CA ANZ and CPA Australia have lodged a joint submission to the AASB to support the alignment of the requirements in AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities (AASB 1060) with the amendments made to AASB 101 Presentation of Financial Statements through AASB 2022-6 Amendments to Australian Accounting Standards – Non-current Liabilities with Covenants. When these amendments are approved, they shall apply for reporting periods beginning on or after 1 January 2024, with early adoption permitted.

Under the amendments to AASB 101, an entity will classify a liability as non-current if it has the right to defer settlement for at least 12 months after the reporting date. Only covenants with which an entity must comply on or before the reporting date affect the classification of a liability as current or non-current. However, when non-current liabilities are subject to covenants after the reporting date, entities will now need to disclose information to help users understand the risk that those liabilities could become repayable within 12 months after the reporting date.

Aligning the presentation and disclosure requirements in AASB 1060 with those in AASB 101 ensures consistency across all the Australian Accounting Standards and reduces any risk of interpretation and application differences.