Research Assignment: A.Review current AASB framework which is also known as “Framework for the Preparation and Presentation of Financial Statements” and provide a critical analysis of different...

AASB

The following article gives us a brief detail
of the AASB and also about the
measurement basis for the assets and
liabilities which are included in the
financial statements of the company. It
gives the relation between the accounting
information along with the market
reaction.
AASB
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A)
As per the current AASB (i.e. Australian Accounting Standard Board) framework, it is the
IFRS 13 which is to be followed by all the companies in order to determine the fair value of all the
measurements of the company. It is the IFRS (International Financial Reporting Standard) 13 which
is being followed by the AASB in order to know the actual fair value of all the measurable items of
the company. It incorporates the existing fair value disclosure requirement from the IFRS 13. It was
in the month of September of the year 2011, that the AASB had adopted the IFRS 13 for the purpose
of measuring the fair value.
The AASB has laid down some new and better disclosures for the purpose of measurement,
and also some old disclosures are still being followed by them. It gives rise to certain new
amendments as well which is being implemented by the AASB in 2011. The AASB has two tiers in
order to prepare the final financial statements of the company. The two tiers are:
 Tier 1 – Australian Accounting Standards, and
 Tier 2 – Australian Accounting Standards – Reduced Disclosure Requirements (RDR).
Both the tiers of the accounting standard are an important aspect of the financial statements.
But, it is the tier 2 which recognizes, measures, and presents the requirements of the tier one and
subsequently reduces all the disclosures as it has been mentioned in the AASB. The tier 2 of the
AASB has two parts which generally helps the companies and other business to determine the
measurement of all the necessary items of their company. The first part includes or addresses the
proposals according to the disclosures as required by the AASB 13.And the second part of the Tier 2
addresses the proposals according to the AASB 13, along with the certain amendments as laid down
by the AASB 13 in the disclosure of measurement through the AASB 2011, in the month of
September.
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Both the tiers along with their respective parts are very much important in the measurement of
all the necessary items of the company or the business. They play their respective parts in
determining the actual and the correct fair value of all the assets of the company or the business. The
tier 2 of the Australian Accounting Standard Board deals with all the regulatory issues and also with
the other issues and also in some other aspects as well. Some of the issues are as follows:
Issues relating to all the not-for-profit organization,
 Issues relating to all the public companies,
 Whether this will help the company in preparing their financial statement for a particular
accounting period of the company,
 It helps in determining whether these proposals, as laid down in the AASB, is in the best
interests of the Australian economy or the society,
 The costs incurred by the company in adopting these proposals which are either quantitative
or qualitative.
The Reduced Disclosure Requirement (RDR) enables the company and the business to
disclose all the information that will help the users of the information in preparing the financial
statements. In order to prepare the financial statements, the users have to assess the following:
 The valuation and the techniques that has been used by the financial reporters in order to
determine the fair value of the assets and liabilities of the company on a recurring or non-
recurring basis.
 The unobservable value of the input when the recurring basis of measurement of the assets
and liabilities are adopted. The effect of the measurement of the profit and loss should be
shown in the income statement of the company.
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Both these have to be kept in mind while preparing the financial statements of the company.
Both the method of measurement, i.e. recurring or...