Question

Part A

1. Choose a country that has adopted IFRSs (i.e. global accounting standards) for at least 3 or more years, as revealed in the accounting literature, and discuss the following:

I. In what year did the country adopt IFRSs?

II. Were the IFRSs introduced all together (at once), or gradually into the local accounting standards of your chosen country? Explain the possible reason.

III. Discuss the benefits and challenges reported in the literature about the adoption of IFRSs in your chosen country.

Selected company Australia

Answer 1

1. AUSTRALIA has adopted IFRS standards since 1 january 2005.

2. When Australia initially adopted IFRS Standards as of 2005, the AASB made a number of changes 
   to IFRS Standards, including elimination of accounting policy options and addition of disclosures. 
   In 2007, the AASB approved an 'Amending Standard' that rescinded the changes that the AASB 
   had made to IFRS when it initially adopted them as Australian Equivalents of IFRS Standards. 
   Those amendments were effective 1 July 2007. However some additional disclosures still 
   remain.
   Australia has two Tiers of reporting requirements for preparing general purpose financial 
   statements:
    Tier 1: Australian Accounting Standards; and
    Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.
   IFRS are incorporated into Tier 1 of Australian Accounting Standards, with the addition of 
   paragraphs on the applicability of each Standard in the Australian environment.
   Tier 2 comprises the recognition, measurement and presentation requirements of Tier 1 (which 
   are also the recognition, measurement and presentation requirements of IFRS Standards) and 
   substantially reduced disclosures corresponding to those requirements.

3.  The IFRS Standards transition process has been reasonably smooth for most sectors.
    While IFRS Standards are currently an appropriate basis for AASB Standards developed for
   NFP entities, further modifications are needed to improve the quality and the cost-
   efficiency of financial reporting.
    One of the key benefits of adoption across all sectors is that it has enabled users and
   preparers to move between sectors, and between countries, with transferable knowledge
   and skills.
    Some entities, in particular those that operate in other countries that use IFRS Standards,
   have experienced cost savings in preparing financial reports. In contrast, some small and
   medium-sized entities (SMEs) and NFP entities have concerns regarding the costs of fully
   complying with AASB Standards, particularly the disclosure requirements.