What is the Difference Between IFRS and AASB?
🆚 Go to Comparative Table 🆚The main difference between IFRS (International Financial Reporting Standards) and AASB (Australian Accounting Standards Board) is that IFRS is a set of international accounting standards, while AASB is a national accounting standards board in Australia.
IFRS is a principles-based approach that aims to establish a common global language for company accounting affairs. More than 144 countries around the world have adopted IFRS, and it is the standard in the European Union (EU) and many countries in Asia and South America.
AASB, on the other hand, is a national accounting standards board in Australia. It is responsible for developing, issuing, and maintaining accounting standards in Australia. While AASB has adopted many IFRS standards, it also has some differences due to local regulations and requirements.
Some key differences between IFRS and AASB include specific details on recognizing income or profits from investments. Under IFRS, and other international standards like AASB, the legal form of the asset or contract is irrelevant, and the recognition of income depends on when cash flows are received. In contrast, GAAP (Generally Accepted Accounting Principles), which is the US accounting standard, is rules-based and focuses on the legal form of the asset or contract.
In summary, the main difference between IFRS and AASB is that IFRS is a set of international accounting standards, while AASB is a national accounting standards board in Australia. Both systems have adopted and adapted IFRS standards, but they also have some differences due to local regulations and requirements.
Comparative Table: IFRS vs AASB
Here is a table comparing the differences between IFRS (International Financial Reporting Standards) and AASB (Australian Accounting Standards Board) accounting standards:
| Difference | IFRS | AASB |
|---|---|---|
| Scope | IFRS is used in more than 110 countries around the world, including the EU and many Asian and South American countries. | AASB is used primarily in Australia. |
| Rules-based vs. Principles-based | IFRS is described as more principles-based, while US GAAP (which is similar to AASB) is described as more rules-based. | AASB is considered more rules-based than IFRS. |
| Inventory Methods | Both GAAP and IFRS allow First In, First Out (FIFO), weighted-average cost, and specific identification methods for valuing inventories. However, GAAP also allows the Last In, First Out (LIFO) method, which is not allowed under IFRS. | Similar to GAAP, AASB also allows the LIFO method for valuing inventories. |
| Revenue Recognition | IFRS and GAAP have converged on revenue recognition standards with IFRS 15 and ASC 606, which share a common principles-based approach. | AASB has adopted similar revenue recognition standards as IFRS. |
| Language | Financial reports must be presented in the English language. | Similar requirement for financial reports to be presented in English. |
| Rounding of Financial Information | No specific rounding requirements in IFRS. | Australian entities must assess the regulatory framework when considering the rounding of financial information. |
Please note that the differences listed above are not exhaustive, and there may be other differences between IFRS and AASB. Additionally, accounting standards are subject to change over time, so it is essential to stay updated on the latest developments in both IFRS and AASB.
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