Question

(in relation to the IAS and AASB) what part of new drug development needs specific accounting guidance? where is clarity needed in the accounting standards to address this issue?

Answer 1

ANSWER :-The International Accounting Standards Board (IASB) is part of the IFRS Foundation and is an independent private-sector organisation based in London. The Australian Government provides a significant annual monetary contribution to the activities of the IASB.The Australian Accounting Standards Board (AASB) is the Australian Government agency responsible for developing, issuing and maintaining accounting standards that apply under Australian company law.

In relation to the IAS and AASB) the following part of new drug development needs specific accounting guidance-:

1) Issue Australian versions of International Accounting Standards Board documents
2) Produce standards that treat like transactions consistently
3) Significantly influence the development of International Financial Reporting Standards
4) Identify areas requiring fundamental review and introduce standards to cover those areas
5) Promote globally consistent application and interpretation of accounting standards.

ANSWER :-The clarity needed in the accounting standards to address this issue are as follows :-

1) Introduction- The introduction explains the purpose and scope of the standard.

2) Objective- The objective defines the context in which the requirements are set.

3) Definitions- The “Definitions” section, included where relevant, explains specific meanings of terms in the standards

4)  Requirements- The requirements set out what the auditor is required to do to achieve the objective of the standard. Requirements are expressed using the words “the auditor should” or “the auditor must.”

EXPLANATION :- The AICPA’s Auditing Standards Board (ASB) is nearing completion of its Clarity Project. The goal of the Clarity Project is to make generally accepted auditing standards (GAAS) easier to read, understand, and apply. As the ASB redrafted the standards for clarity, it also converged the standards with International Standards on Auditing (ISAs), issued by the International Auditing and Assurance Standards Board (IAASB).

While the purpose of redrafting is for clarity and convergence, and not to create additional requirements, auditors will need to make some adjustments to their practices as a result of this project.