The Australian Accounting System

Topics: Financial statements, Australia, Balance sheet Pages: 15 (5176 words) Published: April 17, 2009

Australia, an island continent, located entirely in the Southern hemisphere, is one of the largest countries in the world. Like the United States, it is still a young and constantly evolving nation. Originally being a penal colony, part of the British Empire, Australia has grown into an essentially independent country and has proven to be a solid force in both the world economy and in the field of accounting.

• History and Federal structure
The isle of Australia was discovered in 1522 by British explorers and was originally called New Holland. It was designated by the British government to be a penal colony. The name was changed to Australia in 1817 and in the 1809 settlement ceased to be a penal colony. Independence from the British Empire was attained in 1901 although Australia still recognizes the British monarch as the head of state. In March 1986, the Australia act abolished any remaining control of the country by British parliament. A referendum to dissolve the relationship with the British Monarchy was introduced and defeated in 1999. This would have made Australia a totally independent nation rather than a commonwealth of Britain. It comprises the former British colonies of New South Wales (which became self-governing in 1855), Victoria (1855), Tasmania (1856), South Australia (1856, including the Northern Territories), Queensland (1859), and Western Australia (1890). These one-time colonies became states within a federation as the Commonwealth of Australia in 1901, created by a British Act of Parliament. Now the British Monarchy is merely a figurehead in Australian politics. An appointed Governor' General represents the monarchy but has little actual power. The country is a parliamentary democracy whose legislative branch is made up of an elected Senate and House of Representatives. The executive branch consists of a Cabinet and a Prime Minister. Similar to the United States, state and local municipalities retain much of the actual power. Each state or territory (except Queensland) has its own parliament and governor.

• International relations
Despite its remote location Australia is highly influenced by and has close connections with many and different countries all over the world. It is a member of several worldwide organizations including the United Nations, the International Monetary Fund, the British Commonwealth of Nations, Organization for Economic Co-operation and Development, Combo Plan, The South Pacific Forum and The Pacific Community. Australia enjoys a healthy relationship with the United States and many of the European countries. As a result of its historical development it has close ties to the United Kingdom, and after its first free trade agreement in 1990, to New Zealand. In addition, due to its close geographic proximity, Australia relates to and is influenced by many Asian countries.

National characteristics and culture (“N” Factor)

Significant feature of modern Australian society is the representation of a broad spectrum of cultures drawn from many lands, a development stemming from immigration that is transforming the strong Anglo-Celtic orientation of Australian culture. The United Kingdom and Ireland were traditionally the principal countries of origin for the majority of immigrants to Australia, reflecting the colonial history of the country. Since World War II, however, Australia’s population has become more ethnically diverse as people have immigrated from a wider range of countries. Still culture was dominated predominantly by the English-speaking settlers. Thus, Australia inherited the principle features of the Anglo-Saxon countries and can be fully considered as a member of this group. Australia is a free market economy. It has been a recipient of foreign direct investment by companies already using the Anglo-Saxon accounting which makes its financial system capital-market-based and the major providers of finance are the general public. The...

References: 3. P. Collett, J.M. Godfrey, and S. Hrasky, “International harmonisation: Cautions from the Australian experience”, Accounting Horizons, June,
4. Craig Deegan “Australian Financial Accounting” 3rd edition; Mc Graw Hill, 2003
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