Resolving the Tension between Common Law and Australian Accounting Standard Board Interpretations of Accounting Terms and Concepts - Part 1

Australian Accounting Standard Board (AASB) standards are legislative instruments that have the force of law pursuant to the provisions of the Corporations Act 2001 (Cth) but these provisions apply only to those who are subject to the Act and do not replace common law conceptions of accounting information. Australian courts can choose to be guided by the standards but will define and assess accounting concepts guided by precedents in the common law which may or may not be in agreement with the standards. The courts on the one hand and the accounting profession and commerce on the other are likely to develop divergent conceptual frameworks for the analysis and preparation of financial statements.