Senator Nick Sherry, Minister for Superannuation and Corporate Law, has welcomed the prompt decision of the Australian Accounting Standards Board (AASB) to amend Australian accounting standards to ensure they remain consistent with new standards issued by the International Accounting Standards Board (IASB).
“The global financial crisis has led to concerns about the classification of certain types of financial assets under International Financial Reporting Standards compared to US Generally Accepted Accounting Principles. The changes will allow a financial entity to reclassify selected stressed financial assets in line with international accounting practice.
“Consistent, well-formulated accounting standards provide accurate and useful information to participants in capital markets and promote market integrity, transparency and investor confidence,” Senator Sherry said.
In mid-October, the IASB changed the rules to allow entities to choose to reclassify some financial instruments from a fair value measurement basis, also known as mark-to-market, to a cost basis in certain circumstances.
The IASB’s and AASB’s response forms part of a coordinated approach by global standard setters to address financial reporting challenges associated with the credit crisis. Internationally, this work is supported by the International Organisation of Securities Commissions and domestically by the Australian Financial Reporting Council.
The IASB approach is now similar to the approach taken by the US Financial Accounting Standards Board.
The AASB’s amendments are applicable retrospectively from 1 July 2008.
“These amendments ensure Australian entities are able to use accounting treatments consistent with those available in other jurisdictions and I welcome the AASB’s role in this internationally co-ordinated set of actions,” Minister Sherry said.
Further information on the amended standards is available on the AASB’s website at www.aasb.gov.au.