The paper "Australian and International Accounting Standards Setting Bodies and the Application of AASB 107 and AASB 1031" is a great example of a finance and accounting case study. International and national accounting standard setters play major roles in ensuring effective interpretation and convergence of international accounting standards. This paper aims at discussing the important roles played by national and international accounting standard setters in ensuring proper interpretation and convergence of international accounting standards. Moreover, the paper will discuss the notion that different types of entities need different types of accounting standards in order to minimize or eliminate complexity.
Besides, the paper will focus on the quality and clarity of the cash flow statement presentation by Blackmores Company. Introduction International Accounting Standard Body is focused on setting accounting standards which should be applied by all organizations across the world in order to enhance comparability, reliability and usefulness of financial reports. However, the Australian Accounting Standards Board is focusing on setting national accounting standards which can be applied organizations operating in Australia. In this regard, differences among the accounting policies formulated by the two bodies arise thus calling for a convergence of accounting standards.
Nevertheless, the national and international accounting setting bodies play major roles in the interpretation and convergence of accounting standards (Thomson 2004). However, there is a need to develop different accounting standards for different organizations operating in different settings with different objectives in order to ease the complexity of financial reporting. Moreover, business organizations are required to conform to accounting standards while reporting financial statements such as the cash flow statement. National and international accounting standard setters play a major role in ensuring that financial reports are reliable, comparable and useful to stakeholders. The Role of National and International Accounting Standard-Setting Bodies in Interpretation of International Accounting Standard National and international accounting standard-setting bodies play a major role in the interpretation of international accounting standards.
To start with, the accounting setters are supposed to be vigilant on the formation and implementation of international accounting standards in order to identify issues of interpretation which may arise. Due to difference in environmental settings, there will be inevitable issues of interpretation arising from international accounting standards which need to be dealt with to prevent them from hindering the major objective accounting standard setters (Mary 2005). Moreover, the national accounting standard setters assess an international accounting standard in order to determine the need for interpretation.
Once the need for interpretation is identified, the national accounting setters requests the International Accounting Standard Board (IASB) to address the issue effectively. However, in cases where certain issues affect only one or two jurisdictions, the national accounting setting accounting bodies are supposed to issue their own interpretations. However, they should liaise with IASB to avoid incompatibility (Thomson 2004). International accounting standards-setting bodies are supposed to address issues which are brought forward by national accounting standards setters concerning the interpretation of certain accounting standards.
Besides, the international accounting standard setters maintain a register of issues raised by national accounting standard setters or any other stakeholders of the international accounting standards. Maintain the issues register enables the body to produce effective solutions for all issues raised. The IASB is supposed to provide reasons for failure to handle any issue put forward by any international accounting stakeholders.
Such a responsibility helps the national accounting standard setters to decide whether pursuing the issue will be of significance. Moreover, the IASB has the obligation to monitor the interpretation of the standard by the national accounting standard-setting bodies to ensure that compatibility is not compromised (Thomson 2004).
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