International Financial Reporting Standards in Australia Essay Example
International Financial Reporting Standards in Australia
IFRS is an international language used by different companies to make accounting information be understandable and comparable within different countries like Australia (Bradshaw et al 2010). The invitation of shareholders from the international market has some consequences because it leads to the replacement of the domestic accounting standards of different countries. For Australia to make its accounting principles be comparable, understandable and reliable, it establish some rules which guides the professional accountants follow when preparing books of accounts. IFRS has an importance in harmonizing accounting standards in Australia and this harmonization made the accounting principles attractive in the international market.
It is important for the management to make a reasonable judgment when creating and using the accounting policies that can produce comparable and relevant information that can be used internationally (Bradshaw et al, 2010). When assessing the accounting information it is important to take into accounts the description, recognition criteria and appraisal evaluation concepts for the assets and liabilities of the company in relation to the required Australia framework.
The reason why there is regulation is to increase market perfection because absence of this may leads to trade off the cost and benefits of different business organizations of disclosure of efficient level of accounting information. Because the practice of accounting is becoming complex and therefore there is need to create accounting regulation to increase transparency and comparability of the accounting books if different organizations.
Through the establishment of IFRS, there has been comparability of accounting practice since the all the organizations use the same accounting principles when making books of accounts (Bradshaw et al 2010). They can only use accrual or cash basis method of accounting which is practiced in the international market. In the application of IFRS there are some features which make it to make the accounting information to been comparable include fair presentation and compliance with the requirement of IRFS, going concern, materiality, comparative information and consistency of information. These rules which are followed by accountants when preparing books of accounts makes it be comparable and understandable in the global market.
Bradshaw, M., et al 2010, Response to the SEC’s Proposed Rule- Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards (IFRS) by U.S. Issuers. Accounting Horizons(24)1
Gaffikin, M.J.R 2005, “Regulation as Accounting Theory”, Working Paper (wps9), School of Accounting and Finance, University of Wollongong.
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