Accounting Framework (New Vs Old)
In the year 2002, due to the increase in demand of “international compatibility of accounting standards” (Deegan 2007) the Financial Reporting Council (FRC) made a decision in which the AASB would follow suite the actions proceeding taken forth by the IASB (also in conjunction with the FASB). The FRC (2002) announced “its support for the adoption by Australia of international accounting standards by 1 January 2005.” Afterwards parts of the AASB framework distinctly Statement of Accounting Concepts 3 and 4 (SAC3&4) were substituted by equivalent concepts from the International Accounting Standards. SACs 1 and 2 were left untouched until May 2008 when the IASB released an Exposure Draft (ED) stating the intent to replace the remaining SACs. It is arguable of the contrasts between the AASB’s and IASB’s objectives of the general purpose financial reports (GPFRs) with proposals being of similar meaning while others are different of viewed from dissimilar perspectives.
Firstly, the brief objective of GPFRs in the present AASB Framework (par. 12) outlines that “it is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions.” Furthermore the (SAC2 par. 26) states that “the objective of GPFRs is to provide information to users’ that is useful for making and evaluating about the allocation of scarce material.” Similarly the IASB’s objective of GPFRs in the recent Exposure Draft (OB 2) declares it to “provide financial information about the reporting entity that is useful to present and potential equity investors, lenders and other creditors in making decisions in their capacity as capital providers.” Whereas the brief outline given from both the AASB and IASB about the objective of GPFRs is alike; this only just touches the surface of the issue and many other inharmonious proposals such as the definition and nature of...
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