Discuss about the Accounting Theory for the Post Employment Benefits.
IASB and AASB
Post Employment Benefits:
The IASB has been working on the area of post employment benefits from as early as the year 2006. In the recent years the body has concluded on its plans on the said genre. The revisions to the IAS 19 Employee Benefits got effective in the beginning of the year 2013 (1st January). Evaluation has clearly pointed out at certain particular areas that can do with a good amount of changes. Following the footsteps of the IASB the AASB has also declared the amendments and changes in the year 2011 through the AASB 119. Amongst the various changes and immediate steps that have been prescribed, there is a need to immediately recognize the cost for all the estimated changes in the benefits and also the values of the plan assets. The different components of the mentioned benefit plan. The various risk factors that are associated with the benefit plans are also to be defined. The recent standards shall clearly mention the important inconsistencies that are to be found in the industry of superannuation. These are found when the various benefits plans are compared using the earlier requirements. The new requirements can actually help a person to understand the way the entity’s financial position can be affected by defined benefit plans. In the year 2013 in November the IASB issued another amendment that was the narrow cope amendment to the IAS 19 Employee benefits. This was a step that was taken so that further simplification could b brought about in the accounting for any employee or even a third party’s contributions that are made towards the definite benefit plan. It also reduced the worry of the stakeholders that were pertaining to the complexity of the requirements. The amendments were to commence from the period of or after the year of 2014. No such amendment of AASB has been made for Australia yet.
This project had been undertaken to evaluate the huge cost that is often incurred in providing post employment benefits to the employees of the companies of the nation. This is all the more true for the public sector employees. This project aimed at bringing the maximum benefit for both the person who shall be receiving the amount and also for the body who shall be giving away the amount of money as the post employment benefits. (Aasb, 2015).
The IASB in the year 2014 along with the FASB id conclude a project that aimed at improving and also for standardizing the process of accounting for revenue recognition. The project says that some of the biggest concerns in the said field are the absence of any robust principles that can be used to recognizing the total volume of revenue. The new rule was to be implemented from the year 2017; however it has been deferred to the year of 2018. The changes that were to be made would have had very significant effect on various types of industries. The new rules were supposed to be very lengthy and elaborate. This also meant that a large number of challenges were to be faced at the time of implementing the new changes. This was because the number of stakeholder who shall get affected would have been many. These issues were to have reported to the board from where resolution was expected. The IASB required ample time to solve all the issues; hence it wanted a delay of one year. Hence it got finalized in the year 2015. The AASB 15 was released in the year 2014 in the month of December. Its operative date was January 1st of the year 2017. The amendments that were brought about did touch over 21 standards and other 6 interpretations. In November of the year 20145 this date was further delayed by another year. The new AASB objectives aimed at getting some really solid model for revenue recognition, all the existing inconsistencies were to be removed. In addition of the same the financial reports were also simplified, for which extra requirements were to be eliminated. The project requires a number of transformations.
This new project aimed at consolidating the calculative foundations that would be required to keep a track of the revenues that did come in. This was one of the projects that aimed at keeping a track of the total amount of income of the national economy through the means of revenue.
Answer to Q no 3a
The view that has been provided in the said case seems to be quite justified. The public funds are revenue that often comes in from various accounts. However the civil taxes and contributions from the general population happen to be some of the most potential sources of public funds. This is a categorically wide spectrum fund that contributes to the functioning of the local bodies. Hence in order to gain a proper budgeting of the funds and see to the fact that they are spent in a planned manner so that all the civil needs can be fulfilled a proper stewardship or management of the funds happens to be imperative. However when an eminent body such as the IFRS does not require maintaining an accounting of these public funds that are kept for supply of services, the local authority’s are bound to face a lot of chaos and anarchy. It is important that clearly fiscal bodies such as the IFRS do maintain a good tab and control over the whereabouts of the public funds that are coming in. [roper recognition, estimation and also accounting of these funds happens to be absolutely necessary in case the operations of the local authorities are to be carried out in a smoothed manner. A fund that provides money and financial support to the local authorities and also the rest of the bodies is actually the main fuel that keeps the entire business operating. Once this aspect is faced with a chaos the entire scenario has to face dilapidation. This is a fact that clearly means that a potential failure is lurking nearby to meet with only as time shall permit. (Ifrs, 2016).
The services and its regular supply within regular time intervals shall clearly lubricate and shall facilitate the working of the local authorities. Hence managing and keeping a proper evaluation of the funds that keeps the local authorities running and also the services being supplied to them regularly, is nothing short of being imperative. (Hoogervorst & Prada, 2016)
4a. It is often argued that the integrity of IASB is doubtful so far application of IFRS is concerned. It is mainly raised for pampering the interest of four big giants of accounting and audit firms in the names of Price Water Coopers, Deloitte, Ernst and Young and KPMG. The question raised because these four audit and accounting firm has got the global presence in the field of accounting practices with audit performance. They are following IASB as their major guideline for the respective standard of accounting for practice.
It is to be reckoned that the performance of IASB is structured on the strong foundation of their constitutions. This constitution is the basic pillar of IASB so far its activities are concerned. This constitution is encouraging democracy with sincerity to accomplish the objective of serving the stakeholders. The activities and performance of IASB is not always encouraging the interest of four major audit firms but public interest is also taken care of.
In case of the said controversy, it is mainly raised related to the professionalism of AISB. The governance of IASB is the main area of concern in this aspect. It is often concluded that IASB has implied a thin layer which is endorsed with technocratic attitude. This attitude is promoting neutralism which is not supposedly supporting the accomplishment of objectives regarding the interest of the investors who are intending to do so for short term. The basic feature of IASB application is based on fair value concept which endorses the idea of market value of accounting. It is often argued with other opinions like the endorsement of idea of sponsorship by IFRS for short period events. This idea always endorses the concept of declaring high rate of dividends for promoting the required force in the stock exchange market. This is the basic argument which is posed to support the intention of IASB and its application. This idea never endorses the objective of maintenance of public interest. IASB is facing the criticism by the critics that they should fix their objectives with the main emphasis on the public interest. It is also suggested that the constitution of IAASB should be made in such a way that they can initiate necessary strategies to accomplish the objective of public interest on the prime zone of its highlighted area of performance.
IASB should sit with its governing body to discuss about this issue and start initiating some positive steps which can make people feel that IASB is positive minded with this issue. It is the constant endeavour of IASB to make a common platform globally for accounting standards. (Hoogervorst & Prada, 2016).
The question is raised on the anticipated application of IFRS in the local public bodies of Australia. It is always known that the local public bodies are governed by the local authorities and they are run by the Government in overall aspect. As the local public bodies are run with the objective of serving the community and the nation by their services, the role of profit generation is never been on the card of prioritization. IFRS is mainly applicable to those business entities which are more prone to generate profit by their activities sponsoring commercial activities. The local public bodies are mainly serving the people of the community by their services. Although the local public bodies are with the objective of serving people of the community, they should have the need to maintain the balance of the revenue and expenditure in different forms. The accounting system is normally followed by the local public bodies are unique in nature and tailor mode prioritising the issues of public interest. This may include communication tools for the stakeholders. IFRS mainly insists on the commercial activities, but is also applied in different countries like Malaysia, Canada in their local public bodies as the practicing accounting standards. The main requirements of the accounting system are focused with the reporting style and standards. IFRS, if followed by Australian Public Bodies, will attract lots of steps to ensure perfect and successful roll out of the accounting system. But above all, the issue of reporting is to be tailor made as pr the requirement of the respective public bodies. It is bit difficult for the local public bodies to introduce a single platform accounting system like IFRS for all, as different units need to be treated with their specific area of operation which generates the need of customised reports. It is the area of the government in country or local base to decide on the issue of such roll out from the practiced system of accounting to IFRS. When to implement the same, it will consume good amount of time and it is also to be find out if the authorities have such leniency of time as the activities can’t be stopped for the roll out process. The government should make a parallel run of both the system of they are willing to implement IFRS. But they should think over the prefixed hazards to make a final roll over of the accounting system to switch over the accounting process from practised version to new IFRS system. The main objective to excel in service and it is to be diagnosed if the same can be possible or not with this change over. Ultimately Government is the main authority to decide on it and they will do what they feel best for serving the community with its people and the nation as a whole. (Mof, 2015).
Aasb. (2015). AASB Standard. Retrieved September 30, 2016, from https://www.aasb.gov.au/admin/file/content105/c9/AASB102_07-15.pdf
Hoogervorst, H., & Prada, M. (2016). Working in the Public Interest: The IFRS Foundation and the IASB. Retrieved September 30, 2016, from https://www.ifrs.org/About-us/Documents/Working-in-the-Public-Interest.pdf
Ifrs. (2016). IFRS Application around the world. Retrieved September 30, 2016, from https://www.ifrs.org/Use-around-the-world/Documents/Jurisdiction-profiles/Australia-IFRS-Profile.pdf
Mof. (2015, October 15). Conceptual Framework for Financial Reporting. Retrieved October 09, 2016, from Mof: https://kjs.mof.gov.cn/zhengwuxinxi/gongzuotongzhi/201506/P020150629528305757224.pdf