Treasury and the Australian Government - The Role of International Regulation - Report Writing - Accounting Assignment Help

Assignment Task:

Assignment Task :

Scenario:

The year is 2020.  The US FASB and the London based IASB have agreed in principle to a full merger.  This merger will create the Global Accounting Standards Board (GASB) and will probably be based in New York.

As part of the merger, most of the accounting standards will be completely rewritten.  Proposed changes are far-reaching and extremely complex. The FASB has demanded that wherever there is a GAAP/IFRS difference, GAAP interpretation should prevail. This will bring IFRS into line with the US standards that are congruent with Sarbanes Oxley and the Dodd Frank Act. The IASB is keen to unite and so has agreed. In return the US has agreed to include environmental performance measurements under the umbrella term of "integrated reporting".  

The changes represent a significant amount of additional regulation; at least double the compliance costs compared to the current system.  Cost will be even higher in the first two years due to change over. About 40% of additional load is due to the new environmental performance measurement and auditing. The proposed environmental standards are mostly vague at this time. Further, some of the purely financial accounting changes are likely to negatively impact upon Australian firms and advantage large foreign firms. 

Political environment: 

The changes are politically controversial.  There are many calls for Australia to abandon international standards and replace them with new regulations designed specifically for the Australian environment.  This would mostly consist of reverting to pre 2005 Australian GAAP. The Australian Industry Group is worried about compliance costs and uncertainty. Australian Shareholders Association doesn’t believe the changes will provide any additional information. 

Conversely CAANZ, CPA Australia and the big 4 accounting firms public support the move on the basis of increased global integration.  Many vocal environmental groups (including the Greens) support the environmental changes and interpret them very strictly. 

UK Financial Reporting Council, Korean Accounting Standards Board, Financial Reporting and Assurance Standards Canada and the Accounting Standard Board of Japan are publicly committed to joining. Europe is split on the issue.  Russia, Brazil, Singapore, China, India, Turkey and South Africa are opposed and have promised to make their own version of IFRS if the GASB goes ahead. 

Board members of the AASB are as yet undecided as to what is the best course of action. 

Requirements: 

You work at the AASB as a Senior Business Analyst.  You have been asked to create a discussion paper on the role of international regulation.  This paper will be presented to members of the Board, Treasury and the Australian Government.  This discussion paper must address the following issues:

• A brief explanation of integrated reporting 

• What were the arguments for and against the original move to international standards in 2005? 

• Is it appropriate to allow foreigners to make regulation for locals?

• Is (more) regulation inherently good or bad?

• Evaluate the various risk involved in each alternative, i.e. support creation of GASB versus Australia develops own regulations.

• What (if any) recommendations can you make to the members of the AASB?

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