13.1pps t/a carnegie et al; accounting: financial and organisational decision making © 1999...
TRANSCRIPT
13.1PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
ACCOUNTINGACCOUNTINGFinancial and Organisational Financial and Organisational
Decision MakingDecision Making
Chapter 13
Sources of authority in accountingSlides written by Sandra Porritt
designed by Tony Van Eekelen
13.2
Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
Learning ObjectivesLearning Objectives
• In this chapter you will be introduced to – the different sources of accounting regulation
in Australia– th nature and purpose of accounting standards– the types of accounting standards that have so
far been issued in Australia– the role of various institutions involved in
setting accounting standards
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Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
Learning ObjectivesLearning Objectives
– the relationship between Australian and international accounting standards
– why standard setting has become an increasing political activity both in Australia and overseas
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Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
– the limitations of existing standard setting processes
– recent attempts by the Commonwealth government to reform accounting standard setting
– the pros and cons of adopting international accounting standards as the basis of accounting practice in Australia
Learning ObjectivesLearning Objectives
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Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
IntroductionIntroduction
• accounting is governed by regulation
• regulations come from legislation and the bodies with whom business deals.
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Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
Sources of authority in accountingSources of authority in accounting
• Corporations Law
• Australian Stock Exchange listing regulations
• Accounting standards
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Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
Corporations LawCorporations Law
• Companies legislation administered by the Australian Securities Commission (ASC)
• Profit and Loss statements and balance sheets are required for shareholders
• These reports need to comply with accounting standards
13.8
Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
Australian Stock ExchangeAustralian Stock Exchange
• (ASX) conduct is governed by securities legislation that forms part of th Corporation Law
• concerned with timely disclosure
• relies on compliance with the accounting standards
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Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
Accounting standardsAccounting standards
• give detailed accounting principles and rules
13.10
Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
Structure and format of Structure and format of accounting standardsaccounting standards
• an explanation of the main features - what the standard broadly requires
• which entities the standard applies to
• when the standard takes force
• the purpose for the standard
• the detailed requirements
13.11
Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
The role of international The role of international accounting standardsaccounting standards
• the growing worldwide importance of various accounting issues and events
• concerns about divergences in the disclosureand financial practices of companies tries
• differences due to cultural, legal, political and economic factors
• foreign-based or multinational operations
13.12
Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
Some benefits of Australia Some benefits of Australia adopting IASC standardsadopting IASC standards
• savings in money time and resources
• improvement in foreign investment
• the profession in Australia gains prestige
• could legitimise Australias status in the international community
13.13
Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
Problems from adopting IASC Problems from adopting IASC standardsstandards
• IASC standards viewed by some countries as too flexible and permissive
• wholesale adoption of IASC standards could stifle debate
• unique political and economic arrangements of some countries ie: income tax laws
13.14
Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
the setting of Australian the setting of Australian Accounting StandardsAccounting Standards
• INSTITUTIONS INVOLVED– (AARF) Australian Accounting Research
Foundation – (AASB) Australian Accounting Standards
Board– (IACC) Institute of Chartered Accounts in
Australia
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Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
Institutions involved continued Institutions involved continued
– (ASCPA) Society of Certified Practicing Accountants
– Government - Federal Attorney-General’s Department
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Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
The Australian Accounting The Australian Accounting Research Foundation Research Foundation
• provision of relevant technical advice on accounting and policy matters
• influencial in providing policy recommendations
13.17
Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
The Australian Accounting The Australian Accounting Standards BoardStandards Board
• responsible directly to government
• created under legislation and functioons defined by statute
• standards issued by AASB are legally enforceable
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Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
The Public Sector Accounting The Public Sector Accounting Standards BoardStandards Board
• responsible for developing accounting standards for the public sector and not-for-profit entities
• Australia is one of the few countries - to develop a common set of accounting standards for the private and public sectors
13.19
Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
Other Boards of the ARFOther Boards of the ARF
• The Auditing Standards Board (AuSB) - Auditing
• The Legislative Review Board (LRB) - review legislation for consistancy and applicability
13.20
Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
Urgent Issue GroupUrgent Issue Group
• Formed in 1995 by AARF and its boards because :-
• major criticism– slowness (due process procedures)
• part-time members, reduces their capacity to work speedily
13.21
Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
Limitations of the present systemLimitations of the present system
– found - major deficiencies with Australian standard setting
• on the basis of the differences, the Peirson Report made recommendations
13.22
Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
Impending changes:-Impending changes:-
• to institutional arrangements for standard setting in Australia
– In early 1997 the Federal Treasurer, Mr. Peter Costello, announced a wide-ranging reform program :- CORPORATE LAW ECONOMIC REFORM PROGRAM
13.23
Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
Corporate Law Economic Corporate Law Economic Reform ProgramReform Program
• important issue of international harmonisation
• to what extent should Australia adopt IASC standards
• the position statement recommendations would see the fundamental restructure of standard-setting arrangements in Australia
13.24
Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
The politicisation of accounting The politicisation of accounting standardsstandards
• Impact on competing economic interest in society
• Governments interested in regulation matters
• Costs of compliance
• Standard setters - obliged to consider the impact on a wide range of conflicting economic interests in society
13.25
Chapter 13: Sources of authority in accounting
PPS t/a Carnegie et al; Accounting: Financial and Organisational Decision Making © 1999 McGraw-Hill Book Co. Aust.
SummarySummary
• a number of bodies and their function were discussed– their limitations, other influences and
involvements were reviewed
• debate in Australia about adoption of the IASC standards
• the consequences of the accounting standards to a wide range of people have led to a political influence