This is the fifth edition of a book that was originally published in 1995. The fourth edition of this book was the first Australian text to be published that explored the Australia equivalents of accounting standards (IFRS) issued by the International Accounting Standards Board.

Since the publication of the fourth edition of this text there have been further changes in the process by which accounting standards and associated guidance is developed within Australia. For example, in mid-2006 the Urgent Issues Group was disbanded and the Interpretations Agenda Committee was established. There have also been a number of significant changes in the platform of accounting standards that were released for application in 2005 as part of the process for adopting International Financial Reporting Standards. Some of the changes were due to ongoing efforts to converge the accounting standards issued by the International Accounting Standards Board and the Financial Accounting Standards Board (US). For example, significant changes have since occurred in: how we account for exploration and evaluation assets in the extractive industries (AASB6 replaced AASB 1022 in January 2005); how we disclose information about financial instruments (AASB 7 was released in August 2005); how we disclose information about operating segments (AASB 8 was released in March 2007); and, how we disclose information about related-parties (AASB 1046 was withdrawn in 2005 and AASB 124 was re-released in December 2005). Apart from these changes, many of the accounting standards in place at the beginning of 2005 have been revised and re-released. All these changes have been incorporated and explained in this fifth edition.

Apart from the changing the material to incorporate the release of new accounting standards, as well the revision of other pre-existing accounting standards, this fifth edition has been expanded by adding an additional by four chapters. A new chapter has been added to address share-based payments, and chapter 1 of the fourth edition has been now been broken into two chapters – Chapter 1 now concentrates on explaining the processes in place within Australia that lead to the development, release, and enforcement of accounting standards and other accounting-related guidance, whereas Chapter 2 now is dedicated to the Conceptual Framework. Two more chapters have also been added to the material that addresses the process of consolidation accounting. In total, the material addressing consolidation accounting has been doubled relative to its coverage in the fourth edition, and the related end of chapter questions pertaining to consolidation accounting have also doubled in number relative to the fourth edition. The changes in the coverage dedicated to consolidation accounting has occurred in direct response to a number of requests from users of this book. Apart from the changes to the chapters that address consolidation accounting, additional end of chapter questions have been added to most other chapters.

Each chapter of this fifth edition contains learning objectives, chapter summaries, and a comprehensive end-of-chapter exercise. A glossary of key terms is provided towards the back of the book. The book provides material that will enable the reader to gain a thorough grasp of the contents and of the practical application of the majority of financial accounting requirements currently in place in Australia. In the discussion of these requirements, numerous worked examples, with detailed solutions, are provided throughout the text.

As well as addressing how to apply the various accounting requirements, this text also encourages readers to critically evaluate the various rules and guidelines. The aim is to develop accountants who are not only able to apply particular accounting requirements, but who will also be able to contribute to the ongoing improvement of accounting requirements. The view taken is that it is not only important for students to understand the rules of financial accounting, but also to understand the limitations inherent in many of the existing accounting requirements. For this reason, reference is made to various research studies that consider the merit, implications, and costs and benefits of the various accounting requirements. Also, various newspaper articles discussing different aspects of the accounting requirements are reproduced for consideration and discussion. The permission of copyright holders to reproduce this material is gratefully acknowledged.

Social-responsibility reporting is an increasingly important area of accounting, and one that is rapidly developing. Its importance was further highlighted as a result of the February 2007 report of Intergovernmental Panel on Climate Change (entitled Working Group I Fourth Assessment Report). The report emphasized the linkage between corporate activities and climate change and the need for rapid improvements in corporate environmental performance and related accountability. While this book predominantly considers financial accounting and reporting, Chapter 37 focuses on social-responsibility reporting and provides the most up-to-date and comprehensive material available on this important topic.

Writing a text like this is an extremely time-consuming exercise and so it has been very gratifying that the effort involved has been rewarded by so many institutions across Australia (and also some outside Australia) electing to prescribe previous editions of this book as part of their accounting programs. Given the success of all previous editions, every effort has been made to ensure that the fifth edition is equally valuable to students and teachers, and that it has been substantially and thoroughly revised.