Adoption of Ifrs in Australia Essay Example

adopt international accounting standards in Australia on January 1st, 2005, had significant effects on the entire economy.

The preparation of annual reports in corporate governance emphasizes transparency, independence, and adherence to best practices. The Corporations Act 2001 introduced International Financial Reporting Standards (IFRS) in Australia to allow local entities to access international capital markets by adopting widely used accounting standards. According to the Australia Senate's annual report for 2003-2004, this adoption enables organizations to produce financial reports that conform to globally recognized standards. The Australian Accounting Standards Board (AASB) is directed by the International Convergence and Harmonization Policy statement 4 (2002) to contribute towards developing a single set of accounting standards for worldwide usage while aligning with other standard-setting bodies such as IASB and international federation of accountants' public sector committee. Implementation of IFRS also provides Australian investors with access to high-quality financial information.

The worldwide acceptance of IFRS as the standard for financial accounting will result in cost savings for businesses as they won't need to reconcile reports from different accounting systems. This section examines whether Australia benefited from its decision to adopt IFRS, including exploring the advantages and disadvantages of this approach and its overall impact. While AASB, the former accounting system, had some benefits such as independence, a detailed conceptual framework, close interactions with accounting professions and more detailed standards in certain areas compared to IASB; SAC 1 and 2 were not mentioned in IASB which meant that Australia needed to maintain some of its unique standards that were missing from international accounting norms.

The adoption of IFRS brings various benefits, such as increased capital inflows, higher trade volumes, and growth in Australia's capital markets

(Wayne L, 2005. p10). It also aligns Australia with the international harmonization of accounting standards, demonstrating the country's position among leading nations like the EU. Furthermore, embracing IFRS facilitates business expansion both locally and globally (FRC session 2 background paper, 2005 pp.).

Currently, more than 100 countries have embraced FIRS reporting standards; however, the benefits of adopting IFRS must not be overly hyped. Some argue that it poses a high cost for small companies, which make up approximately 80% of Australian companies. Furthermore, previous encounters illustrate that attracting foreign companies to list in Australia is not directly related to the adoption of IFRS (Wayne L, 2005).

The reasoning for having independent accounting standards is to allow the AASB to oversee a company's financial reports. However, since the Australian financial reporting regime must fully adopt IFRS, the Australian Parliament has surrendered its legislative power over Australian companies to the IASB, which has only one vote. This loss of control may result in a decrease of accounting intellectual capital and a weaker financial reporting regime. While IFRS has been effectively implemented in the European Union, achieving consistency and comparability in all aspects of financial reporting still requires further progress. It should be noted that the disadvantage may not hold true in the future.

Australia's potential benefits from adopting IFRS and its ability to influence international accounting standards depend on the future development of these standards. Various sources have discussed this issue, including the Australian Accounting Standards Board's "International Convergence and Harmonisation Policy" (ISSN 1320-2553, April 2002, pp4), KPMG's "Across the board-IFRS: reporting revolution or expensive distraction?" (August 2006, issue 11, pp 1) by Kris P and Andrea W, Wayne

L's "The Emasculation of Accounting Standard Setting in Australia" (September 2004, pp2-11), and the financial notes of the Australia Senate (retrieved on April 21, 2007 at http://www.aph.gov.au/senate/dept/annual05/financial/fin_notes2.htm). The "International Accounting Standards Board" (retrieved on April 21, 2007 at http://www.) is also relevant.

The content presented on iasb.co.uk is about International Financial Reporting Standards and is taken from the April 2007 version of Wikipedia, which was accessed on April 21st, 2007. The information can be found at http://en.wikipedia and is contained within a paragraph HTML tag.The website "ifac.org" provides information on the "International Financial Reporting Standards." The page titled "The Founding of IFAD" was authored by Tsuguoki F in November 2000 and can be accessed on the website. This information was retrieved on April 21, 2007.