deegan5e_ch01.pptVIP

Chapter 1 An overview of the Australian external reporting environment Objectives Understand the scope of regulation relating to Australian external financial reporting Be able to explain the general functions of the Australian Securities and Investments Commission, the Australian Accounting Standards Board, the Financial Reporting Council and the Australian Stock Exchange Be able to explain the general functions of the International Accounting Standards Board and its direct relevance to Australian accounting standard setting Understand the role of an accounting standard and the process through which it is developed Objectives (cont.) Understand the magnitude of the changes that occurred in 2003 and 2004 in Australian Accounting Standards as a result of the Financial Reporting Council’s strategic decision that Australia would produce financial reports that comply with standards being issued by the International Accounting Standards Board Understand that the practice of financial accounting is quite heavily regulated within Australia, and be aware of some arguments for and against the regulation of financial accounting Financial accounting defined Financial accounting is a process involving the collection and processing of financial information to meet the decision-making needs of parties external to the organisation Financial accounting may be contrasted with management accounting, which: focuses on providing information for decision making by parties within the organisation is largely unregulated Financial accounting is heavily regulated, and a great deal of regulation changes each year User demand for general-purpose financial reports Users include (the ‘Framework for the Preparation and Presentation of Financial Statements’ (the AASB Framework) released by Australian Accounting Standards Board July 2004): present and potential investors employees lenders suppliers and other trade creditors customers government and its agencies the public Users lack the