The Move to IFRS in Australia ASEM IFRS Seminar Professor David Boymal Chairman Australian Accounting Standards Board

Before 2005 Australia harmonised with IFRS but had written own Standards A few topics not harmonised:  IAS 39 Financial Instruments  IAS 19 Employee Benefits  IAS 38 Intangible Assets The Move to IFRS in Australia

We found that our previous attempt to harmonise did not produce 100% compliance The big auditing firms identified many subtle differences between IFRS and previous Australian GAAP The Move to IFRS in Australia

After 2005 Apply IFRS for periods commencing 1 January 2005 The AASB is retained to:  convert IFRS into law  write non-IFRS Standards  contribute to the development of world-wide Standards  develop interpretations

The Move to IFRS in Australia The main reason for adopting IFRS is to improve the credibility of financial reporting in Australia In order to achieve this we need to be able to state 100% compliance

The Move to IFRS in Australia 100% compliance can only be achieved by verbatim adoption of IFRS Without 100% compliance, the exemptions in IFRS 1 cannot be utilised, which would make it nearly impossible to adopt IFRS

The Move to IFRS in Australia Implementation Problems Application to other sectors IFRS written especially for the for-profit business sector Australian Standards are sector neutral Difficulties in applying IFRS to the not-for-profit private sector and the government sector Australia needs to add paragraphs to adapt IFRS for the other sectors

The Move to IFRS in Australia Implementation Problems Interpretations IFRS are principles-based Interpretations are needed At times Australian interpretations may not be consistent with interpretations in other countries IFRIC interpretations not forthcoming or not timely Big auditing firms have their own world-wide interpretations – driven from London

The Move to IFRS in Australia Implementation Problems Burden on smaller companies IFRS are designed for large listed companies Heavy burden to apply IFRS to smaller entities A need for different requirements for SMEs

The Move to IFRS in Australia Implementation Problems First-time Adoption The initial year of adoption is particularly difficult Extensive re-education IASB has moved on and cannot amend the Standards to help first-time adopters Need someone else to obtain advice from

The Move to IFRS in Australia Contributing to World-Wide Standards The basis on which Australia adopted IFRS is as an active participant in the process The AASB actively participates in IASB projects:  as a commentator on all IASB proposals  as a research leader