Implication Of International Accounting In Australia After IFRS Period

Collection of Data

Discuss about the Implication of International Accounting in Australia after IFRS Period.

This research aims at analyzing the consequences of the International Accounting in the Australian local government entities after the International Finance Reporting Standards (IFRS) implementation. Our study will entail examining the effects of the international accounting in all the entities within the entities of Australian local governments after the adoption of the IFRS. Our research will focus on the significant changes in the AASB (Australian Accounting Standard Boards) concerning their policies in accounting before the employment the IFRS regime and after its implementation. The Australian government adopted IFRS in 2004 for its local governments’ entities, and it was fully operational in the 2005/2006 financial year. We will use the annual reports of the period before the IFRS’s implementation and the reports after its implementation. We will then access the effects of IFRS’s adoption on the international accounting practices, focus on the significant changes under the Australian Financial Accounting Board (AASB) and the accounting policies, and study the contrast before and after International accounting practices regime.

According to the IFRS and the accounting standards that were already operating, all the individual units (entities) were crucial in the preparation of good financial records. The entities of the Australian local government were required to allow AASB to prepare and compare revenue (earnings), equity, and the value of assets and liabilities before the end of 2005. After the IFRS became fully operational in the 2005/2006 financial year, it aided in the preparation of the 2006 financial report. Their deviation resulted from a change in accounting policies. We will compare the account records which both the AASB and the IFRS will prepare for the same set of local governments’ entities concerning the entities’ revenue and income, changes in equity, and the values of assets and liabilities (Hanson M. 2006). The following tables show the comparison

Between the annual records at the end of years 2004 and 2006 done with the AASB and IFRS (Taylor, Tower and Neilson, 2010).

Surplus amount as at 31^st December 2004

Value of assets and changes in equity as at 31^st December 2004

Changes in equity as at 31^st December 2006

Value of liabilities as at 31^st December 2004 (Taylor, Tower and Neilson, 2010)

Surplus amount as at 31^st December 2006

Value of assets as at 31^st December 2006

Value of liabilities as at 31^st December 2006 (Taylor, Tower and Neilson, 2010)

Summary of the Outcome

Summary of the outcome

From the collection of the data, we came up with an overview of the comparison between annual reports of the two years regarding their changes in equity, surplus amounts, assets, and liabilities (Taylor, Tower and Neilson, 2010)

There is a difference between the accounting results of the two accounting policies. When the accounting policy of the IFRS is used, it shows positive results. For instance, the value of the changes in equity is higher than when AASB model was used.  . The surplus amount reduces considerably when the model is used, but this is a definite contribution since the surplus amounts marks losses. The value of the assets and liability also increase after the implementation of the IFRS. This is a significant contribution shows that the activities and profitability of the local government entities are growing.

The effects of implementing the IRFG over the AASB are that it has led to financial growth among all entities of the Australian local governments. The increase is clearly shown by the diversity of the financial records before and after the adoption of IFRS. After employment of the IFRS, the changes in equity showed a considerable gain of over 1000m dollars. The difference between the liabilities of the two periods is over 3.05 million, and it has resulted from the raised long-term benefits, benefits of the employees, and many others (Taylor, Tower and Neilson, 2010). The financial position of the Australian local governments’ entities has improved considerably over the two years (Taylor, Tower and Neilson, 2010). It is thus clear that the IRFG accounting technique is the best over the AASB because it brings more income, and ensures a cleaner record of financial statements.

The IFRS implementation has a significant impact on the financial report systems of Australia. They promote the financial position of a firm at hand and in general control the market situation, which in turn controls the economy of their area. The International accounting practices also makes auditing work and preparation of any company’s financial accounts easier. Changes in policies of International accounting system are aimed at correcting the company’s financial and accounting errors as well as discovering new opportunities of growth, this in turn promotes the financial position of the company. These Australian local government entities through their implementation of the IRFS showed their adherent to the internationally agreed accounting (Annual reports 2004, 2006). They presented all their account records and assisted to clarify the impact of employing the IRFS accounting technique

Conclusion and findings

According to  annual reports of the year 2004 and 2006, the implementation of the IFRS as an important accounting tool to be used for on the international accounting practice has been fundamental in describing the history of Australia’s local governments’ annual reports. It has brought about the debates concerning the effects of the International accounting practices before and after the IFRS adoption and how these practices have affected the financial performance of the local governments’ entities. These transformations in the standards of accounting in the individual local government’s units have compelled major alterations to the mode in which these local governments’ entities describe their financial performance. This research has contributed to the knowledge of the effects of employing the IFRS on the International accounting for Australia’s local governments’ entities after the IFRS period (Hanson, 2006). The annual reports of 2005 of all the Australian local government entities provided prove for the positive effects adopting the IFRS. The reports clearly showed the contrast between the effects of International accounting on the financial performances of the entities before and after the IFRS period. From the research’s findings, we comprehend the implications of adopting the IFRS because it has positively affected the surplus amount, changes in equity, as well as the value of assets and liabilities.

 The results have provided insights of the effects of other countries implementing the IFRS for their local governments’ entities. This case study is crucial not only because it has shown the effects of the implementation of the IFRS on the International accounting for Australia’s local governments’ entities, but also because it has provided other countries with the insights of employing it within their local government’s entities. This will be very significant because it will show the comparative effects of International accounting practice and financial performance of different local governments after the IFRS implantation.

References

Hanson, M. J. (2006). Becoming one: The SEC should join the world in adopting the International Financial Reporting Standards. Loy. LA Int’l & Comp. L. Rev., 28, 521.

Taylor, G., Tower, G. and Neilson, J., 2010. Corporate communication of financial risk. Accounting & Finance, 50(2), pp.417-446.

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