Australia
Accounting down under
The story of numbers in the
land of wonder
Presented by Group 4
Table of contents
01 Brief introduction
National and economic context, Sociocultural and institutional
environment, Accounting infrastructure, Measurements and disclosures,
Non-human factors
02 Main content
Major sources of influence, Accounting profession, Accounting standards
and practices, IFRS Adoption – Progress and Challenges, Sustainability
and ESG reporting
Group members
Name
ID
Nguyễn Hoàng Ngân
11224564
Nguyễn Sinh Phúc
11225140
Nguyễn Thị Thu Phương
11225281
Nguyễn Thu Thảo
11225947
Lê Tiến Thịnh
11226016
Nguyễn Thành Trung
11226621
A. Brief
introduction
I. National and Economic
Context
I. National and Economic Context
1. Economic structures
Australia has a diverse economy:
Capital market highlights:
• ASX ranks 8th globally
• Strong bond & derivatives markets
• Largest funds management sector in
Asia-Pacific
(driven by compulsory superannuation)
I. National and Economic Context
1. Economic structures
Capital market highlights:
• FDI remains high at A$4.97 trillion (2024), with a risk-based
approach in sensitive sectors.
I. National and Economic Context
1. Economic structures
Capital market highlights:
• GDP per capita: ~USD 64,820 (30th globally), but real GDP per
capita fell in 2024 due to inflation, high borrowing costs, and
population pressure on public services.
=> Economic conditions drive demand for strong valuation, sector-specific reporting,
and greater audit focus on fair value, risk, and compliance.
I. National and Economic Context
2. Entrepreneurial practices
Australia’s entrepreneurial ecosystem:
• Dynamic, supported by a free-market economy, government backing, capital
access, and skilled workforce.
• High global rankings in ease of doing business and innovation.
I. National and Economic Context
2. Entrepreneurial practices
SMEs:
• Account for over 97% of registered businesses.
• Active in retail, construction, hospitality, and healthcare.
• Agile but face challenges with complex accounting and investor access.
I. National and Economic Context
2. Entrepreneurial practices
• Impact on accounting:
⚬ SMEs need simplified reporting and external advisory.
⚬ Corporations require detailed IFRS reports and audits.
⚬ Startups face challenges with revenue recognition, intangible valuation,
and investor reporting.
⚬ Accountants play an increasing strategic role in supporting growth and
innovation.
I. National and Economic Context
3. Inflation
• Inflation in Australia is tracked by the Consumer Price Index (CPI),
published by the ABS.
I. National and Economic Context
3. Inflation
• The Reserve Bank of Australia (RBA) targets 2–3% inflation using interest rate
adjustments to maintain price stability and support the economy.
Figure: Australia’s Inflation Rate 1960-2024
II. Sociocultural and
Institutional Environment
II. Sociocultural and Institutional Environment
1. Cultural Environment
Combines Gray’s accounting values with Hofstede’s cultural dimensions to explain
how cultural factors influence accounting practices in Australia.
II. Sociocultural and Institutional Environment
1. Cultural Environment
Gray Dimension
1. Professionalism
2. Flexibility
Australia’s Likely
Position
Justification (linked to Hofstede)
High
Australia’s high individualism (73) and low
power distance (38) promote the use of
professional
judgment
and
ethics
in
accounting, beyond strict legal rules.
Moderate to High
With moderate uncertainty avoidance (51),
Australian accountants can apply principlebased standards like IFRS with flexibility and
interpretation.
II. Sociocultural and Institutional Environment
1. Cultural Environment
Gray Dimension
3. Optimism
4. Transparency
Australia’s Likely
Position
Justification (linked to Hofstede)
Moderate
Australia’s masculinity (61) and short-term
orientation (56) reflect a focus on
performance and profit, though conservative
reporting is still valued for compliance.
High (Low Secrecy)
High individualism, low power distance, and
high
indulgence
(71)
support
open
disclosure and investor-friendly reporting,
backed by strong legal protections
II. Sociocultural and Institutional Environment
2. Social structure
According to a 2015 ANU Poll,
• Over 90% of Australians identify as
middle or working class
=>This class structure creates a public
demand
for
financial
fairness
and
transparency.
=> drives demand for accurate corporate
disclosures and accountability
II. Sociocultural and Institutional Environment
2. Social structure
Political environment
Australia has a very stable and
transparent political system,
supported
by
democratic
institutions and strong rule of
law.
World Bank – Worldwide Governance Indicators (2023)
II. Sociocultural and Institutional Environment
2. Social structure
Political environment
Australia scored 0.92 for political
stability, placing it in the top
20% globally.
World Bank – Worldwide Governance Indicators (2023)
II. Sociocultural and Institutional Environment
2. Social structure
Political environment
Australia scored 0.92 for political
stability, placing it in the top 20%
globally.
=> Australia has low political risk,
making it a safe and predictable
place
for
both
local
and
international businesses.
World Bank – Worldwide Governance Indicators (2023)
II. Sociocultural and Institutional Environment
2. Social structure
Political environment
For the accounting profession,
this stability helps build trust in
financial reporting and provides
a strong foundation for adopting
global standards like IFRS.
World Bank – Worldwide Governance Indicators (2023)
III. Accounting Infrastructure
III. Accounting Infrastructure
1. Procedures for developing standards
Australian Accounting Standards Board (AASB)
• Primary authority responsible for developing and issuing accounting
standards
• Operates independently under the oversight of the Financial
Reporting Council (FRC)
• Derives authority from the Australian Securities and Investments
Commission Act 2001 (ASIC Act)
• Ensures that Australian accounting standards promote transparency,
accountability, and efficiency across the economy.
• Maintains close alignment with the International Accounting
Standards Board (IASB) to ensure consistency with global practices.
III. Accounting Infrastructure
1. Procedures for developing standards
Standard-Setting Process
• Research and Monitoring: The AASB monitors IASB
developments and conducts local research to identify trends
• Public Consultation: When a new standard is proposed,
AASB publishes Consultation Papers or Exposure Drafts,
seeking feedback from stakeholders
• Evaluation & Finalization: The AASB reviews feedback,
issues new or revised standards through official
Pronouncements.
• Post-Implementation Review: After implementation, the
AASB may conduct reviews to assess if the standard achieves
its objectives and address challenges..
III. Accounting Infrastructure
1. Procedures for developing standards
Institutional Framework
The AASB operates within a collaborative regulatory
environment:
•
Financial Reporting Council: provides strategic
oversight and ensures AASB’s activities align with the
national interest.
•
Australian Securities and Investments Commission:
monitoring and enforcing corporate compliance with
accounting standards.
•
Australian Government Treasury: ensure accounting
standards support broader economic policy goals and
aligned with Australian law.
III. Accounting Infrastructure
2. Measurements and disclosure
Measurement Bases
•
Historical cost
•
Fair Value
•
Present value
•
Amortized cost
Disclosure Requirements
•
Accounting policies adopted and any changes
•
Key estimates and management judgments
•
Related party transactions
•
Segment reporting for diversified businesses (AASB 8)
•
Events after the reporting period (AASB 110)
•
Financial risk exposures (AASB 7)
III. Accounting Infrastructure
2. Measurements and disclosure
ESG Reporting
•
Large companies voluntarily
reports with frameworks:
align sustainability
•
TCFD (Task Force on Climate-related Financial
Disclosures)
•
GRI (Global Reporting Initiative)
•
AASB is actively preparing to adopt ISSB-based
sustainability standards
Digital Reporting
Digital financial reporting through XBRL
•
Enhances data usability for investors & regulators
•
Standardized tagging improves accuracy & efficiency
•
Automation transforms financial data analysis
III. Accounting Infrastructure
2. Measurements and disclosure
Implications for Accounting and Auditing Practices
Mục này có hình ảnh của: Accounting woman is counting money | Premium Vector
For Accountants:
– Apply sound professional judgment in complex areas
– Develop expertise in sustainability frameworks, non-financial
data assurance, and technology-enabled reporting tools
For Auditors:
– Ensuring both numerical accuracy and the adequacy and
transparency of disclosures
– New audit methodologies and expanded skill sets to provide
assurance for ESG reports and digital reporting
Agile, forward-thinking, and committed to upholding the integrity and usefulness
of financial reporting
IV. Non-human Factors
IV. Non-human Factors
1. Background and applicable standards
Climate-fueled disaster
•
84% of Australians have experienced at least one
climate-related disaster since 2019
•
Major disasters:
•
•
Heatwaves (71%)
Droughts (37%)
Floods (45%)
Bushfires (43%)
Destructive storms (35%)
Landslides (8%)
Traditional assessments focused on business & infrastructure losses.
Burnt Assets Report: Evaluate natural capital impact, estimating 400–700 million
tones of CO₂ emissions
IV. Non-human Factors
1. Background and applicable standards
Climate Risk: New materiality
•
Risk: Physical (weather) & Transition (regulation)
risks are key drivers of litigation and financial loss.
•
Mandate: Climate risk is a material risk affecting
financial statements (impairments, disruptions)
•
Framework: Key tools for professionals include:
– Auditing Standards: ISA 315, ISA 330, ISA 540
– Reporting Guidance: TCFD and emerging ISSB
standards.
•
•
Traditional assessments focused on business & infrastructure losses.
Burnt Assets Report: Evaluate natural capital impact, estimating 400–700 million
tones of CO₂ emissions
IV. Non-human Factors
2. Adapting Accounting Policies
Asset Valuation and Impairment
•
Useful life reassessment based on regulatory,
technological & environmental changes.
•
Include climate scenarios in impairment models
•
Evaluate carbon pricing, resource scarcity &
sustainable demand impacts
Provision & Liabilities
•
Environmental restoration & decommissioning costs
for asset-heavy entities.
•
Supply chain disruptions raise contractual risks &
costs.
•
Legal risks from greenwashing & emissions failures
IV. Non-human Factors
2. Adapting Accounting Policies
Estimates & Assumptions
•
Organizations must refine methods for:
•
Asset fair values and recoverable amounts
•
Inventory obsolescence
•
Restoration and litigation obligations
•
Credit losses, especially from climate-exposed
borrowers
B. Main
content
I.
Major sources of
influence on
accounting in Australia
I. Major sources of influence on accounting in Australia
1. Government & Regulatory Bodies
a. Australian Accounting Standards Board (AASB)
→ Develops and maintains Australia's
accounting standards, which are fully aligned
with IFRS.
→ Has statutory authority under the Australian
Securities and Investments Commission Act
2001.
→ Actively issues Interpretations and Guidance
Notes tailored to the local context.
Australian Securities and Investments Commission (ASIC)
→ Regulates financial reporting,
ensures
compliance
with
AASB
standards for listed companies.
→ Enforces accounting transparency
under the Corporations Act 2001.
b. Professional Bodies
CPA Australia and Chartered Accountants ANZ (CA ANZ)
→ Develop and enforce codes of
ethics,
Continuing
Professional
Development (CPD), and audit quality
standards.
→ Engage in policymaking through
submissions to AASB and Treasury.
c. International Bodies
→ Since 2005, Australia has adopted
IFRS-based standards through the AASB.
→
AASB
participates
in
consultations and comment letters.
IFRS
→ Australia is a member of the IFRS
Asia-Oceania Standard Setters Group
(AOSSG).
d. Academic & Corporate (Universities + Big Four)
University Accounting Programs
→ Influence the profession through
research, education, and thought leadership
in financial reporting, auditing, and
sustainability.
→ Examples: Centre for Accounting and
Industry Partnerships (CAIP) at UniMelb.
PwC,
Deloitte,
EY,
KPMG in
Australia
d. Academic & Corporate (Universities + Big Four)
PwC, Deloitte, EY, KPMG in Australia
→ Have substantial influence on how IFRS is interpreted in practice.
University
Accounting
Programs
→ Participate in AASB working groups and issue thought leadership (e.g.,
climate risk, ESG reporting, fair value measurement).
→ Train the majority of early-career accountants and set practical
benchmarks.
Example: Deloitte Australia’s “Clarity in Financial Reporting” guides for
AASB/IFRS updates.
⇒ These institutions collectively influence standards, ethics, and
compliance, ensuring Australia’s alignment with global best practices.”
II.
The Accounting
Profession in Australia
II. The Accounting Profession in Australia
1. Educational Pathway
a. Complete an Accredited Degree
• Bachelor of Accounting or Bachelor of Business
• Takes 3 years full-time
b. Alternative Pathway
• Master of Professional Accounting
• For those with non-accounting degrees
• Takes 2 years full-time
c. Professional Accreditation Required
• Degree must be approved by: CPA Australia & CA
ANZ
• Ensures compliance with industry standards
2. Certification: CPA Australia vs CA ANZ
CPA Australia (Certified Practising Accountant)
• One of the largest global accounting bodies
• Members work in over 100 countries across various industries
How to Become a CPA:
• Hold a recognised accounting degree
• Complete the CPA Program
• Gain at least 3 years of relevant professional experience
Key Focus Areas:
• Practical business skills
• Accounting and finance
• Strategic thinking
• Leadership development
CA ANZ
(Chartered
Accountants
Australia
and New
Zealand)
2. Certification: CPA Australia vs CA ANZ
CA ANZ (Chartered Accountants Australia and New Zealand)
• Represents Chartered Accountants in Australia and New Zealand
• Recognised internationally for high professional standards
CPA
Australia
(Certified
Practising
Accountant)
How to Become a Chartered Accountant:
• Hold a recognised accounting degree
• Complete the CA Program
• Undertake 3 years of mentored practical experience
Key Focus Areas:
• Accounting and auditing
• Ethics and assurance
• Strategic decision-making
• Professional integrity and leadership
3. Skills and Practical Experience
Core Skills for Accountants in Australia:
•
Financial Accounting
•
Auditing
•
Taxation
•
Management Accounting
Practical Experience Matters:
•
Gained through internships or entrylevel roles
•
Builds confidence
understanding
•
Complements technical knowledge
and
real-world
4. Continuing Professional Development
Required annually by most professional bodies
Keeps accountants up to date with:
•
New laws
•
Technology
•
Accounting standards
For International Applicants:
•
Must meet Australian visa requirements
•
Pass a skills assessment by a recognised authority
•
Ensures eligibility to work as an accountant in Australia
•
III.
Key or unique
accounting standards
and practices
III. Key or unique accounting standards and practices.
1. IFRS Adoption in Australia
• Adopted IFRS since 2005 for for-profit entities.
• Overseen by Australian Accounting Standards Board (AASB) → an
independent body appointed by the government.
• AASBs mirror IFRS issued by IASB, including the numbering system.
• Supports global comparability and promotes harmonization of financial
reports internationally.
• Beyond IFRS adoption → AASB also issues specific standards in the
AASB 1000 series to reflect Australia’s legal and economic context.
III. Key or unique accounting standards and practices.
2. Two-Tier Differential Reporting Framework (AASB 1053)
Tier 1: Full IFRS Compliance
Tier 1 → For publicly accountable entities:
• Listed corporations, financial institutions,
government entities.
• Full compliance with IFRS, with minimal
modifications for Australian context.
Tier 2: Reduced Disclosure
Requirements
Tier 2 → For entities without public
accountability (private firms, NFPs):
• Must apply IFRS recognition & measurement
principles.
• Use AASB 1060 → allows for significantly
fewer disclosures → balances user needs vs.
cost-effectiveness.
III. Key or unique accounting standards and practices.
2. Specific Standards for Not-for-Profit Sector
• Recognizing IFRS is for-profit focused, AASB developed
specific standards for NFP entities.
• AASB 1058 → Key standard for NFP income
recognition:
• Covers grants, donations, peppercorn leases —
transactions not well addressed by IFRS.
• Also allows potential recognition of volunteer services
as income/assets, if reliably measurable.
• Reflects the unique operational and funding models of
NFP organizations.
• Highlights Australia’s commitment to tailored and
meaningful reporting for the NFP sector.
III. Key or unique accounting standards and practices.
3. Public Sector Accounting Practices
• Public sector standards largely aligned with IFRS,
but also incorporate IPSAS to address sectorspecific needs.
• Aligned with Government Finance Statistics (GFS)
to enhance macroeconomic analysis.
Unique public sector challenges:
• Determining control for consolidation.
• Recognizing non-exchange revenue (taxes, fines).
• Accounting for heritage assets, infrastructure
assets.
• Budget reporting under AASB 1055 → crucial for
government transparency.
IV.
IFRS Adoption –
Progress and Challenges
IV. IFRS Adoption – Progress and Challenges
1. Degree of IFRS Adoption in Australia
• Australia was among the earliest
adopters of IFRS, effective from
January 1, 2005, aligned with the
EU IFRS timeline.
• The AASB, under oversight of the
FRC,
develops
IFRS-based
standards with legal backing
through the Corporations Act
2001.
• ASIC enforces compliance for all
for-profit entities.
• Transaction neutrality ensures
that equivalent transactions are
treated consistently across forprofit, not-for-profit, and public
sector entities.
IV. IFRS Adoption – Progress and Challenges
2. Issues and Challenges During IFRS Adoption
High Initial Implementation Costs:
• Companies faced substantial costs for software upgrades, staff
training, and engaging external consultants.
• Implementing IAS 39 (financial instruments) posed significant
technical difficulties, especially for financial institutions (fair
value measurement & hedge accounting).
Loss of
Local
Guidance
Reduced Comparability
Ongoing
Updates &
Global
Misalignment
IV. IFRS Adoption – Progress and Challenges
2. Issues and Challenges During IFRS Adoption
High Initial
Implement
ation Costs
Reduced
Comparabilit
y
Loss of Local Guidance:
• Replacing AGAAP with IFRS caused the loss of detailed local
guidance, particularly regarding employee benefits and
intangible assets.
• This led to greater complexity and reduced clarity in financial
reporting for many Australian entities.
Ongoing Updates & Global Misalignment
IV. IFRS Adoption – Progress and Challenges
2. Issues and Challenges During IFRS Adoption
High Initial Implementation Costs
Reduced Comparability:
• Initially, AASB restricted optional IFRS accounting
treatments to maintain consistency with AGAAP.
• When these options were reintroduced, the increased
variability in accounting treatments reduced comparability
across entities.
Loss of
Local
Guidance
Ongoing
Updates &
Global
Misalignment
IV. IFRS Adoption – Progress and Challenges
2. Issues and Challenges During IFRS Adoption
High Initial
Implementation
Costs
Loss of Local Guidance
Ongoing Updates & Global
Misalignment:
Reduced
Comparability
• Continuous updates to IFRS (e.g., emissions
trading, global financial crisis-related changes) do
not always align with Australia’s business needs.
• Companies face a permanent administrative
burden adapting to evolving IFRS requirements.
IV. IFRS Adoption – Progress and Challenges
3. Ongoing Efforts and Institutional Responses
• Transformation of AASB:
Post-IFRS adoption, AASB shifted from national standard-setting to active
global participation. The Board contributes to:
⚬ Global research (e.g., extractive industries),
⚬ Collaboration with IPSASB, NSS Group, AOSSG, and the IASB.
⚬ Participation ensures Australia’s voice remains influential in global IFRS
evolution.
• Clarifying IFRS Adoption Status:
⚬ To avoid confusion, AASB stopped using the term "Australian
Equivalents to IFRSs."
⚬ It now states that for-profit entity standards are fully IFRS compliant
→ reinforces global comparability and regulatory clarity.
V.
Sustainability and ESG
(Environmental, Social,
and Governance)
reporting
V. SUSTAINABILITY AND ESG REPORTING
V. SUSTAINABILITY AND ESG REPORTING
1. Policy & Legal Landscape
V. SUSTAINABILITY AND ESG REPORTING
2. Corporate Practices (GRI, TCFD, ISSB)
TCFD
Legal
Frameworks
V. SUSTAINABILITY AND ESG REPORTING
3. Mandatory Climate Disclosures (AASB S1, S2)
AUASB
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