Developments in the accounting profession

Significant developments continue to occur in public sector financial reporting in Australia.

In September 2006, the AASB released AASB 1049 Financial Reporting of General Government Sectors by Governments, involving harmonisation of accounting standards with the requirements of Government Finance Statistics. The standard is to be applied over the period 2008–09.

The AASB has also identified several projects primarily related to the public sector which will form a large part of its key focus for 2007. These projects include:

  • the issue of an exposure draft ED 155 Financial Reporting for Whole of Governments, for a consolidated government equivalent to AASB 1049, with the intention to also have the standard in place for 2008–09;
  • the release of ED 156 Proposals Arising from the Short-term Review of the Requirements in AAS 27, AAS 29 and AAS 31, which generally proposes to re-locate the requirements of these standards in other topic-based standards; and
  • the review of public sector not-for-profit entity issues arising from the implementation of Australian Equivalents to International Financial Reporting Standards in 2005–06.

In addition, the AASB has released an invitation to comment (ITC 12) on a proposal for a revised differential reporting regime for Australia for small and medium-sized entities, which may lead to a reduced reporting burden for these entities.

The Australian Auditing and Assurance Standards Board (AUASB) is also undertaking work of public sector interest with projects into compliance auditing and into the auditing of financial statements prepared under AASB 1049.

As a result of previous ANAO audits, JCPAA reviews and work by the Department of Finance and Administration, entities are now including an increased consideration of legal and compliance risks as part of their overall risk management frameworks.

To reinforce this commitment to legislative compliance, the Department of Finance and Administration announced in 2005 that it would implement a requirement for the Chief Executives of all FMA agencies to sign an annual Certificate of Compliance. For 2006–07 the Certificate requires agencies to focus on their responsibilities under the FMA Act and satisfy themselves and their responsible Minister that these responsibilities have been discharged.

A similar requirement was extended to the directors of Commonwealth authorities and wholly-owned companies in the general government sector, also to commence in respect of the 2006–07 year.