Solution 13.2

The role of accounting standards

 The accounting standards had the purpose of reducing the wide range of diverse accounting methods then in operation as each method of accounting could lead to the presentation of a completely different profit figure. The accounting standards provide a unifying code of practice in preparing and presenting accounting information.

 ASB process for developing standards 

The ASB’s consultative process before issuing an FRS is as follows:

Step 1:   The issue of working drafts for discussion (DD).

Step 2:  After the discussion period a Financial Reporting Exposure Draft (FRED) is issued.

Step 3:  After consideration of feedback on the exposure draft an FRS is published