Welcome! BFA201 Financial Accounting Unit Outline Financial Accounting BFA201 My Contact Details • Steve Allen – 64304578 – 0408358211 – Stephen.Allen@utas.edu.au – @UTASCCC 3 4 Unit Outline • Contact details • Textbook • Learning outcomes • Prerequisite - BFA104 • Tutorial signup • Self-study and tutorial questions 5 Unit Outline • Attendance • Assessment • Penalties • Referencing and plagiarism • If you have a problem… • Unit Schedule 6 Accounting Standards • You will need to be familiar with the following websites (as this saves you buying the Financial Reporting Handbook): – http://www.aasb.gov.au (AASB) • Also useful: – http://www.ifrs.org – http://www.gaap.com.au (IASB) (GAAP) 7 Week 1: Overview of the accounting reporting environment Financial Accounting BFA201 Learning Objectives • To understand the Australian external financial reporting environment • Be able to explain the roles of ASIC, AASB, FRC, ASX, IASB 9 Readings & references • Deegan (2012) Ch. 1 • Become familiar with AASB website – check if you can find the accounting standards 10 Independent Study Tasks • Read Chapter 1 of Deegan • Access the AASB website and ensure you can find the Accounting Standards • Complete the following questions from Deegan (2012), Chapter 1 • Review Questions 1 & 4 11 Financial Accounting Defined • Financial accounting is a process involving the collection and processing of financial information to assist the decision-making needs of parties external to the organisation • Contrasted with management accounting: – focuses on providing information for decision-making by parties within the organisation – largely unregulated • Financial accounting is heavily regulated 12 Special purpose v General Purpose Financial Reports • Special purpose financial reports are prepared to specifically satisfy the financial information needs of a particular user (e.g. financial reports prepared for a bank to support a loan application). • Other parties might not have the necessary power to demand financial reports that address their own information requirements. • General purpose financial reports are developed to generally meet the financial information requirements of a cross-section of shareholders as well as other stakeholder groups (creditors, employees, government etc). 13 Users of General-purpose Financial Reports • Users may be defined to include: – present and potential investors – employees – lenders – suppliers and other trade creditors – customers – government and its agencies – the public • Users do not have the power to demand specific information to meet their needs 14 Financial Accounting • What is Financial Accounting? – To provide useful information to users making decisions about the allocation of scarce resources. • GPFS v SPFS • Who are the users of GPFSs? 15 Why Regulate Accounting? • Separation of ownership & control • Stewardship • Accountability • Complex organisations • Use legislation & professional pronouncements 16 Accounting Regulators 1. The Financial Reporting Council (FRC) 2. The Australian Accounting Standards Board (AASB) 3. The Australian Securities and Investments Commission (ASIC) 4. The Australian Securities Exchange (ASX) 17 Financial Reporting Council • Est. 2000 (CLERP 1999) • Appointed by Treasurer • Peak body Federal Treasurer, Hon Wayne Swan • Oversees accounting & auditing standard setting process • Appoints members of AASB • Advises government 18 www.aasb.gov.au Functions: • Conceptual Framework • Accounting Standards • International Accounting Standards • Reports to FRC 19 Commonwealth Treasurer Institutional arrangements for standard setting in Australia Auditing and Assurance Standards Board Auditing and Assurance Standards Board Staff 20 ASIC • Independent Government body • Administers Corporation legislation – Corporations Act: – Company directors; disclosing entities – Financial Statement preparation – ‘True & fair’ • Reports to Parliament & Treasurer – Note FRP (p. 12 Deegan) no longer exists 21 www.asx.com.au • One national stock exchange • 1998 – publicly listed company • ASX Listing Rules • ASX Corporate Governance Council 22 Organisational structure for Australian accounting standard setting Source - http://www.aasb.gov.au/About-the-AASB/Organisational-structure.aspx 23 International Financial Reporting Standards • 2005 – Australia adopted IFRS • Corp Act – AASB makes standards • IFRSs are converted to AASBs • AIFRS • AASB Interpretations • More changes ahead – FASB (US) 24 AASB Standards • 3 sources of AASB standards: – AASB 1-99 series (new IFRS) – AASB100-999 series (old IAS) – AASB1000+ series (no international equiv.) 25 IASB www.iasb.org • Who are we & what do we do? • IASB creates IFRS 1. 2. 3. 4. 5. • Agenda Discussion Paper Exposure Draft (ED) Adopted by countries Two year review AASB’s role in an IASB world 26 IFRIC • International Financial Reporting Interpretations Committee • Established Dec 2001, sub-committee of IASB • Has the task of reviewing widespread accounting issues within the context of current IFRSs 27 What is IFRIC? International Financial Reporting Interpretations Committee Ruth Picker Managing Partner Ernst & Young Melbourne 28 Points to Ponder • International cultural differences • All this regulation—is it really necessary? • Free-market perspective • Pro-regulation perspective 29 Next Week - Topic 2: The Conceptual Framework and Fair Value Measurement Copyright notice © Copyright University of Tasmania, School of Accounting & Corporate Governance All rights reserved. Commonwealth of Australia Copyright Regulations 1969 - WARNING This material has been reproduced and communicated to you by or on behalf of the University of Tasmania pursuant to Part VB of the Copyright Act 1968 (the Act). The material in this communication may be subject to copyright under the Act. Any further reproduction or communication of this material by you may be the subject of copyright protection under the Act. Do not remove this notice. 30