Solution
David answered on
Dec 22 2021
Introduction
The paper presents aims to present a discussion on the Phase 3 and Phase 4 component of the
Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities.It
egins with a discussion on the history and practices in Australia, followed by a consideration
of the structure that existed pre-IASB. Then it goes on to discuss the Phase 3 and phase 4
components of the Conceptual Framework, their relevance, and why and what the likely
outcomes or results of these are. Finally, it goes on to reach a conclusion on the basis of the
esearch done, findings of same and the understanding reached on the basis of such findings.
History of Accounting practices in Australia
The application of accounting standards, practices and principles helps in the generation of
financial information which forms the basis for use by various stakeholders for their decision
making purposes. Initially and since 1966, in Australia the accounting standards were
developed by professional accounting bodies and they operated under their relevant codes of
ethics. These professional bodies jointly operated under the AARF or the Australian
Accounting Research Foundation. Eventually, AARF em
aced both the Accounting
Standards Board or AcSB and the Public Sector Accounting Standards Board or the PSASB.
The main responsibilities of these two boards comprised of working closely together for the
purpose of preparing accounting standards for both private sector as well as public sector
organisations. Further down, in the year 1984, the Ministerial Council for Companies and
Securities set up the Accounting Standards Review Board or ASRB for the purpose of
eviewing the standards produced by the profession; and where they were so approved by the
ASRB, to give them the credibility of the company law. This system operated so as to grant
the standards the authority of the Companies Act 1981 and the matching codes of the relevant
states/ te
itory. In 1988, the ASRB and the AcSB of the profession combined together and
the ASRB continued to work closely with the PSASB. Thereafter, the ASRB was re-
established under the Australian Securities Commission Act 1989 and began to be called the
Australian Accounting Standards Board (AASB) form the year 1991. This newly formed
AASB began to formulate standards which were given credence under the Corporations Law.
(AASB, 2013).
Another round of restructuring was done in the year 2000 which resulted in the AASB
joining hands with the PSASB. This newly formed AASB was formed under the newly titled
Australian Securities and Investments Commission Act 1989. As part of this reorganization,
the Australian Government set up a body to oversee the functioning of the AASB and it
egan to be called the Financial Reporting Council or FRC. Since then, and as of now, the
AASB continues to operate under the Australian Securities and Investments Commission Act
2001 and its standards come to apply under the Corporations Act 2001. (AASB, 2013).
At the international level, the Australian Standard setters also contribute to the development
of the international accounting standards by the International Accounting Standards Board
(IASB), which was formed in 2001 to replace the International Accounting Standards
Committee (IASC) which was formed in the year 1973. Moreover, in the year 2002 and then
2003, the AASB on the direction of FRC went ahead to ca
y out harmonisation and
convergence of its standards with the International Financial Reporting Standards (IFRS) of
the IASB and also the Generally Accepted Accounting Principles (GAAP) reporting in the
public sector; and assist the International Public Sector Accounting Standards Board
(IPSASB) with developing standards for the public sector.
Structure that existed pre-IASB
The advent of the various international financial markets has called for a need to harmonise
the accounting standards worldwide. The purpose of this widespread adoption of the IFRS is
to
ing about transparency and increase the quality of financial statements. In the pre-IASB
period or before the adoption of the IFRS, the earlier AASB along with the PSASB
developed AASB standards which were applicable to all entities regulated under the
Corporations Law. They also developed AAS standards that were applicable to all the other
forms of entities. It is noticed that the AAS series of standards have nearly all phased out with
the exception of AAS 25 on Superannuation Plans. As regards the AASB standards, those
issued from 2000 onwards applied to all forms of entities.
The history of accounting regulation in Australia dates back to the year 1946 when the
Institute of Chartered Accountants in Australia (ICAA), on the basis of the ICAEW, released
five recommendations on accounting principles. Subsequently, in the year 1956, a number of
ecommendations were issued by the Australian Society of Accountants. Later on, the two
odies jointly issued statements as recommendations for the prescribed accounting principles
through the Australian Accounting Research Foundation (AARF). The reason behind such
lack of formality in the accounting standards formation was that there were divided views on
their usefulness in the presentation of accounting information. It was felt that regulation
estricts the organisations from adopting those practices which best suits their performance
and position.Till the IASB period, the AARF teamed up with the AASB to develop the
accounting standards which were mandatory in nature. Finally, with the establishment of the
IASB and the adoption of the IFRS, the standard setting process was taken away from the
AARF.
Conceptual Framework for General Purpose Financial Reporting by Public Sector
Entities
The purpose of the Conceptual Framework, being developed by the International Public
Sector Accounting Standards Board (IPSASB) is to explicitly present the concepts that need
to be applied in developing the International Public Sector Accounting Standards (IPSASs)
and other providing...