What is an IFRS and how does it affect accounting in Australia?

“IFRSs” is the collective term used to describe the authoritative pronouncements issued by the IASB. Technically, IFRSs comprise the following:
1. two series of standards – those explicitly called International Financial Reporting Standards and the older series of International Accounting Standards, and
2. two series of Interpretations – those issued by the former Standing Interpretations Committee (SIC) and those issued by the existing International Financial Reporting Interpretations Committee (IFRIC) of the IASB.

Under a broad strategic direction from the FRC, the AASB has adopted IFRSs for application by entities reporting under the Corporations Act 2001 for annual reporting periods beginning on or after 1 January 2005. This is to ensure that general purpose financial statements prepared by for-profit entities in accordance with AASB standards will also be in accordance with IFRSs.

The AASB has a transaction neutrality policy, which means similar transactions and events should be accounted for in a similar manner by all types of entities, whether in the for-profit sector, the not-for-profit private sector, or the public sector – unless there is a sound reason to be different in particular circumstances. The AASB considers the specific needs of not-for-profit entities in the private and public sectors when preparing new and revised IFRSs for adoption in Australia.

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