Lobbying for changes to the Australian reduced differential reporting standard

A consultative process initiated by the Australian Accounting Standards Board (AASB) to create an Australian standard for Small and Medium-sized Entities (SMEs) provided an opportunity for users and preparers of financial statements to lobby for the inclusion of their views. This consultative process raises questions regarding its role in incorporating the notion of public interest into accounting standards. This paper presents evidence of self-interest and promotion of the private interests of influential stakeholders and clients, obtained by surveying financial statement users and preparers and interviews with AASB members and comment letter writers. We also find evidence of division amongst stakeholders and consider the impact of this on the incorporation of the public interest in accounting standards. This is the first study known to the authors which incorporates the views of the writers of comment letters about a national accounting standard for unlisted entities. It raises a challenge to the global accounting profession regarding its role in protecting the public interest in the standard setting process, to counter disengagement by users of financial statements.