Financial Accounting Lease Report

Australian Accounting The complicated world of finance, business and accounting in today's world justifies the firm's customer base's inquiry into some proposed changes in accounting standards for leases. The purpose of this report is to inform clients on current and proposed accounting standards that are affecting their means to do business. This report will first give a brief history of these standards before describing the current practices that are used by this firm.

The report will conclude by highlighting some proposed changes to these standards and give a glimpse to the future of this firm and the way it conducts business and how it will affect reporting of financial information. History The application of accounting standards assists in the production of financial information that is used as the basis for decision making by a wide variety of stakeholders Cortese (2009). Accounting standards in Australia were initially developed by the professional accounting bodies, and were enforceable under their codes of ethics.

From 1966, the professional bodies jointly operated the Australian Accounting Research Foundation (AARF), which ultimately encompassed both the Accounting Standards Board (AcSB) and the Public Sector Accounting Standards Board (PSASB). These Boards worked closely together in preparing standards for private sector and public sector organisations. At the start of 1984, the Accounting Standards Review Board (ASRB) was established by the Ministerial Council for Companies and Securities to review the standards produced by the profession and give them the force of company law, where approved by the ASRB.

This system operated under the Companies Act 1981 (Cwlth) and corresponding State/Territory Codes. The ASRB and the profession's AcSB merged in 1988, with the ASRB continuing to work closely with the PSASB (Australia.gov). The ASRB was re-established under the Australian Securities Commission Act 1989 and in 1991 was renamed the Australian Accounting Standards Board (AASB). The AASB's standards then applied under the Corporations Law. Another restructure was put in place in 2000, with the AASB merging with the PSASB.

The new AASB was formally re-established under the Australian Securities and Investments Commission Act 1989 (as it was then re-titled). The regulatory changes also included the establishment of the Financial Reporting Council (FRC) by the Australian Government, to oversee the activities of the AASB. The AASB's standards now apply under the Corporations Act 2001 and the AASB continues to operate under the Australian Securities and Investments Commission Act 2001.

In 2002, the FRC gave a broad strategic direction to the AASB requiring the adoption of pronouncements issued by the IASB -- the International Financial Reporting Standards (IFRSs). Accordingly, Australian equivalents to IFRSs apply to annual reporting periods beginning on or after 1 January 2005. The AASB has also retained some domestic standards and interpretations (Delatribe 2010). In 2003, the FRC also issued a further broad strategic direction to the AASB in relation to the harmonization of Government Finance Statistics (GFS) and Generally Accepted Accounting Principles (GAAP) reporting in the public sector.

The accounting profession in Australia is thriving. The number of accountants employed at the professional level has risen strongly over the past decade, from around 100,000 in 1996-97 to just over 140,000 in 2005-06. Current Practices of the Firm The current practices of this firm are based on the adoptinon of the IFRS' standards. This began at the beginning of 2005 and is still in place today. This standard is in line with the European Union's directives and was applied with the 2004 IFRS stable platform (Grossinger 2007).

The adoption of these rules is both beneficial to the client and the firm. The costs to preparers, auditors and users of multinational financial reports are now standardized and easier to read. As a result, Australian entities' financial reports are more readily understood world-wide and gaps in the AGAAP are more complete, (AASB). Future Developments While the future is often hard to define, our firm is confident that any changes to international accounting standards can be taken in stride while providing the best accounting services available in this country.

This does not mean there are challenges in our future, there are. McGregor (2008) suggested that "the evolution of the accounting standard-setting process in Australia will bring further significant changes as we move to introduce major features of the structures existing in the United States and the United Kingdom." In other words, the global marketplace will dictate this movement.

Grant Thornton's survey about these practices suggested that "i n retrospect, four out of five respondents were supportive of the decision to adopt IFRS for financial reporting periods commencing in 2005, even though there were mixed feelings regarding the impact it had on business when it was first adopted. Those who felt its impact was negative balanced out against those who felt IFRS had.