The Australian Accounting Standards Board (AASB) is an Australian Government agency that shapes and structures financial reporting in this country. All accountants will be particularly familiar with this body. The AASB dictates Accounting Standards to keep the Australian economy in line with global financial reporting standards. Both the public and private sectors are expected to follow the AAS set down by the AASB in all reporting and financial operations.
In effect, the AAS impacts the entire spectrum of business. Do you work as a company accountant or external auditor? Are you a corporation required to prepare financial reports? Are you impacted by government reporting? Are you in the not-for- profit or public sectors and need to prepare reports or any kind of financial statements?
Then you operate under the AAS, and the significant changes to Accounting Standards are set to impact you.
What does this mean for me?
These are narrow and specific changes that will impact your operations from 30 June 2017. They are a prelude to even more important changes that will come into effect in 2018-19, which all accountants need to prepare for.
Right now, you need to be aware of the impact on:
- Financial instruments: loans, trades, assets, and their interest.
- Asset amortisation, fair value, and investment portfolios.
- Declaration of credit losses and cash flows.
- Customer contracts, transactions, and pricing.
- Not-for- profit assets, income, donations and leases.
The detail in the changes means it is vital that you talk to an experienced accountant to make sure that you are meeting the standards.
Taking Your Business Overseas? A Spotlight On Korea
Our Sydney team recently took a trip to Seoul. We trained and strategized with our Korean office, and it gave us a renewed insight into the risks and benefits of taking a business from Australia out into the global market, especially in light of the EMDG.
Korea in particular has its attractions for Australian investors and companies. The EMDG (Export Market Development Grant) scheme can equip you to launch into Seoul. But a smart approach is a thoughtful one:
- Why are you investing in a foreign market? The EMDG reimburses up to 50 per cent of eligible export promotion expenses above $5,000, if these expenses are at least $15,000. But you need to measure your motivations and the lure of outbound investment against your mission, vision, and strategy. How limited is your scope in Australia and will the overseas market compensate by significantly taking up your offering?
- How do you penetrate the new market? Opening up a company in a new country (foreign direct investment) is a straightforward approach. But can you manage all those new regulations? Then again, if you work through a local partner, how much of the profits from your business are you willing to share? How will this business structuring affect your ability to access grant schemes such as the EMDG?
- What resources do you need? These include human resources as well as tangible assets. You may be able to access government grants such as the EMDG. Are they as readily available as you presume?
- What’s it all going to really cost from a monetary perspective? Plan your cash flow and budget. Plan to break even and perhaps have a few early years of losses. You can apply for up to 8 grants across 8 grant years under the EMDG scheme, but you need to measure how much you can gain and where this money will go. How will you manage in these meagre years to balance the books?
- How much time will it take out of you? Time is perhaps more lean and precious than money. You need to know how much of your time, and your current organisation’s time, you are willing to spend.
And how does all this apply to your target market? South Korea has traditionally invested heavily in R&D so this may be an avenue for you. The regulatory framework is different to Australia’s, but both the FTA and Korea’s approach present a climate of stability. The nation has low inflation and low unemployment. It’s higher than average interest rates help draw in foreign investment and its currency is relatively stable, yet you may meet challenges in breaking into industries typically shaped by big, oligarchical players.
In any case, a chat with an expert in Australian business, the EMDG scheme, and your target market can make a smart approach even sharper.
Important Disclaimer: Readers should not act solely on the basis of the material on this page. Items herein are general comments only and do not constitute or convey advice. Legislation and proposals of legislation are also subject to constant change. We therefore recommend that formal advice be sought before acting in any of the areas. This news article is issued as a guide to the readers. Calibre Business Advisory Pty Ltd and its associated entities disclaims any losses that may be incurred as a result of the reader undertaking any action based on this article.