- The IASB’s revised Conceptual Framework has been released for public comment
- The AASB is consulting on different options for Tier 2 reporting.
- Take time this reporting season to consider how the proposals may affect you.
The AASB recently issued a Consultation Paper setting out options for a replacement to the revised Conceptual Framework.
After wrestling with the ‘special purpose problem’ for many years, the AASB feels the time is right to have another crack at the conundrum, with the aim of improving the consistency, comparability and transparency of financial reports lodged with regulators.
Here are five key questions to navigate the AASB’s.
1. Am I publicly accountable?
The AASB’s Conceptual Framework proposals are in two phases. Phase 1 is aimed at all publicly accountable entities and those that voluntarily prepare general purpose financial statements.
The AASB has indicated that if no objections are raised to the Phase 1 proposals, on which comments are due by August 9, they may move straight to an amended standard. That means it’s time to speak now, or forever hold your peace.
2. Is there a problem with special purpose?
The ability of entities to self-assess their reporting entity status, has resulted in divergent reporting practices.
How do you see the reporting entity concept operating in practice? Who typically decides whether an entity is a reporting entity, and who decides which accounting standards to apply?
3. Are the proposals so different to what we’re doing now?
The options proposed by the AASB for Tier 2 entities are either the current Reduced Disclosure Regime (RDR), or a new ‘Special Disclosure Regime’ (SDR), which is full compliance.
The difference might be a couple of disclosures, or it might be more.
4. Who are the users of my financial reports?
A proxy for the existence of users of financial statements is economic significance. It’s an appropriate time for these thresholds to be revised.
5. What about a third tier?
The AASB has indicated in its proposals that it may be willing to introduce a third (lesser) tier of general purpose reporting requirements for the not-for-profit sector.
Members should use this reporting season to think about what a more robust framework could look like and how the AASB’s proposals stack up.
Share your views
This could be a rare opportunity to reform the Australian financial reporting framework.Read more
Discover Our Courses
Visit our education store for more information.Find out more