Naa Gee Pty concerns about the extensive cost that relate to reporting and preparation of financial statements is justified, as did many other companies. In response to this the AASB released a new standard, AASB 1053 Application of Tiers of Australian Accounting Standards in June of 2010. This standard means that companies are split into 2 different tiers, companies that are required to prepare full general purpose financial statements and companies that can have reduced disclosure requirements.
Tier 1 is the highest reporting standard there is and this means for entities reporting under Tier 1, they have “Publicly accountable” like that of Naa Gee. Which means they have to apply full International Financial Reporting Standards (IFRS) to general…show more content… Tier 2 has significantly reduced disclosure requirement which means that the costs of preparing and auditing general purpose financial statements is significant lover than that of tier 1.
To determine if Naa Gee can report under tier 2 requirement’s the concept of ‘public accountability’ must be addressed. The term public accountability means “accountability to those existing and potential resource providers and others external to the entity who make economic decisions but are not in a position to demand reports tailored to meet their particular information needs” (Aasb.gov.au, 2015). It is probably that Naa gee can report under tier 2 requirements this is due to them not having any public accountability. Even though there are 3 shareholders that are not direct directors of Naa Gee, due to them be family members and a related party they are in a position to request a financial statement. Ultimately AASB will determine if Naa Gee can report under tier 2 requirements, if they feel that Naa Gee does have public accountability than it must continue reporting in its current