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The Move to IFRS in Australia

The Move to IFRS in Australia

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The Move to IFRS in Australia

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  1. The Move to IFRS in Australia ASEM IFRS SeminarProfessor David Boymal Chairman Australian Accounting Standards Board

  2. The Move to IFRS in Australia Before 2005 • Australia harmonised with IFRS but had written own Standards • A few topics not harmonised: • IAS 39 Financial Instruments • IAS 19 Employee Benefits • IAS 38 Intangible Assets

  3. The Move to IFRS in Australia • We found that our previous attempt to harmonise did not produce 100% compliance • The big auditing firms identified many subtle differences between IFRS and previous Australian GAAP

  4. The Move to IFRS in Australia After 2005 • Apply IFRS for periods commencing1 January 2005 • The AASB is retained to: • convert IFRS into law • write non-IFRS Standards • contribute to the development of world-wide Standards • develop interpretations

  5. The Move to IFRS in Australia • The main reason for adopting IFRS is to improve the credibility of financial reporting in Australia • In order to achieve this we need to be able to state 100% compliance

  6. The Move to IFRS in Australia • 100% compliance can only be achieved by verbatim adoption of IFRS • Without 100% compliance, the exemptions in IFRS 1 cannot be utilised, which would make it nearly impossible to adopt IFRS

  7. The Move to IFRS in Australia Implementation Problems Application to other sectors • IFRS written especially for the for-profit business sector • Australian Standards are sector neutral • Difficulties in applying IFRS to the not-for-profit private sector and the government sector • Australia needs to add paragraphs to adapt IFRS for the other sectors

  8. The Move to IFRS in Australia Implementation Problems Interpretations • IFRS are principles-based • Interpretations are needed • At times Australian interpretations may not be consistent with interpretations in other countries • IFRIC interpretations not forthcoming or not timely • Big auditing firms have their own world-wide interpretations – driven from London

  9. The Move to IFRS in Australia Implementation Problems Burden on smaller companies • IFRS are designed for large listed companies • Heavy burden to apply IFRS to smaller entities • A need for different requirements for SMEs

  10. The Move to IFRS in Australia Implementation Problems First-time Adoption • The initial year of adoption is particularly difficult • Extensive re-education • IASB has moved on and cannot amend the Standards to help first-time adopters • Need someone else to obtain advice from

  11. The Move to IFRS in Australia Contributing to World-Wide Standards • The basis on which Australia adopted IFRS is as an active participant in the process • The AASB actively participates in IASB projects: • as a commentator on all IASB proposals • as a research leader