceptable to Australia

10 Improvement

10.1 Deficiencies in accounting requirements

10.2 Over-complex ‘rules-based’ standards -> ‘principles-based’

10.2.1 Difficulties; e.g. Enron

10.2.2 Influenced