The Trilogy Standards
The changes to the trilogy standards which comprise of AASB 1018 'Statement of Financial Performance", AASB 1034, "Financial Report Presentations and Disclosures" and AASB 1040 "Statement of Financial Position" created confusion within the accounting profession and business community. The changes were designed for the purposes of international harmonisation and for a paradigm of change away from the profit and loss approach. Many of the issues that arose are being addressed by Exposure Drafts and a emphasis on making the disclosures relevant and reliable is a key issue for the profession. This assignment covers the changes that took place, it looks at the response to the changes and is supported by evidence resulting from a study of the Australian Securities and Investment Commission (ASIC) and Ernst and Young (E&Y). The relevance and reliability issue as in the Statement of Accounting Concepts (SAC) 3: has created debate over whether the trilogy standards meet such requirements.
The overall concern is eliminating the misinterpretation and confusion caused so the financial information is both relevant and reliable.
The current AASB 1018 'Statement of Financial Performance" was issued in October 1999, along with two other presentation and disclosure standards, AASB 1034, "Financial Report Presentations and Disclosures" and AASB 1040 "Statement of Financial Position". These three standards became generally known as "the trilogy" and were first pertinent for 30 June 2001 year-ends. The introduction of the trilogy was the largest change to the presentation of financial reports in Australia in recent times with the balance sheet and profit and loss account being replaced with a Statement of Financial Position and Statement of Financial Performance. The two main reasons behind the change are the international harmonisation program and the move towards a balance-sheet emphasis. After the first year of...