Question

(Answer length - approximately 100 words)

From January 2005, Australia has adopted the accounting standards issued by the International Accounting Standard Board (IASB). As a result, the role and functions of the Australian Accounting Standards Board (AASB) has changed since 2005.

Required:

Given the current role of the AASB, do you think that the AASB should be removed and Australian companies should simply follow the IASB standards? Provide two justifications to support your answer.  

Answer 1

Solutions:

For the preparation and presentation of financial statements, IFRS are standards to be adopted by about 120 countriesenabling the use of IFRS within their jurisdiction. IFRS are guidelines, while financial accounting and financial reportingmust also comply with local regulations and rules.

Current role of AASB

AASB's current role is that companies could use the IFRS and be able to comply with local land laws, for this purpose after 2005 on the incorporation of the IASB standards AASB issued accounting standards.  Also for those entities not covered by IFRS, AASB issues accounting standards.

AASB not to be removed due to following reasons:

1. Its a body acting and implementing IASB standards in accordance with local land law requirements.

2.Issuing of standards in accordance with Australian local law for entities not covered by IASB standards and therefore including standards to prepare accounting reports.

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