Regulation of Accounting in Australia

Regulatory Environment of Accounting in Australia

Regulation

 overseeing, according to predetermined rules, an activity by an entity not directly involved in the activity.

Regulation is

• For example:

– the government is deliberately intervening in the production

of general purpose financial statements;

– this control is through a standard setting body: Australian

Accounting Standards Board (AASB) which is supposed

Regulatory Bodies and ACTS

Australian Securities and Investments Commission (ASIC)




ASIC runs a financial reporting surveillance program with the aim of improving the quality of financial reporting. We regularly review the annual and interim financial reports of selected listed companies and other significant public interest entities to monitor compliance with the Corporations Act and Australian Accounting Standards. We also review financial reports based on complaints, other intelligence and through our audit inspection program.

Australian Stock Exchange (ASX)


ASX Compliance Pty Limited is a wholly owned subsidiary within the ASX Group that provides compliance and enforcement services to the various ASX Group entities that hold licences under the Corporations Act to operate markets or clearing and settlement facilities.
ASX Compliance has delegated authority to make certain compliance and enforcement decisions on behalf of the relevant ASX licensee under its operating rules. It also provides other services as necessary to ensure:

• in the case of a market licensee, it has adequate arrangements for monitoring and enforcing compliance with its operating rules (as required by s792A of the Corporations Act); and

• in the case of a clearing and settlement facility licensee, it has adequate arrangements for enforcing compliance with its operating rules (as required by s821A of the Corporations Act).

ASX Compliance has a separate Board of Directors to other ASX Group entities (currently only one out of four ASX Compliance directors is also a director of other ASX entities).
Alan Cameron AO, a former chairman of ASIC, is the chairman of the ASX Compliance Board.
Kevin Lewis, Group Executive and Chief Compliance Officer, heads the ASX Compliance function and, in that capacity, reports directly to the ASX Compliance Board.

Financial Reporting Council (FRC)

The Financial Reporting Council (FRC) is the peak body responsible for overseeing the effectiveness of the financial reporting framework in Australia.  Its key functions include the oversight of the accounting and auditing standards setting processes for the public and private sectors, monitoring the effectiveness of the auditor independence regime, and advising the Minister on these matters. It is a statutory body under Part 12 of the Australian Securities and Investments Commission Act 2001 (the ASIC Act).

International Accounting Standards Board (IASB)

The IASB is the independent standard-setting body of the IFRS Foundation. Its members (currently 15 full-time members) are responsible for the development and publication of IFRSs, including the IFRS for SMEs and for approving Interpretations of IFRSs as developed by the IFRS Interpretations Committee (formerly called the IFRIC). All meetings of the IASB are held in public and webcast. In fulfilling its standard-setting duties the IASB follows a thorough, open and transparent due process of which the publication of consultative documents, such as discussion papers and exposure drafts, for public comment is an important component. The IASB engages closely with stakeholders around the world, including investors, analysts, regulators, business leaders, accounting standard-setters and the accountancy profession.

Australian Acounting Standard Board(AASB)

The AASB had adopted the IASB and transform International Accounting Standard(IAS) and International Financial Reporting Standards(IFRS) into the Australian Standard. The AASB is an Australian Government agency under the Australian Securities and Investments Commission Act 2001. Under that Act, the statutory functions of the AASB are:

• to develop a conceptual framework for the purpose of evaluating proposed standards;
• to make accounting standards under section 334 of the Corporations Act 2001;
• to formulate accounting standards for other purposes;
• to participate in and contribute to the development of a single set of accounting standards for worldwide use;
• and to advance and promote the main objects of Part 12 of the ASIC Act, which include reducing the cost of capital, enabling Australian entities to compete effectively overseas and maintaining investor confidence in the Australian economy.

The vision of the AASB is to be recognised as a global centre of excellence, delivering a truly distinctive contribution to the development of high-quality financial reporting standards.


Mission
The mission of the AASB is to:
(a) develop and maintain high-quality financial reporting standards for all sectors of the Australian economy; and
(b) contribute, through leadership and talent, to the development of global financial reporting standards and to be recognised as facilitating the inclusion of the Australian community in global standard setting.

International Financial Reporting and Interpretation Committee(IFRIC)

The IFRS Interpretations Committee is the interpretative body of the IFRS Foundation. Its mandate is to review on a timely basis widespread accounting issues that have arisen within the context of current International Financial Reporting Standards (IFRSs). The work of the Interpretations Committee is aimed at reaching consensus on the appropriate accounting treatment (IFRIC Interpretations) and providing authoritative guidance on those issues.

In developing interpretations, the Interpretations Committee works closely with similar national committees.   The interpretations cover both:

• newly identified financial reporting issues not specifically dealt with in IFRSs; and
• issues where unsatisfactory or conflicting interpretations have developed, or seem likely to develop in the absence of authoritative guidance

The Interpretations Committee comprises 14 voting members drawn from a variety of countries and professional backgrounds. They are appointed by the Trustees of the IFRS Foundation and are selected for their ability to maintain an awareness of current issues as they arise and the technical ability to resolve them.

IFRIC interpretations are subject to IASB approval and have the same authority as a standard issued by the IASB.

FASB and its joint Project
 

At their joint meeting in October 2004, the IASB and the US FASB decided to add to their respective agendas a joint project to develop a common conceptual framework, based on and built on both the existing nd the FASB Conceptual Framework, that both Boards would use as a basis for their accounting standards.
The two boards reached the following tentative decisions about the approach to the project:

• The project should initially focus on concepts applicable to business entities in the private sector. Later, the boards should consider the applicability of those concepts to other sectors, beginning with not-for-profit organisations in the private sector.
• The project should be divided into phases, with the initial focus being on achieving the convergence of the frameworks and improving particular aspects of the frameworks dealing with objectives, qualitative characteristics, elements, recognition, and measurement. Furthermore, as the frameworks converge and are improved, priority should be given to addressing issues that are likely to yield benefits to the boards in the short term, that is, cross-cutting issues that affect a number of their projects for new or revised standards.
• The converged framework should be in the form of a single document. It should include a summary and a basis for conclusions.