Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Tuesday, 17 February 1987
Page: 92

(Question No. 4913)

Mr Jacobi asked the Attorney-General, upon notice, on 18 November 1986:

(1) Is it a fact that the Accounting Standards Review Board (ASRB) has been accepting, virtually without amendment, standards prepared by the Australian Accounting Research Foundation; if so, (a) is the ASRB performing a useful function in this area and (b) would it be less expensive and time consuming simply to accept standards prepared by the profession.

(2) Further to question No. 3798 (Hansard, 16 September 1986 page 673), (a) does his answer to part (3) indicate that the ASRB is contemplating abandoning historical cost accounting and (b) is it a fact that current cost accounting is now largely discredited in Australia and overseas as an alternative to historical cost accounting.

(3) Further to his answer to part 2 (b) of question No. 3798, is he able to say when the disclosure requirements of Schedule 7 will be replaced by approved accounting standards.

(4) Is he satisfied with the rate at which standards are being approved by the ASRB.

Mr Lionel Bowen —The answer to the honourable member's question is as follows:

(1) It is not correct to say that the ASRB has been accepting, virtually without amendment, standards prepared by the Australian Accounting Research Foundation. Before approving a proposed accounting standard the ASRB has to consider whether:

(a) the information generated by application of a proposed standard is relevant to informed decision making and discharges directors' accountability in a manner consistent with community requirements and expectations;

(b) the proposed standard is well formulated and logically derived;

(c) the proposed standard is consistent with approved accounting standards; and

(d) the proposed standard is practicable (for some or all companies) having regard to the commercial and economic consequences which might flow from its implementation.

I am informed that, as a result of applying the above criteria to the proposed standards submitted by the AARF, the ASRB has had to:

(a) substantially re-draft most of the proposed standards;

(b) reject one proposed standard and a substantial proportion of another proposed standard because the content was not considered to be correct; and

(c) limit the application of some standards in order to avoid imposing onerous disclosure requirements on smaller companies.

2 (a) My answer to part (3) of question No. 3798 does not indicate that the ASRB is contemplating abandoning historical cost accounting. I understand that, for the foreseeable future, historical cost accounting will remain the principal method of accounting. However, this would not prevent the ASRB from monitoring the development of other methods of accounting, such as current cost accounting.

2 (b) World-wide interest in the various methods of accounting for the effects of changing prices (of which current cost accounting is one example) has, for the past decade or so, waxed and waned depending on the rates of inflation in major western countries. Consequently, with today's lower rates of inflation, it is true to say that there is now less interest in current cost accounting than there was some years ago. Some work is still being undertaken on current cost accounting, although it seems that such information may be used to supplement accounts prepared on an historical cost basis rather than replace them.

(3) No. The ASRB has established a Working Party to consider the work involved in a transfer of disclosure requirements from Schedule 7 to approved accounting standards. However, the Ministerial Council has not yet received the Working Party's report on either the magnitude of the task or a time table setting out the period over which the transfer is to be achieved.

(4) Yes.