Accounting standard setting
Accounting standards in Australia were initially developed by professional accounting bodies and were enforceable under their codes of ethics.
From 1966, the professional bodies jointly operated the Australian Accounting Research Foundation (AARF), which ultimately encompassed both the Accounting Standards Board (AcSB) and the Public Sector Accounting Standards Board (PSASB). These Boards worked closely together in preparing standards for the private sector and public sector organisations.
At the start of 1984, the Accounting Standards Review Board (ASRB) was established by the Ministerial Council for Companies and Securities to review the standards produced by profession and give them the force of company law, where approved by the ASRB. This system operated under the Companies Act 1981 (Cwlth) and corresponding State/Territory Codes. The ASRB and the profession’s AcSB merged in 1988, with the ASRB continuing to work closely with the PSASB.
The ASRB was re-established under the Australian Securities Commission Act 1989 and, in 1991 was renamed the Australian Accounting Standards Board (AASB). The AASB’s standards were then applied under the Corporations Law.
Another restructure was put in place in 2000, with the AASB merging with the PSASB. The new AASB was formally re-established under the Australian Securities and Investments Commission Act 1989 (as it was then re-titled). The regulatory changes also included the establishment of the Financial Reporting Council (FRC) by the Australian Government to oversee the activities of the AASB.
The AASB’s standards now apply under the Corporations Act 2001, and the AASB continues to operate under the Australian Securities and Investments Commission Act 2001.
The Australian accounting standard setters also put significant effort into contributing to developing international accounting standards under the International Accounting Standards Committee (IASC), which was established in 1973 and became the International Accounting Standards Board (IASB) in 2001. The AASB also sought to harmonise and converge its standards with those of the IASB and assist the Public Sector Committee (PSC) of the International Federation of Accountants in developing standards for the public sector. The PSC is now called the International Public Sector Accounting Standards Board (IPSASB).
In 2002, the FRC gave an overall strategic direction to the AASB, requiring the adoption of pronouncements issued by the IASB – the International Financial Reporting Standards (IFRSs). Accordingly, Australian equivalents to IFRSs apply to annual reporting periods beginning or after 1 January 2005. The AASB has also retained some domestic standards and interpretations.
In 2003, the FRC also issued a further broad strategic direction to the AASB about harmonising Government Finance Statistics (GFS) and Generally Accepted Accounting Principles (GAAP) reporting in the public sector.