Activities of the AASB-Free-Samples for Students-Myassignmenthelp

Question; How does the AASB incorporate changes to International Accounting Standards into the Australian Accounting Standards. Answer: Introduction AASB standards are set in motion as soon as they are approved with a given deadline for its adoption by all registered entities in Australia. However, the accounting standards issued and even the conceptual framework on which the framework of standards are based are never going to be static and rigid documents. The provisions of accounting standards do keep on changing as per the prevalent economic scenarios and market conditions. In this aspect, the role of the AASB Board is quite important as the AASB Board is deemed as the primary standard setting board in Australia(Roy, 2015). Literature Review The AASB Board is a 11 member board including the chairman of the board. The chairman of the AASB board is appointed by the Ministry of Corporate law and the members of the AASB board are appointed by the FRC or the Financial reporting council. AASB is entrusted with the opportunity of developing a general and widely applicable standard which is understandable in a transparent and comparable manner so that general purpose financial statements can be presented in an unbiased manner for the consumption of the users in Australia. The changes in the standard can be made as a result of the technical issues being identified by the IASB or the same can be identified by the IFRIC. Australian regulators have adopted the IASB or the IFRS framework since 2005 and thus any technical issues identified by the IASB would have a significant change in the AASB standards as well and would require modification as well. Thus, any issue which is reported by the IASB board or the IFRIC would be required to be addressed by the AASB board too. However, the degree of involvement in the change program might be substantive or non-substantive on the part of AASB board. A technical issue might be considered when identified by IPSASB. AASB board always monitors the working program of the IPSASB and would undertake changes pertaining to financial reporting in the public-sector organizations in Australia(Berry, 2011). Issues of technical nature cn also be identified by AASB itself related to IASB consideration to IFRIC consideration and once the issues are identified the AASB would go on to issue relevant agenda related to the technical issue considered. The agenda means a project proposal would be prepared by the AASB board including the benefits that would accrue of the project is undertaken by AASB and the resources which is estimated to be consumed on consideration of the relevant consideration. The project proposal would also most of the time try to include a note as to how the non-consideration would affect the relevant parties. The project proposal would then be considered by the AASB board as to whether the same shall be worthwhile to be acted upon and if the same shall be placed inside the work program or Agenda of the board. If the board decides not to include the proposal in the agenda then the board would proceed to issue a rejection statement citing relevant decision making criteria. The minutes of the board meeting in which either the proposal is accepted to rejected would be recorded appropriately(Picker, 2015). The next step taken by the board is to consider the research proposal and do a methodical research on the same. AASB board would proceed to have a detailed discussion on the materials which are presented by the staff members of the AASB. The scope of the issue and any possible alternative approaches would be included in the agenda papers and discussed. The AASB would include possible information statements from the IASB board or even from the IFRIC and may be form the NZASB etc(Deegan C. , 2015). Sometimes the issues under consideration of the Agenda might be jointly considered with the New Zealand board when the issues under consideration might be beneficial to both countries. The next process in the change process is the consulting process with all the stakeholders involved. Once the AASB board considers the agenda in detail and then the documents adopted after considerable and detailed discussion would beamed available to the stakeholders concerned. The documents which are made available to the stakeholders are:a) Exposure drafts Invitations to Comment and Discussion PapersThe exposure drafts are papers which were discussed in the board meetings prepared to a conclusion have been reached and the same includes the proposed standard or in the case of a change being considered the amendments concerned.Invitations to comment generally seek feedback on broad proposals. An ITC may contain a discussion paper or a consultation paper. The invitations to comment are papers which seeks feedback form industry professional and other participants to the exposure draft within a timely framework. On the other hand, the discussion papers are the papers which are issued by the IASB or AASB to seek industry feedback from the professionals working in specific or a broad range of industries to discuss the whole range of topics in detail(Shirley Carlon, 2015).The next step in the standard setting process involves a detailed consultation with industry stakeholders etc. following methods: RoundTable Discussions The AASB in many cases of exposure drafts would like to invite constituents or provincial institutions regarding a detailed discussion on the exposure draft in a formal meeting at a designated place. For attending such formal roundtable meetings participants would be required to register for the same in advance. Detailed discussion would be undertaken and presentations form the participants would be accepted for further consideration and detailed review(Berry, 2011). Focus Groups Focus groups generally present the groups of users of the financial statements in Australia including the shareholders and other investors, equity and other categories of analysis and credit rating agencies etc. these groups would be used the analyze how the proposed changes in the existing standards is intended to enhance the reporting standards and enhance the fairness of the information contained in the statements mens issued by entries under AASB and ASX. Project Advisory Boards The AASB on its part might consider appointing a project advisory panel by the relevant stakeholders which would include people in a group with the requisite skill and knowledge base to review and deliberate and present a report on the topic under consideration. The project advisory panel would be required to prepare comments on the agenda papers submitted by the AASB board(ALEXANDER, 2009). Interpretation Advisory Panels The AASB in some cases of deadlock might prefer to form panels known as Interpretation Advisory Panels to help in the preparation of alternative views on specific topics(Peter Atrill, 2014). Issue of the pronouncement documents Once the agenda document is approved after the above mentioned due process the AASB would issue a pronouncement to the effect in the form of a new standard or a interpretation statement for the changes or in the form of a conceptual framework statement as required. AASB for this purpose follows a transaction neutrality policy in general events of an issue of technical nature would be dealt with similarly whether the same is related to for profit or not for profit organizations ( unless the AASB is of the opinion that issues need different ) interpretations(Melancon, 2002).The technical issues once pronounced in the form of a change document would also be required to be submitted to IASB so that a standard international document would be considered to be used. Further the AASB would also solicit comment letters form the relevant set of stakeholders and the comments submitted would be used in the submissions which would be presented to the IASB etc. for formal international pronounceme nts. Implementation and compliance with the issues pronouncements AASB would then push for the implementation of the issued changes to an existing standard or a new approved standard pronounced with a given deadline and the same set of deadlines would be followed by monitoring organizations like the ASIC , APRA and CPAA and IPA etc. the AASB also requires timely inputs form the above mentioned organization as to whether relevant changes to the standards are required at all(Mclaney, 2013). Concluding Remarks From the above discussion, it appears that the review and standard setting (changing) process is a quite open and transparent process and no party holds an absolute edge as far as standard setting are considered. The AASB holds the most power but the same is not absolute. The stakeholders also get their due consultative right and in case of any deadlock the advisory panels can be formed to advise on a number of maters. Thus, the entire process seems to be a balanced one and is not in the favor of a singular entity. However, the final decisions regarding the standard setting and caging rests with the AASB Board(Elliott, 2014). The likely impact on company accounting if the recommended changes are written into IAS 116/AASB 116 is assessed as follows: As a result of the exposure Draft for the changes in AASB 116, the clarification provided is that the current use of calculating depreciation of an asset based on the revenue based model is not an appropriate model. Thus, revenue is deemed an inappropriate base for estimating depreciation of an asset and the revenue generation is also prohibited to be used as a method of depreciation because the same does not reflect the economic benefits derived from the said assets(Dyson, 2007). Paragraph 17 of the AASB 17 specified the directly attributable costs for the measurement of the PPE. One of the example which was specified under the paragrpagh17 was that the cost of testing is one of the costs to determine whether the asset is functioning in a proper manner and the net cost of the asset would only be determined only after deducing the net sales figures which were produced from the disposal of the item produced while testing etc. and while bringing the asset into the installed location and working condition(Deegan Ward, 2013). Thus, the provision was misused and misinterpreted by many entities. Under the draft the paragraph 17 was modified and it was prohibited to deduct such net proceeds from the costs of an assets while the same being brought into working condition by an entity. Because of this new provision an entity would report such net proceeds if any (accrued in the testing phase) in the profit and loss account and would not make any adjustment to the cost of the long term asset itself. countries which are predominantly manufacturing concerns or mining operations would be more affected by the proposed changes in the standard: The AASB Board during the discussion came to the conclusion that the prosed changes and required amendments to the existing standard would bring the required set of information to the user groups involved by making it possible to include all revenue in the profit and loss statements when they have occurred. Under the current provisions some of the revenues were offset against the costs the PPE in certain cases and thus a clearer picture of the revenue would emerge under the new amended regulatory provisions. This would make it possible to cast the real value of PPE or the actual cost of the PPE would be shown in a better way. Both the revenue and costs as per the view of the board was earlier distorted by the previous provisions which were misinterpreted often(Dagwell, 2014). Under the new amended provisions, the business entities would now be required to make sure they identify the costs incurred which is related to the items of productions and which were sold before the PPE is made available for use by the entity. Also, there shall be a distinction between costs incurred in general and costs incurred before the data the PPE is made available for use. Under the new proposed provisions, the costs incurred on inventories must exclude the deprecation of the assets which is yet to be made available for use by the entity(Cottrell, 2012). Should national accounting boards such as the AASB modify their own standards if the need arises? Basically the entities concerned would be required to make judgements regarding identification of costs as to whether the said costs are costs related to inventory or related to testing of the asset concerned or the costs which would be needed to be recognized in the income statement. The new provisions also implies that the proceeds which were deducted earlier form the costs of the PPE is not in excess of the full cost of testing the asset to determine the PPE is working properly(Britton, 2012). From the above discussion it appears that the said provisions were needed by the whole manufacturing and mining industries and not just a particular section of the said industries in a particular country. The proposed changes are definitely not a one size fits all strategy and can be applied irrespective of the industry in which the entity is presently working. National accounting boards can proceed to make such changes but hey would be required to notify the IASB regarding the proposed changes and if the IASB board deems fit the same provisions can be incorporated into international accounting standards as well. Thus, currently there is no ambiguity as to whether the standards should be locally amended or amended and advised by IASB. It can be done both ways and benefit in a standardized format of international reporting(Berry, 2011). Conclusions The proposed changes in the above standards as per the board is in conformance of the provisions of IFRS 15. This is particularly because of the fact that the asset under consideration is to be sued for the normal activities of production etc., there would not be any particular basis under which it would be held that the inventory produced during testing of the asset would result from non-ordinary activities and that can be presented as revenue in the income statements. As a consequence the board believed that no changes would be required in the other standards regarding presentation of the inventory and revenue and existing provisions would suffice. Particularly the entity may be required to disclose the inventory as a revenue category under para114 of the IFRS 15 and as the provisions of IFRS 15 as well IAS 2 is satisfied no further disclosure would be required to be made and no change is therefore proposed(Barker Schulte, 2017). Bibliography ALEXANDER, D. (2009). Financial Accounting (2nd ed.). Prentice hall. Barker, R., Schulte, S. (2017). Representing the market perspective: Fair value measurement for non-financial assets. Accounting, Organizations and Society, 56(3), 55-67. Berry, A. . (2011). Accounting in a Business Context. OXFORD: South-Western Cengage Learning. Britton, A. (2012). Financial Accounting (5th ed.). London : Financial Times/ Prentice Hall. Carl S. Warren. (2012). Corporate Financial Accounting (12edition ed.). 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