Australian framework reform

The AASB’s financial reporting framework reform project is entering its next phase.

In Brief

  • The for-profit reforms have been completed and are effective for financial years beginning on or after 1 July 2021.
  • The AASB is now progressing framework reform in the not-for-profit (NFP) sector, with a discussion paper open for comment until March 2023.
  • Work on reform in the public sector will commence once the NFP framework reform project concludes.

This Australian Accounting Standards Board (AASB) project aims to make the financial reporting framework clearer and simpler. The AASB’s work is evidence based, with substantial efforts being directed toward research on existing practices and extensive stakeholder consultation. CA ANZ is an active participant and encourages its members to become involved.

The project is addressing each of the following three sectors successively.

For-profit private sector  

In early 2020 the AASB completed its for-profit framework reform by amending SAC 1 Definition of the Reporting Entity to remove the ability of certain for-profit entities to lodge special purpose financial statements with regulators. Instead impacted entities must now prepare Tier 1 or 2 general purpose financial statements that apply all the recognition and measurement requirements of all accounting standards (including consolidation and equity accounting as appropriate).  However, disclosure relief is provided for Tier 2 through a new simplified disclosure standard (AASB 1060) that replaces the AASB’s Reduced Disclosure Regime. These reforms apply to financial years beginning on or after 1 July 2021.

CA ANZ special purpose guide

Can I still prepare special purpose financial statements?

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Not-for-profit private sector

The AASB is now progressing framework reform in the not-for-profit (NFP) sector. NFPs preparing Tier 2 general purpose financial statements must now use the AASB’s new Tier 2 simplified disclosure standard (AASB 1060). The AASB is also developing a Tier 3 standard that will offer simplified recognition and measurement requirements and a discussion paper on its proposed simplifications is now open for comment, accompanied by an extensive range of support resources.  The scope of SAC 1 will then be amended to require certain NFPs with legislative reporting requirements to prepare general purpose financial statements under this new Tier 3 standard.

Not-for-Profit Private Sector Financial Reporting Framework

AASB Tier 3 Discussion Paper.

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Public sector

The AASB has released Research Report No. 6: Financial Reporting Requirements Applicable to Australian Public Sector Entities which benchmarks Australian public sector financial reporting with seven comparable jurisdictions internationally. This has been followed by a discussion paper; Improving Financial Reporting for Australian Public Sector Entities that sets out possible options for a way forward. The AASB intends to use this paper to encourage discussion amongst key stakeholders. More formal work on reform in this sector will commence once the NFP framework reform project concludes.

Public Sector Financial Reporting Framework

AASB project summary.

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