Aasb Identifies A Technical Issue Accounting Essay

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A technical issue may be identified by the International Accounting Standards Board (IASB) or the International Financial Reporting Interpretations Committee (IFRIC).

Australia has adopted International Financial Reporting Standards (IFRSs) since 1 January 2005, in line with strategic direction from the Financial Reporting Council. Therefore, issues on the IASB work program and the IFRIC work program are also included on the AASB work program, although the degree of involvement by the AASB varies issue-by-issue and may be substantive or non-substantive.

A technical issue may also be identified by the International Public Sector Accounting Board (IPSASB). The AASB closely monitors the IPSASB work program and undertakes work on selected topics, based on their significance to public sector financial reporting in Australia.


AASB identifies a technical issue

AASB Board members and staff can identify technical issues requiring consideration.

Issues identified in relation to for-profit entities are normally referred to the IASB or the IFRIC for consideration.

Issues affecting not-for-profit entities in the public and private sectors may be addressed domestically or referred to the IPSASB.


Australian organisation/individual identifies a technical issue

Australian stakeholders can advise the AASB of issues that in their view should be considered by the AASB or an international standard-setter. For example, issues may be raised in the context of improving the relevance and reliability of financial information or reducing the costs of financial reporting.


Add issue to the agenda

Once a technical issue has been identified, the AASB will develop a project proposal.

A project proposal contains an assessment of the potential benefits of undertaking the project, the costs of not undertaking it, the resources available and the likely timing.

The AASB will then review the project proposal and make a decision as to whether the project is worthwhile and should be placed on its agenda (work program).

If the Board decides not to add a topic to the agenda, the Board may decide to formally report the decision as a Board Agenda Decision, sometimes called "items not taken onto the agenda" or "agenda rejection statements". The minutes of meetings record the decisions made and whether or not a formal Board Agenda Decision is issued.


Research and consider issue

When an issue has been added to the agenda, the AASB will discuss agenda papers developed and presented by AASB staff. The agenda papers address the scope of issues, alternative approaches, and timing of outputs. They may draw upon relevant material from other standard setters, including the IASB, IPSASB and the New Zealand Financial Reporting Standards Board (FRSB), or from other organisations.

Some issues are considered jointly with the New Zealand Financial Reporting Standards Board where they are of significance in each country, in order to develop comparable requirements.


Consult with stakeholders

Once the research has been completed, the AASB makes related documents available for public comment and discussion with stakeholders via one of the following document types.

Exposure Drafts (EDs)

An exposure draft typically is a draft of a proposed standard (or other pronouncement) or draft amendment to a standard. An ED is likely to include more refined proposals in comparison with Invitations to Comment, Discussion Papers and Consultation Papers.

Invitations to Comment (ITCs)

Invitations to comment generally seek feedback on broad proposals. An ITC may contain a discussion paper or a consultation paper.

Draft Interpretations

A draft interpretation is a draft of a proposed interpretation. of a standard.

Discussion Papers (DPs)

These usually outline a wide range of possible accounting policies on a particular topic. Discussion papers, consultation papers and similar documents may be issued by the AASB, the IASB, the IPSASB or other standard setters. The AASB may choose to issue international documents in Australia for comment, perhaps with an Australian preface added to explain the context.

The methods the AASB uses to consult with stakeholders may also include the following:

Roundtable discussions

The AASB may hold formal discussions with a range of stakeholders in connection with proposals issued for comment.

Consultative Group

The AASB Consultative Group brings together a cross-section of interest groups in the private, public and not-for-profit sectors to increase their involvement in the standard-setting process. Members of the Consultative Group include representatives of parties interested in and affected by financial reporting requirements. The members of this group provide views to the AASB on major technical issues, the AASB's work program, project priorities and due process.

Focus Groups

The User Focus Group comprises representatives of financial statement users such as investors and investment professionals, equity and credit analysts, credit grantors and rating agencies. This Focus Group enhances the AASB's consultation with this significant group of users of financial statements.

The Not-for-Profit (Private Sector) Focus Group comprises representatives of financial statement preparers, donors, credit grantors and community agencies in that sector. This Focus Group is a key resource for the AASB in addressing NFP issues in the private sector.

Project Advisory Panels

The AASB may appoint stakeholders to a project advisory panel: a group of people with expertise in a particular topic. Panel members may be asked to provide advice and comments to staff and/or the AASB members as agenda papers are developed to address an issue.

Interpretation Advisory Panels

The AASB may form Interpretation Advisory Panels as required on a topic-by-topic basis. The role of Panels is limited to preparing alternative views on an issue and, where appropriate, recommendations for consideration by the AASB. Panel membership normally includes preparers, users, auditors and regulators in order to represent a wide range of perspectives.

Refer to the Interpretations Model document, which describes the Advisory Panel process.


Issue standard or other pronouncement

The outcome of the AASB's consideration of an issue may be the issuance of a pronouncement, such as a standard, an interpretation, or a conceptual framework document. Alternatively, the AASB might decide to address an issue by giving its view on the issue in the minutes of a meeting or in a formal Board Agenda Decision.

Pronouncements applicable to for-profit entities will be consistent with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board. This is to ensure that general purpose financial statements prepared by for-profit entities in accordance with AASB standards will also be in accordance with IFRSs.

The AASB has a transaction neutrality policy under which similar transactions and events should be accounted for in a similar manner by all types of entities, whether in the for-profit sector, the not-for-profit private sector, or the public sector - unless there is a sound reason to be different in particular circumstances. The AASB considers the specific needs of not-for-profit entities in the private and public sectors when preparing new and revised IFRSs for adoption in Australia.


Submissions to international organisations

The AASB takes input received from Australian organisations and individuals into account when preparing its submissions to international organisations. The AASB makes formal submissions on documents issued for comment by the IASB and IPSASB, to contribute to the setting of high quality international accounting standards.


Comments from stakeholders in Australia

The AASB requests formal comment letters (submissions) and other input from stakeholders on the AASB's own proposals and in relation to various consultative documents issued by the IASB and the IPSASB. The AASB considers this input in making submissions to the IASB and the IPSASB and in developing its own pronouncements.


Implementation and compliance

The AASB monitors implementation of accounting standards and interpretations in Australia. This may lead to revisions to domestic AASB standards or to submissions to the IASB or the IPSASB to propose changes to international standards.

Compliance with Australian accounting standards and interpretations is also monitored by other organisations, including:

the Australian Securities and Investments Commission (ASIC)

the Australian Prudential Regulation Authority (APRA)

other Federal, State and Territory Government regulators

CPA Australia (CPAA)

The Institute of Chartered Accountants in Australia (ICAA)

the National Institute of Accountants (NIA).

The AASB receives feedback from the above organisations that assists in assessing whether amendments to standards are required.