What is the purpose of the AASB?
The AASB operates under the Australian Securities and Investments Commission Act 2001. Its role is also to contributes to the development of a single set of accounting and external reporting standards for use across the world. In its work, the AASB seeks to contribute to stakeholder confidence in the Australian economy.
What is the AASB conceptual framework?
The AASB uses a conceptual framework to develop and evaluate accounting standards. This framework lays out the principles that underpin how financial statements should be prepared and presented. It is designed to be used by external entities in the Australian economy.
This framework is designed to create ‘transaction neutrality’. This policy means that similar transactions or events are recorded in a similar way by entities of all kinds, of all sectors, unless in particular circumstances.
How does the AASB develop accounting standards?
Since 2005, the Australian Accounting Standards have incorporated concepts from the International Accounting Standards Bureau (IASB), the independent body that develops the International Financial Reporting Standards (IFRSs).
If an issue is identified (by the AASB, the IASB or by an Australian organisation or individual), there are a series of review and consultation processes that take place, which vary depending on the issue. Matters relating to not-for-profit entities are examined by the IASB or the IFRS Interpretations Committee.
Australian organisations and individuals can refer a matter for consideration to the AASB. Once identified, that issue is assessed and a project proposal is developed in response by the AASB – these proposals put forward the potential benefits, costs and the expected timeline of undertaking the project. The Board then makes the decision on whether to move forward with the project.
In researching and considering technical issues, the AASB consults with a wide range of domestic stakeholders and international standard setters. Issues which affect not-for-profits in the public and private sectors may be referred to the International Public Sector Accounting Standards Board (IPSASB).
The AASB monitors the implementation and interpretations of the accounting standards in Australia. When preparing new and revised IFRSs for adoption in Australia, the AASB takes into account the particular needs of all entities, including not-for-profit organisations. On occasion this process may lead to revisions of the AASB standards, or to proposed changes to international standards.
Compliance with the AASB
As part of their duties, a board of directors must ensure that their organisation maintains compliance with the relevant standards set out by the AASB. This includes the preparation of all external financial reporting as regards:
- The financial statements.
- The notes that accompany the financial statements.
- The directors’ declaration.