Australia is one of the most regulated countries in the world, in terms of accounting. The preparation of Accounting statements and compliance with the laws, regulations is becoming increasingly complex. Accounting Regulations are needed so that a company can summarize, evaluate and analyze all its financial activities and understand its performance, financially. They are also needed for investors in the company, so that they can decide by reading the statements made in compliance with the regulations whether to invest in the company’s future or not. Also various other stakeholders like customers,suppliers, government need time to time information about the company, and such information is possible only by complying with standard accounting regulations.
Accounting regulations arise from or are created after scandals, problems crop up in a company’s financial system. There have been major scandals in the past three decades in Australia which highlighted the lack of accounting and auditing regulations. The first major scandal came to light with the downfall of Australian Auction Company which brought focus onto auditing issues in Australia.1 Another wave of scandals came up with Adelaide Steamship, Ariadne, Judge Corporation etc. These scandals when studied afterwards, pointed towards one common fact: There was desperation to create an incorrect view of the financial status of the company. They had overstated incomes and understated expenses, which led to stricter and complex laws and regulations in Australia. The scandals are generally due to human greed, but it is imperative to stop those using tight regulations.
US legislative reforms had impacted Australia’s various acts and also International Financial Reporting Standards were adopted in Australia as Australian International Financial Reporting Standards (IFRS).From 2005, Australian Accounting Standards Board (AASB) adapted to IFRS.