Each company has their own regulatory framework as to how to function, how to present the financial statements in the particular manner, how to disclose the company’s intentions of expansion of the business in future and how to comply with the statutory compliances and etc. For each of the work the governing country Government of the company develops such a regulatory framework which will not help the companies to formulate their financial statements but also will help the regulators to check whether the required companies are complying with the requirements of not. In this review, at first the regulatory framework in respect of the accounting has been explained. It has detailed how the regulatory framework has developed over the years and how the accounting standards have developed over the years and how its compliances have been made. The reference has been made to Finance Reporting Council, Australian Accounting Standards Board and Corporations Act 2001. Thereafter, in the next, convergence of Australian Accounting Standards with the framework set for International Financial Reporting Standard has been developed. How International Financial Reporting Standard has been formulated and how the Australian Government has standardized their processes to apply these. Thereafter, the study has been ended with the concluding paragraph stating that the review has been useful to the users of the financial statements.
The financial system of Australia is governed by various components which in itself constitutes the regulatory framework. This regulatory framework reduces the chances of any working or incorrect information to be passed on to the users of the financial statements. Before proceeding with the regulatory framework, it is necessary to have an understanding of the accounting system and how the financial statements are made available to the users of the financial statements.
An accounting is the process of identifying, classifying and recording the transaction of the company at one place. Thus, emerges the books of accounts. Keeping books of accounts in the good condition is one of the major objectives of each and every organization. From these books of accounts the company’s financial statements including the balance sheet at the particular point of time, statement of profit and loss for the particular period, statement of changes in equity and the cash flow statement is prepared. Balance sheet describes the financial position of the company at the particular point of time, statement of profit and loss provides the value of the net profit earned or loss suffered during the year, statement of changes in equity provides the changes in the share capital and the reserves and surplus of the company during the year and the cash flow statement will depicts that the total cash inflows and cash outflows made by the company in three different activities namely operating, investing and the financing. These financial statements are then presented to the auditors of the company to report thereon. Thereafter in the annual general meeting of the company, the auditor report is approved and annual report is published of the company. The annual report of the company contains the financial statements of the company along with the auditor report and the notes to the financial statement of the company. These then are made available for the users of the financial statements. The users of the financial statements are those persons whose decision can be affected by the annual report of the company and includes shareholders, banks and financial institutions, employee and government authorities under which the company performs its function and other stakeholders. The users take the decision on the basis of the analysis of the financial statements they made and the interpretations thereon. In this way, the accounting is very important for every organization whether it is big or small (Deegan, 2010).
For keeping and maintaining the books of accounts there shall be defined framework. Framework is the structure, plan or layout of how to proceed and complete the work in an effective and efficient manner. Framework is regarded as the platform which has been defined as per the need and requirements and the work is done accordingly. Similarly for accounting also there has been framework which has been developed by the Australian Government. The need of the intervention arises in the nineteenth century only. Prior to this there has been no accounting framework. In the thirteenth century the double entry book keeping has been experienced in Italy and with the passage of time in the fifteenth century almost all the countries have started following the double entry system of book keeping. After the establishment of the professional bodies’ chartered accountants, public accountants and society for accountants the company the need for having the financial statements duly prepared by the managers and duly certified by the auditor and adopted by the members of the company has arisen. Although the financial statements have been prepared and authenticated by the company but the contents of the annual report have still not be prepared.
In the year 1998, Australia’s financial regulatory framework has laid down the three elements which are described as three agencies which regulates the financial system of the companies operating in Australia:
Australian existing regulatory framework consists of four major components:
Also the in the year of 1997, Australian government has moved for following
Thereafter the regulatory framework have been further developed by the Corporations Act 2001 which have focused on the true and fair view of the financial statements along with the application of the relevant and applicable accounting standards in the full spirit.
In this manner, the regulatory framework is operating in the country of Australia.
Convergence with IFRS
International Financial Reporting Standards have superseded the relevant accounting that is being applied by the companies operating in Australia. Australian Government has laid down their accounting standards. But the International Financial Reporting Standards setting body has laid down that in addition to the financial statements prepared in accordance with the Australian accounting standards, the company have to follow the International Financial Reporting Standards framework as it has been made mandatory for globally. International Financial Reporting Standards have become applicable from first of January two thousand and five. It comprises of the following two major portions:
Through the direction of the regulatory body – Financial Reporting Council, the International Financial Reporting Standards has made mandatory for the companies listed under the Corporations Act, 2001 and will begin from the period starting from first of January two thousand and five. Thus, the financial statements so prepared by the company in accordance with the Australian Accounting Standards shall also be prepared in accordance with the International Financial Reporting Standards.
As per the Australian Accounting Standards, any transaction or event that has taken place in the profit making entity or no profit entity, the recording of the transaction will be the same and will be entered in the same manner. Whereas while complying with the relevant International Financial Reporting Standards, the difficulties have been faced in case of no profit entity and therefore the specific needs have been satisfied (AASB, 2017).
Australian Government has prescribed two tiers of reporting requirements which is helpful in creating the General Purpose Financial Statements. There are as follows:
International Financial Reporting Standards have stepped into the tier 1 structure of accounting standards. Tier 2 structure specifies the ways of measurement, recognition and the presentation of the financial statements of the company. Thus, an International Financial Reporting standard has become the tier 1 in the structure and its disclosure requirements and other specification have been mentioned as per the tier 2 structure.
Tier 1 structure are mandatory to be applied by the
The following entities may apply tier 1 or tier 2 structures:
As already discussed, tier 1 companies have to comply with the International Financial Reporting Standards along with the application of the relevant Australian accounting standards and shall contain the explicit statement that the company has complies with the International Financial Reporting Standards.
Few International Financial Reporting Standards have been applied universally irrespective of the fact that whether the compliant company comes under the category of tier 1 structure or tier 2 structures. These International Financial Reporting Standards are:
Earlier to introduction of International Financial Reporting Standards, Australia has not adopted International Accounting Standard 26 on Accounting and reporting of the retirement benefit plans of employees. But after the introduction of International Financial Reporting Standards, the companies in Australia have to apply the International Financial Reporting Standards on retirement benefit plans of employees (IFRS Foundation, 2016).
To have deeper knowledge of the standardization of International Financial Reporting Standards, the example of AASB 117 on accounting for leases has been selected. Thus standards states that there are two leases and while entering into any transaction, it shall be bifurcated and understood whether the lease is an operating lease or financing lease. In case of operating lease the lease rentals are charged to the profit and loss statement and have been expensed in the year in which it is incurred and paid. It does not recognize the corresponding asset or liability in the financial statements of the company at the yearend (Chua Y and Cheong C, 2012). The asset or liability if any arises is disclosed in the notes to accounts and remains as off the balance sheet item. In this the economic position of the company cannot be depicted in the real terms. Whereas as per the International Financial Reporting Standards number 16 on leases, there is no bifurcation is required to be made rather the asset or liability needs to be created at the end of the financial year. The financial position as well as the financial performance can be easily judged and the users can take maximum benefit of it. With the adoption of this International Financial Reporting Standards many airline companies and retail sectors will start having the true and fair view of the financial statements and moreover there will be no level playing field for them. Australian Government has now changed their perspectives and has standardized their function accordingly.
Every company shall have proper framework in which it can perform its function in an efficient and effective manner. In this literature review the history of the regulatory framework in respect of the accounting of the financial transactions of the companies have detailed with respect to the origin of the accounting, origin of institute of chartered accountants and thereby auditors, and then the development of Australian regulatory framework for accounting through the accounting standards body and Finance Reporting council. Thereafter the International Financial Reporting Standards have been explained in regard to its convergence with Australian Accounting Standards and have detailed how the Government of Australia have taken up the task of incorporating the International Financial Reporting Standards in their regulatory framework of two tier structures. In order to conclude the review has been the extensive and the users will have now more information about the company in their annual report through the introduction of International Financial Reporting Standards.
The financial statements are the backbone for each and every organization without which no company can function properly. It tells about the financial position of the company at the particular point of time and financial performance for the particular period end. If the financial statements have not been prepared in accordance with the framework of the accounting then the financial statements will be futile serving no purpose to the users of the financial statements.
In this review the regulatory framework of accounting in the country of Australia have been explained and it has been detailed that how the framework have developed over so many years. What are the bodies which are regulating and monitoring the compliance of the prevailing regulatory framework? Whether the framework is being compiled by the applicable reporting entities or not in the full spirit? Further the regulatory framework has been extended to the International Financial Reporting Standards Application and it details that how Australia has standardized their framework and the accounting standards in accordance with the International Financial Reporting Standards in order to give uniform and correct picture of the financial statements. Thus, to summarize, the Australian regulatory framework has been fully standardized for adoption of International Financial Reporting Standards.
AASB, (2017), “What is an IFRS and How does it affect Accounting in Australia”, available on https://www.aasb.gov.au/About-the-AASB/For-students.aspx
Australian Government Official Website, (2017), “Strengthening the Financial Reporting Framework” available at https://archive.treasury.gov.au/documents/403/HTML/docshell.asp?URL=Ch6.asp accessed on 27/04/2017.
Chua Y and Cheong C, (2012), “The Impact of Mandatory Adoption of IFRS on Accounting Quality : Evidence from Australia”, available at https://www.aaajournals.org/doi/abs/10.2308/jiar-10212?code=aaan-site accessed on 28/04/2017.
Deegan C, (2010), “An Overview of the Australian External reporting Environment”, available at https://www.slideshare.net/joshuatuisawau/deegan5e-ch01 accessed on 27/04/2017.
IFRS Foundation, (2016), “IFRS Application Around the World : Australia”, available on https://www.ifrs.org/Use-around-the-world/Documents/Jurisdiction-profiles/Australia -IFRS-Profile.pdf accessed on 28/04/2017.
Reserve Bank of Australia, (2017), “Australia’s Financial Regulatory Framework”, available on https://www.rba.gov.au/publications/annual-reports/cfr/2002/aus-fin-reg-frmwk.html accessed at 28/04/2017.
To export a reference to this article please select a referencing stye below:
My Assignment Help. (2018). Regulatory Framework Existing In Australian And Convergence . Retrieved from https://myassignmenthelp.com/free-samples/regulatory-framework-existing-in-australian-and-convergence.
"Regulatory Framework Existing In Australian And Convergence ." My Assignment Help, 2018, https://myassignmenthelp.com/free-samples/regulatory-framework-existing-in-australian-and-convergence.
My Assignment Help (2018) Regulatory Framework Existing In Australian And Convergence [Online]. Available from: https://myassignmenthelp.com/free-samples/regulatory-framework-existing-in-australian-and-convergence
[Accessed 07 April 2020].
My Assignment Help. 'Regulatory Framework Existing In Australian And Convergence ' (My Assignment Help, 2018) <https://myassignmenthelp.com/free-samples/regulatory-framework-existing-in-australian-and-convergence> accessed 07 April 2020.
My Assignment Help. Regulatory Framework Existing In Australian And Convergence [Internet]. My Assignment Help. 2018 [cited 07 April 2020]. Available from: https://myassignmenthelp.com/free-samples/regulatory-framework-existing-in-australian-and-convergence.
MyAssignmenthelp.com is one of the noted service providers that deliver essay help. We provide tailored essay assistance to make sure that student gets online essay help exactly in the way they want it to be written. We at MyAssigemnthelp.com have built teams of consultants, who readily attend every query related to help me writing my essay. We provide essay writing help in forms of tips and steps in order o assist students with tough essay assignments.
Answer: In many ways the ethical issues are considered as a tiny subject to talk upon however when the ethics is on the basis of the company, the ethical decision models are necessary to compete with other companies in order to have a competitive advantage. Also putting ethics as the last option can create the trouble among the organisation. The company needs to perform ethical practices and the policies to gain the market share and the large ...Read More
Answer: Introduction The aim of the report is to compare the financial performance of A.P. Eagers Limited (APE) Ltd and comparing it with its competitor Automotive Holdings Group Limited (AHG) Ltd. Performance of the companies will be compared through computing various ratios like net profit margin, debt ratio, current and quick ratio, assets turnover and cash cycles. A.P. Eagers is the oldest automotive retail group listed in Australia...Read More
Answer: Introduction: The report has focused on evaluating the financial performance of the A2 Milk Company Limited for 2018 along with anticipating future performance depending on a number of assumptions made by the organisation. It is an ASX listed organisation producing milk and other dairy products operating in Australia and New Zealand (The a2 Milk Company 2019). In addition, a detailed discussion of the top-down and bottom-up approaches...Read More
Answer: Introduction: The international financial crisis and the economic crisis of 2008-09 is not well unspoken among the government, media or in the theoretical discourse. The public hunt for the guilty without understanding the difficult causes of the disaster (Lane and Milesi-Ferretti 2018). A large part of the people believe that the culprits are the bankers, bonuses, greed, fraud, speculations and corruptions. While others have hi...Read More
Answer: Introduction Global Financial Crisis (GFC) is considered the most significant worldwide economic catastrophe since the Great Depression of 1929. The sub-prime mortgage crisis is an example of the financial crisis that created an impact on the global financial markets across the world. The aim of the paper is to discuss the possible causes that lead to the financial crises and the examples crises. Further, it includes the opinion relat...Read More
Just share your requirements and get customized solutions on time.
Our writers make sure that all orders are submitted, prior to the deadline.
Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.
Feel free to contact our assignment writing services any time via phone, email or live chat.
Our writers can provide you professional writing assistance on any subject at any level.
Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.
Get all your documents checked for plagiarism or duplicacy with us.
Get different kinds of essays typed in minutes with clicks.
Calculate your semester grades and cumulative GPa with our GPA Calculator.
Balance any chemical equation in minutes just by entering the formula.
Calculate the number of words and number of pages of all your academic documents.
Our Mission Client Satisfaction
Great job , quick response. Will call back again , highly recommend ...............
Great help. This website saved my life because I was behind in submitting and I have a jobwhich prevented me from completing the assignment. Thank you My Assignment
I passed this particular course with very good. I hope to pass the other ones too. I am very happy
The assigment u have sent me I think it’s fine but instead of I believe or I u can write student believe or like this it’s should not be I