The IRFS accounting level has different levels of calculation, different to the AASB. There are reports about the assets and liabilities. The assets are further divided into intangible and tangible assets. There are very slim differences between these two aspects. The two are supposed to be determined by an accounting expert. This aspect was not previously there on the AASB standards. This, therefore, means two implications for the public sectors. The first implication is that they have two hire new accounting staffs that are equipped with the modern IRFS standards. This will be one way of adopting and implicating the new rules.
Secondly, the public sector entities have to hire more accounting staff. Some accounting staff will be involved in the calculation while other will be included in the reporting. The reporting of accounting losses and profits from the fields. The reporting of liabilities. The reporting of depreciating assets and the councils. The discussed two implications of IRFS standards on accounting staff automatically invites another inference. The other suggestion asks to focus on resources. There have to be enough resources that aid in the collection of this kind of financial and accounting data.
The public sector had only one tire of accounting decision to make concerning the AASB. The regional government directors only operated to make accounting decisions that were in cash flow forms. The same choices would be used when presenting the accounting financial statements to the national government. Since the coming of the new standards, the public sector councils have to decide on two separate levels. Previous to the AASB standards where both management accounting and external reporting were the same. Currently, with the new IRFS, the councils have to make internal and external accounting report. They have to use it for internal decision-making processes, and they too develop a superior information system which is specifically designed to incorporate both the AASB standards and the new IRFS. The external accounting standards where the decision is first made has to meet the IRFS standards of ethical legislation and regulations. The second tier decision has to meet the council and local management entity of internal decision making within the scope of the local board. Although there are possibilities of correlations, care should be taken not to overlook one over the other. The dual reporting regime has particular effects on the public sector that will be mentioned at the last part of this report.
There has been numerous complains that adopting and using the new IRFS standards is quite involving. From asset evaluation, depreciation policies, useful lives, and other unmentioned essential policies. In this way, there are several ways in which the government and the IRFS standards are keenly following to ensure that the standards are developed (Bugeja, & Loyeung, 2017). The rules of making it the standard an economic policy has significantly added pressure to the local governments. This, therefore, affects the local counties development. The entities have reportedly been so keen to implement and follow the policies that they did have time to focus on other developmental factors (Goode, 2017).
The managers are so in-depth into keeping financial records and standards while keeping up with the IRFS, that they don’t have adequate time to focus on investments. One of the case studies recognizes that before the implementation of the IRFS, the public sector was able to invest in real estate’s business, they further claim that with the coming of these standards it is difficult to analyze the measures while keeping developments improved. Managerial standards have therefore been smothered from creativity of development to profits and loss management.
With the previous implementation of accounting standards, there were specific misquoted margins on profits and losses by the council’s local managers. Many audit reports had shown accountants who interfered with the balance sheet to affect the external presentation. The story even further determined that the accountants would have priority meetings with account supervisors before the actual interviews on accounting levels. The accounting standards helped maintain the ethical standards of accounting. These standards imply that the managing accountants in the public sector have to become more responsible and abide by their moral rules (Firth, & Gounopoulos, 2017).
The assets that are written to the public sector are difficult to determine if they are assets. Determining the fair value of an asset is a recommendation in the new standards. The standards further recommend that there is the sustainability of the market value of the assets. This implications of the accounting standards can be neglected by the public sector (Bugeja, and Loyeung, 2015). The assets of the public sector can be challenging to analyze. An example of an asset which can be challenging to examine regarding sustainability and market value, for example, is a road transport network within the local government. Such infrastructure is, therefore, challenging to use as assets as they cannot be sold to produce profits.
The standards have changed on the various accounting operations of the public sector entities. Based on the implications that these IRFS standards have had on the public sector entities (Bryce & Mather, 2015). The substances have been forced to adapt to the new systems. Ranging from how the companies hire their accountants to how they treat their professional valuation of assets.
The public sector is currently forced to hire accounting staff that is capable of understanding without a doubt the new standards of accounting (Apergis, 2015). The most advantageous public sector authorities are the ones situated in urban locations, as they can easily access such accounting professional. However, it is difficult for accounting professionals from rural areas to access such accounting professionals that adapt very fast to the new IRFS standards. The public sector in the rural areas, therefore, have to involve their top trained managers. Some of the public sector entities have organized training for their accounting officers to understand into more in-depth analysis the operations of the IRFS (Wee, Tarca, & Changn, 2014).
The accountants have also learned to become even more responsible in the public sector entities. These standards have had a positive impact by increasing the ethics of accountants, therefore, reducing corrupt cases. It is now easier to do audits in the public sector entities. As the level of accountability has increased, the public sector entities authorities do not have to worry about corrupt cases anymore (Bond, Govendir & Wells, 2016).
These accounting standards have led to the slowed growth of these entities. A lot of time is taken balancing the interest required by the rules that were creatively thinking about how to develop projects. Projects have to be delayed, so the accounting balance meet the regulations expected. When all the managers are so engaged in such, the company, therefore, therefore, makes very little progress (Bond, Govendir & Wells, 2016).
The provincial government has also been forced to invest in infrastructure that favors the implementation of the IRFS. Some local governments have employed technological types of machinery and software that can do financial accounting operations (Grossman, Smith, & Tervo, 2016). These operations are so simple when done by these soft wares and are accurate than when a human is involved. The human might only be required when making financial, assets and liabilities estimations (Benson, Clarkson, Smith & Tutticci, 2015).
References
Apergis, N. (2015). The role of IFRS in financial reporting quality: Evidence from a panel of MENA countries. International Journal of Economics and Finance, 7(10), 182.
Benson, K., Clarkson, P. M., Smith, T., & Tutticci, I. (2015). A review of accounting research in the Asia Pacific region. Australian Journal of Management, 40(1), 36-88.
Bond, D., Govendir, B., & Wells, P. (2016). An evaluation of asset impairments by Australian firms and whether they were impacted by AASB 136. Accounting & Finance, 56(1), 259-288.
Bryce, M., Ali, M. J., & Mather, P. R. (2015). Accounting quality in the pre-/post-IFRS adoption periods and the impact on audit committee effectiveness—Evidence from Australia. Pacific-Basin Finance Journal, 35, 163-181.
Bugeja, M. and Loyeung, A., 2015. What drives the allocation of the purchase price to goodwill?. Journal of Contemporary Accounting & Economics, 11(3), pp.245-261.
Bugeja, M., & Loyeung, A. (2017). Accounting for business combinations and takeover premiums: Pre-and post-IFRS. Australian Journal of Management, 42(2), 183-204.
Bugeja, M., Czernkowski, R., & Moran, D. (2015). The impact of the management approach on segment reporting. Journal of Business Finance & Accounting, 42(3-4), 310-366.
Firth, M., & Gounopoulos, D. (2017). IFRS adoption and management earnings forecasts of Australian IPOs.
Goode, V., Crego, N., Cary Jr, M. P., Thornlow, D., & Merwin, E. (2017). Improving Quality and Safety Through Use of Secondary Data: Methods Case Study. Western journal of nursing research, 39(11), 1477-1501.
Grossman, A. M., Smith, M., & Tervo, W. (2016). Measuring the Impact of International Financial Reporting Standards on Market Performance of Publicly Traded Companies.
Wee, M., Tarca, A., & Chang, M. (2014). Disclosure incentives, mandatory standards and firm communication in the IFRS adoption setting. Australian Journal of Management, 39(2), 265-291
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