Developments in the accounting profession
For some time the Australian Accounting Standards Board has been working to produce AASB 1049 Whole of government and general government sector financial reporting, an accounting standard to bring together the two accounting frameworks that governments have previously reported under—Government Finance Statistics and Generally Accepted Accounting Principles. The standard AASB 1049 Whole of government and general government sector financial reporting was finalised in October 2007 and came into effect in 2008–09. Its implementation was a significant issue for public sector accountants and auditors in 2008–09.
The global financial crisis promoted discussion about the adequacy of accounting standards. International standard setters are working to improve accounting standards in a number of areas, particularly in respect of the measurement and disclosure of complex financial instruments.
Apart from these matters, 2008–09 was a period of relative stability in financial reporting. The Australian Accounting Standards Board replaced the accounting standards for government departments and local governments, transferring their content, largely unamended, to new and revised standards.
Significant changes are expected, both internationally and nationally. The International Accounting Standards Board and the United States Financial Accounting Standards Board are working jointly to develop a new conceptual framework as the foundation for changes to accounting standards. That project is focused mainly on the private sector. The International Public Sector Accounting Standards Board is also seeking to develop a conceptual framework as the basis for its suite of accounting standards.
Locally, the Australian Accounting Standards Board is continuing with its project to enhance public sector accounting standards. In 2008–09, the board announced plans to release a draft of an accounting standard for non-exchange income, which includes grants and appropriations—two areas of particular importance to the public sector. The board also decided that public sector entities should be allowed to take advantage of the new standards for small and medium sized entities, when those standards are released. This will provide an opportunity to simplify the financial reports of smaller government entities, while preserving accountability.
Auditing standards are also changing. The International Auditing and Assurance Standards Board (IAASB) revised its standards to improve their clarity and aid consistency of application. This is a significant revision of these auditing standards, adding to the requirements that must be met in undertaking audits of financial statements. The Australian Auditing and Assurance Standards Board is currently reviewing the IAASB standards for adoption in Australia, with effect from reporting periods beginning on or after 1 January 2010.