27 February 2006 
 
Australian businesses are experiencing difficulty with certain aspects of the new Australian International Financial Reporting Standards according to a survey of over 200 Australian businesses conducted by the Institute of Chartered Accountants.  
 
The survey of those businesses, which have been applying the new Australian International Financial Reporting Standards for the past six months, revealed concerns around the application of the standards on financial instruments (AASB 132/139), Income tax (AASB 112) and Impairment of assets (AASB 136).  
 
More than 60% of respondents identified financial instruments as the most difficult standards to adopt, 55% thought the standard on income tax was complicated and 50% said they had trouble applying the standard on impairment of assets.  
 
The Institute’s Technical Standards Adviser, Keith Reilly said it was no surprise that the standards on financial instruments were highlighted because it impacted a large number of businesses (any business with debtors/creditor).  
 
The Income tax standard (AASB 112) was also identified as a problem standard, which Mr Reilly said was expected because people perceived income tax to be a difficult area to account for. He said the new tax consolidation treatment made the whole tax area more complex for major businesses and had aggravated that perception.  
 
Impairment on assets (AASB 106) was the other key area acknowledged in the survey, which Mr Reilly accredited to the more conservative and tougher approach adopted in the new standard.  
 
“The standard on impairment of assets is very detailed and far more elaborate to apply. It has also resulted in additional documentation, which is time consuming,” he said.  
 
To help businesses understand the new standards the Institute of Chartered Accountants has produced a business practice guide for small businesses and have a dedicated area on Australian International Financial Reporting Standards on its website, charteredaccountants.com.au.  
 
During this month and March, the Institute of Chartered Accountants is also running ‘Accounting for Income Tax’ workshops, which will be attended by over 300 delegated nationally. Seminars are also being hosted both this month and next month on ‘Preparing your first set of accounts under the new standards’ which incorporates content on financial instruments (AASB 132/139).