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* The interaction of the Australian equivalents of IFRS with existing governance obligations
* The implications of this for companies in the first reporting season
* Disclosure as a means of educating the marketplace in relation to adjustments caused by the new accounting standards
The Financial Reporting Council has determined that Australia will adopt International Financial Reporting Standards (IFRS) for years commencing on or after 1 January 2005. This has brought about a process of replacing existing Australian Accounting Standards with an IFRS equivalent, specifically for use by Australian reporting entities. In many cases, the changes to existing standards will be minor; in other cases changes will be significant and may completely change the manner in which transactions and balances are accounted for and disclosed in financial statements.
To all those working in the financial divisions of their organisations, governance regulation may feel like familiar territory. However, while coming to grips with the detail of regulation and the requirements of Australian equivalents to IFRS, there is a real possibility of overlooking some broader implications. In this article I will look at the particular aspects of the adoption of the new accounting standards that intersect with existing governance obligations and examine what the implications may be for boards of directors and those who report to them.
Have you considered the following?
* When will you 'know or be able to reliably estimate'?
* Could a market announcement emerge from IFRS considerations?
* What is your obligation to be informed?
Disclosing the impact
Australian Accounting Standards Board (AASB) 1047, 'Disclosing the impact of adopting Australian equivalents to International Financial Reporting Standards', is operative for the 2004 reporting season. It requires the disclosure of the impacts of changes in accounting policies in the period leading up to the adoption of Australian equivalents to IFRS.
For 2004 reports the standard requires …