Date posted: 01/07/2022

Submission on AASB fair value guidance for not-for-profits

Joint submission supports AASB’s proposed fair value guidance for NFPs (ED 320)

In brief

  • AASB ED 320 proposes detailed guidance on the application of AASB 13 Fair value measurement in the public sector
  • Stakeholders face practical difficulties applying AASB 13 to assets held for their service potential
  • Joint submission supports guidance as a measured and pragmatic response to these challenges

The CA ANZ/CPA Australia joint submission on AASB ED 320 has provided overall support for the draft implementation guidance supporting the application of AASB 13 Fair value measurement in the not-for-profit public sector.  

The guidance addresses a range of challenges associated with applying the principles of AASB 13 to determining the fair value assets held for their service potential that have been identified, particularly in the public sector where the use of fair value is mandated). These issues include:- 

  • identifying market participants and their assumptions where assets are specialised,  
  • assessing highest and best use for specialised assets, and  
  • the calculation of current replacement cost.   

Such issues led the International Public Sector Accounting Standards Board (IPSASB) to consider an alternative model to fair value. However, our recent submission to the IPSASB’s measurement proposals indicated that our preferred approach was for additional guidance, such as that now contained in ED 320, that would support the continuing use of AASB 13.  

We believe the AASB’s proposals are a reasonable and measured approach to the complexities of the above implementation challenges and the associated professional judgements. We also agree that the proposals set out logical, pragmatic and consistent responses to the variety of other issues that have been raised.  

However, the submission identifies some instances where additional clarification of key terms or further guidance to provide clearer direction and reduce the associated measurement uncertainty. 

Joint CPA/ CA ANZ submission on ED 320 

Title Joint submission on IPSASB measurement proposals 

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