Q&A

IMPACT OF INTERNATIONAL STANDARDS ON THE PUBLIC SECTOR

Q: I am wondering what the impact of the change to international financial reporting standards will be on the public sector. I am also confused at the local level as to why some standards are only being issued as AASBs while some are AASs.

A: The Australian Accounting Standards Board is in the process of replacing the AAS series with the AASB series, so right now we have a mix whereby a public sector reporting entity would be expected to apply some (older) AASs [eg. AAS 33] and some (newer, sector neutral) AASBs [eg. AASB 1044]. Some of the older AASs have equivalent AASBs, and each impose equivalent requirements. There are, however, a few where the AAS requirements differ from those of the AASB, for example, AASB 10 15 and AAS 21,AASB 1017 and AAS 22. All these AASs will continue to apply until they are superseded by sector neutral AASBs.

The FRC's announcement with regard to the change to international standards in 2005 only related to corporate Australia. However, as the board has a policy of issuing sector neutral standards, we expect that, in implementing the FRC strategy, the board will issue AASBs which contain, to the extent possible verbatim, IASB standards that would apply to business undertakings. To the extent that there are sector specific issues (such as for not-for-profit entities), we expect those issues to be identified and addressed in a separate section of the converged standard. We will get some idea as to what the future may hold when we see the soon-to-be-released AASB ED 109 on business combinations, intangible assets and impairment.