Podcast
Questions and Answers
What is the primary purpose of the International Financial Reporting Standards (IFRS)?
What is the primary purpose of the International Financial Reporting Standards (IFRS)?
What is one of the key functions of the Australian Accounting Standards Board (AASB)?
What is one of the key functions of the Australian Accounting Standards Board (AASB)?
How does the Australian Securities and Investments Commission (ASIC) contribute to the accounting standards process?
How does the Australian Securities and Investments Commission (ASIC) contribute to the accounting standards process?
What role does the Australian Securities Exchange (ASX) play in relation to public companies?
What role does the Australian Securities Exchange (ASX) play in relation to public companies?
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Which of the following is NOT a way lobby groups influence accounting standard setting?
Which of the following is NOT a way lobby groups influence accounting standard setting?
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What is the primary purpose of accounting standards for external users?
What is the primary purpose of accounting standards for external users?
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What must the AASB refer to when preparing accounting standards for Australia?
What must the AASB refer to when preparing accounting standards for Australia?
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Which of the following is a function of lobby groups in the context of accounting standards?
Which of the following is a function of lobby groups in the context of accounting standards?
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How do accounting standards assist the directors of companies?
How do accounting standards assist the directors of companies?
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What does ASIC efficiently manage in relation to companies?
What does ASIC efficiently manage in relation to companies?
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Which statement best describes the role of the Financial Reporting Council (FRC)?
Which statement best describes the role of the Financial Reporting Council (FRC)?
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What aspect does accounting standards aim to enhance regarding investor confidence?
What aspect does accounting standards aim to enhance regarding investor confidence?
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What is one of the mandatory requirements of accounting standards for reporting entities?
What is one of the mandatory requirements of accounting standards for reporting entities?
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What purpose does the International Accounting Standards Board (IASB) serve?
What purpose does the International Accounting Standards Board (IASB) serve?
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How do accounting standards affect the ability of entities to compete overseas?
How do accounting standards affect the ability of entities to compete overseas?
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What benefit do accounting standards provide to the preparers of financial reports?
What benefit do accounting standards provide to the preparers of financial reports?
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Study Notes
Accounting Standards
- Standards are instructions and guidelines for financial reporting policies and practices
- They are technical documents outlining how businesses should complete specific elements in recording transactions
- They are mandatory (legally required) for all reporting entities
Purposes and Advantages of Accounting Standards
Protecting External Users
- Help external users by ensuring accounting reports of public companies contain relevant and faithfully represented information on company performance
- Assist external users (creditors, investors) to analyze and make informed judgments about entities
- Facilitate the provision of financial information and comparable reports
Assisting Directors
- Assist directors in performing their duties
- Ensure financial statements accurately reflect company performance
- Assist prepares of financial reports by giving them a framework and benchmarks, facilitating accountability and promoting accurate reporting
- Ensure directors of public companies are held accountable, regarding the large amounts of money invested in these organizations
- Providing confidence to investors in the Australian capital markets
Effect on Performance and Economy
- Concern for shareholders, reflected in high quality standards, has a profound effect on the performance of individual companies, and the health of the economy
- Enables Australian companies to compete effectively overseas
- Helps reducing the cost of capital
Accounting Bodies
Financial Reporting Council (FRC)
- Oversees appointments and budgets for AASB.
- Provides broad strategic direction
- Has a major indirect influence on the development of Accounting Standards companies are required to follow
International Accounting Standards Board (IASB)
- Appointed, funded and overseen by the IASCF (International Accounting Standards Committee Foundation)
- Develops a set of high-quality global accounting standards (IFRS)
- Transparent and comparable standards
- Collaborates with national accounting standards setters
Australian Accounting Standards Board (AASB)
- Independent accounting standards organization based in Melbourne
- Develops a conceptual framework for evaluating proposed accounting standards
- Develops and issues accounting standards (force of law for all reporting entities in Australia)
- Refers to IASB during the preparation of accounting standards.
- Participates in and contributes to the development of a single set of Accounting Standards for worldwide use
Australian Securities and Investments Commission (ASIC)
- Issues interpretations of accounting standards (in the form of Practice Notes)
- Monitors compliance with standards
- Refers practice issues to AASB for possible amendments
- Receives, processes and stores information given
- Regulates and informs the public about Australian companies
Lobby Groups
- Attempt to influence standard setting, with reference to their industry goals or interests
- Methods include:
- Being appointed to FRC or AASB
- Being appointed to committees or advisory groups
- Involvement in the standard-setting process
- Engaging in public debate on issues related to accounting standards
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Description
This quiz covers the essential aspects of accounting standards, including their purpose, advantages, and the protection they offer to external users. Learn how these standards guide financial reporting practices and support directors in maintaining company accountability. Test your knowledge on the implications of these technical documents in real-world financial scenarios.
