AASB and adoption of IFRS
1. Introduction
This report aims to investigate as to whether the Australian Accounting Standards Board (AASB) should continue with the proposed Reduce Disclosure Regime (RDR) or whether it should adopt the International Accounting Standards Boards (IASB) International Financial Reporting Standard (IFRS) for Small to Medium-Sized Entities (SME’s) by assessing both the implications of the RDR and the IFRS for SME’s in Australia. Firstly this report will look at the SME sector and address its needs and current reporting standards. Secondly the report will examine the IFRS for SME’s set by the IASB and compare this with the AASB’s RDR. Thirdly the report will discuss what the implications of adopting either the RDR or the IFRS for SME’s in Australia and then finally conclude with recommendations to the AASB on the matter.
It must be stated that this Report assumes that the AASB’s RDR and the IASB’s IFRS for SME’s are the two primary options and will investigate as such. 2. Small to Medium-Sized Entities In Australia.
Firstly to clarify what constitutes as a small to medium sized entity in Australia, the Australian Bureau of Statistics (ABS) defines a small business as an actively trading business with 0–19 employees and a medium-sized business as an actively trading business with 20–199 employees. Also defined by the ABS, an actively trading business is one that has an ABN and is required by the ATO to follow regulations regarding GST, or directly monitored by the ABS and is determined to be active (abs.gov.au).
Australian small to medium-sized entities contribute to a large portion of the economy. As at June 2007 they represented around 2 million actively trading businesses, and employed around 42% of total employed persons in Australia. As at 2006 it had been estimated that SME’s have contributed to around 46% of Australia's Gross Domestic Product (abs.gov.au).
Disclosed by the Australian Government Department of Innovation Industry, Science and
This report aims to investigate as to whether the Australian Accounting Standards Board (AASB) should continue with the proposed Reduce Disclosure Regime (RDR) or whether it should adopt the International Accounting Standards Boards (IASB) International Financial Reporting Standard (IFRS) for Small to Medium-Sized Entities (SME’s) by assessing both the implications of the RDR and the IFRS for SME’s in Australia. Firstly this report will look at the SME sector and address its needs and current reporting standards. Secondly the report will examine the IFRS for SME’s set by the IASB and compare this with the AASB’s RDR. Thirdly the report will discuss what the implications of adopting either the RDR or the IFRS for SME’s in Australia and then finally conclude with recommendations to the AASB on the matter.
It must be stated that this Report assumes that the AASB’s RDR and the IASB’s IFRS for SME’s are the two primary options and will investigate as such. 2. Small to Medium-Sized Entities In Australia.
Firstly to clarify what constitutes as a small to medium sized entity in Australia, the Australian Bureau of Statistics (ABS) defines a small business as an actively trading business with 0–19 employees and a medium-sized business as an actively trading business with 20–199 employees. Also defined by the ABS, an actively trading business is one that has an ABN and is required by the ATO to follow regulations regarding GST, or directly monitored by the ABS and is determined to be active (abs.gov.au).
Australian small to medium-sized entities contribute to a large portion of the economy. As at June 2007 they represented around 2 million actively trading businesses, and employed around 42% of total employed persons in Australia. As at 2006 it had been estimated that SME’s have contributed to around 46% of Australia's Gross Domestic Product (abs.gov.au).
Disclosed by the Australian Government Department of Innovation Industry, Science and