Guide to Accounting Standards for Private Businesses

With your business being your financial life line, the financial status of your business is critically important to success. Australia maintains a number of accounting standards which help govern the standard of accounting within Australia. It is therefore essential to ensure you are successfully adhering to these standards by relying on professional accountants as they are compliant with the accounting standards. For the business owner who is not well versed in accounting practices, it is difficult to discern whether the accounting service providers adhere to the accounting standards or not.

What is an Accounting Standard?

Accountants are responsible for compiling the finances that pertain to business transactions. These should be done by following the criteria that has been put in place for them and have been accepted as general accounting principles. These make up the accounting standards.

Originally, these standards were put into place by professional accountants. They were governed under a code of ethics. In 1966, the Australian Accounting Research Foundation came into play. This was a joint union of the Accounting Standards Board and the Public Sector Accounting Standards Review Board. In 1984, The Accounting Standards Review Board was established. Then, it was renamed the Australian Accounting Standards Board in 1991. In 2000, this entity merged with the PSASB.

Why are Accounting Standards Vital to Businesses?

These standards and the generally accepted financial principles set the guidelines for the accounting standards. This allows for the production of financial statements for a business entity. These statements should accurately reflect the company’s financial status and how it is performing financially. It should give clear direction as to the status of the cash flow. All of these factors are important for every aspect of a certain business.

Most business owners rely on these financial records for making decisions concerning their company. Creditors can utilize them to obtain a clear financial picture of the company, while investors can use them for the same purpose. These financial records demand a high level of accuracy. The accounting standards are the foundation for accomplishing this. These records are pertinent for supporting the accountability of the business. They are also vital for keeping the business in compliance with the set rules and regulations.

Does Your Business Need Accounting Standards?

Every business regardless of its size or whether it is private or public has some regulations to follow. Listed companies are compelled by law to adhere to the accounting standards, requiring the entity to produce special purpose financial reports. For Australian businesses that qualify under this form of reporting, the requirements they have to meet are those needed by the users of the accounting record. If the company is filing statements that come under the Corporations Act, then there are accounting standards in place for this.

Some private companies can claim to be non-reporting entities. For non-reporting entities the demand and requirement for financial information is very low therefore there are reduced accounting standard requirements needed to be completed. ,

Choosing the Right Accounting Resources

Most business owners are not financial experts. Yet, at the same time, it is essential that business owners keep close tabs on what their business is doing financially. There are a lot of rules and regulations that have to be adhered to. For these reasons and many others, it is highly important to choose an expert accounting service provider like Tally Accounts. They ensure that your business stays compliant with the rules and regulations as they pertain to your business. In combination with remaining compliant, your financial records also serve as an extremely powerful resource. These help you to make the right business decisions as well as grow your business. Use Tally Accounts to help achieve and maintain your business success.