Welcome!
BFA201
Financial Accounting
Unit Outline
Financial Accounting BFA201
My Contact Details
• Steve Allen
– 64304578
– 0408358211
– Stephen.Allen@utas.edu.au
– @UTASCCC
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Unit Outline
• Contact details
• Textbook
• Learning outcomes
• Prerequisite - BFA104
• Tutorial signup
• Self-study and tutorial questions
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Unit Outline
• Attendance
• Assessment
• Penalties
• Referencing and plagiarism
• If you have a problem…
• Unit Schedule
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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)
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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
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Readings & references
• Deegan (2012) Ch. 1
• Become familiar with AASB website – check if you can find
the accounting standards
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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
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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
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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).
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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
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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?
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Why Regulate Accounting?
• Separation of ownership & control
• Stewardship
• Accountability
• Complex organisations
• Use legislation & professional pronouncements
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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)
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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
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www.aasb.gov.au
Functions:
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Conceptual Framework
•
Accounting Standards
•
International Accounting Standards
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Reports to FRC
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Commonwealth Treasurer
Institutional
arrangements for
standard setting in
Australia
Auditing and
Assurance Standards
Board
Auditing and Assurance
Standards Board Staff
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ASIC
•
Independent Government body
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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
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www.asx.com.au
•
One national stock exchange
•
1998 – publicly listed company
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ASX Listing Rules
•
ASX Corporate Governance Council
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Organisational structure for Australian accounting
standard setting
Source - http://www.aasb.gov.au/About-the-AASB/Organisational-structure.aspx
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International Financial Reporting
Standards
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2005 – Australia adopted IFRS
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Corp Act – AASB makes standards
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IFRSs are converted to AASBs
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AIFRS
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AASB Interpretations
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More changes ahead – FASB (US)
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AASB Standards
• 3 sources of AASB standards:
– AASB 1-99 series (new IFRS)
– AASB100-999 series (old IAS)
– AASB1000+ series (no international equiv.)
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IASB www.iasb.org
•
Who are we & what do we do?
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IASB creates IFRS
1.
2.
3.
4.
5.
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Agenda
Discussion Paper
Exposure Draft (ED)
Adopted by countries
Two year review
AASB’s role in an IASB world
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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
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What is IFRIC?
International Financial Reporting Interpretations Committee
Ruth Picker
Managing Partner
Ernst & Young Melbourne
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Points to Ponder
•
International cultural differences
•
All this regulation—is it really necessary?
•
Free-market perspective
•
Pro-regulation perspective
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Next Week - Topic 2:
The Conceptual Framework and Fair Value
Measurement
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