As the financial crisis was a global one, it affected all the countries worldwide, including Australia. The AASB, as the name suggests, is an Australian government agency for setting up the nation’s own accounting standards. The mission with which it was set up was to: (a) Help in developing and maintaining high-quality financial reporting standards across all sectors in the Australian economy, and (b) Make contributions in the development of global financial reporting standards and to facilitate the inclusion of the Australian community into the global standards.
Now, let us look at how AASB responded to the GFC. It set new standards that were specifically designed for their own economy. Some of the achievements and progress made by AASB are mentioned below: (a) It formulated the accounting standards that are specifically meant for Australian entities to prepare their financial reports so that users of those reports can make completely informed decisions. (b) It helped Australia to participate in the development of a single accounting standards source across the world.
(c) It formulated new accounting standards for those Australian entities which do not come under the reporting requirements of the Corporations. (d) The staff of AASB improvised on their own accounting standards by being in close touch of the IASB and its representatives and taking suitable advices from them. (e) A number of implementation issues were pointed out by the AASB, which needed to be addressed. Majority of them being re-valuation of property, plant or equipment under construction and the presentation of discontinued operations. And the list goes on and on about the efforts AASB put to amend their accounting standards.
And again, it did so in order to help the Australian entities go by their own economy’s standards and not face any risk of the unethical use of the fair-value accounting methods used internationally so that their economy won’t have to again face the risk of a crisis arising out of unfair-value accounting means. Conclusion As we all know how devastating GFC was, the main point of agenda here was to discuss the role of fair-value accounting on GFC. We have seen examples of US, INDIA and measures taken by accounting Standard Boards, International and domestic, to improve and scrutinize Fair-Value Accounting.
Global financial markets require several kinds of trust to operate efficiently. Ethics are at the very core of an accounting professional. If he/she comes out to be a fraud, there is no way that organization can survive with respect to a long term perspective. If they don’t follow fair-value accounting means in their system, it is for sure that at some point of time they will fall. Can the world sustain then? These are some questions which everybody should know the answer to and they do, but when greed comes into play, ethics go away.
Customers are crushed and executives only focus on filling their pockets with lots and lots of money by creating fraud here and there. While the ethics of the accountancy profession have not been argued in the current article, we understand the consequences of not following the above mentioned values pretty well. This GFC clearly underlines how high the stakes become when ethics are relegated and the accounting standards are amended for personal use.
List of References
[1] Fair Value Measurement, IAS 40 vs. Exposure Draft, Erasmus University Rotterdam [2] Australian Accounting Standards Board Annual Report 2008-09
