In general, financial reports are perceived to provide a net benefit not only to the reporting company but also to society. However, questions about the actual benefits provided by these financial reports and whether or not these benefits far outweigh their costs are still present among accounting experts, the users and the public. These questions are the same, regardless of the country or the reporting framework used by such country. This paper focuses on Australia and discusses whether there is really a net benefit to the business community and the society of the financial reports as they are now and whether such is true in the Australian context.Financial Reports in Australia
Like any other business entities around the world, the generation and issuance of financial reports are integral processes and regulatory requirements for any Australian business entity. This fact is highlighted in Australia’s Corporation Act 2001 of the Act. Section 1111AO of this Act specifically requires the entities that were incorporated in Australia to prepare financial reports. The entire Chapter 2M of the same Act lays out the requirements for such reports. These requirements include who is actually responsible for such reports and the timing of their preparation.The financial statements in Australia are prepared in accordance with the country’s accounting standards issued by the Australian Accounting Standards Board or AASB. Currently, the accounting standards issued by AASB are locally adopted from the International Financial Reporting Standards or IFRS, which became effective on January 2005 (AASB FAQs). Australia, however, uses a “different disclosure regime” wherein the requirements for financial reporting are “set according to the type of entity” (Treasury, n.d.).Do Financial Reports Lead to a Net Benefit in Australia’s Society?
The following are discussions about specific areas in the financial reporting environment of Australia. Each one is described and its impact explained based on the Australian context.