Introduction
Background
On 4 March 1997 the Treasurer announced that, as part of the Government's new Corporate Law Economic Reform Program, a paper on how the accounting standard setting process in Australia should be reformed would be released.
The issues to be addressed include:
- the development of accounting standards that enhance efficiency, expansion and international competitiveness of Australian business while at the same time maintaining investor confidence;
- the composition and funding of the AASB and the need for greater industry and user participation;
- the relevance and usefulness of existing accounting standards to contemporary conditions;
- the extent to which accounting standards should be strictly prescribed and whether there is scope for individual companies to be permitted or required to determine the level and type of disclosure which is appropriate for those companies; and
- whether Australia should continue to develop its own set of standards or whether international standards should be used as a basis and adapted to Australian conditions where necessary.
This paper proposes an accounting standard setting framework for Australia which requires the involvement and support of all stakeholders in financial reporting. The restructuring of the existing regime gives rise to a range of associated issues including consideration of the role of accounting standards (Parts 4 and 5), the institutional arrangements for standard setting in Australia (Part 6), the funding of the accounting standard setting process (Part 7), compliance with accounting standards (Part 8), the separation of the setting of accounting standards for public and private sector entities (Part 9) and future developments (Part 10).
Key Economic Principles
As with other key corporate law policy areas which the Government has identified in the Corporate Law Economic Reform Program, the proposed reforms are to be assessed against the following key principles:
- cost/benefit analysis of the existing law and proposed changes;
- the development of a regulatory and legislative framework that is consistent, flexible, adaptable and cost effective;
- the reduction of transaction costs for firms and other market participants;
- an appropriate balance between government regulation and industry selfregulation;
- the removal of barriers to entry for service providers; and
- improved harmonisation between Australia's regulations and laws with those applying in major world financial markets.
Enquiries concerning this paper and its implementation can be made to:
Mike Kooymans
Corporate Governance and Accounting Policy Division
The Treasury
Telephone: (02) 6263 3984