- New AASB proposals will remove special purpose financial reports as an option that for profit entities can use to lodge a financial report with a regulator
- The proposals are contained in AASB ITC 39 which closes for comment on 9 November
- Have your say on what should replace special purpose reports for non reporting entities
The AASB's ITC 39 Applying the IASB's Revised Conceptual Framework and Solving the Reporting Entity and Special Purpose Financial Statement Problems is proposing to remove the reporting entity concept contained in Statement of Accounting Concepts 1 Definition of the Reporting entity (SAC1) as one of the bases for Australia's differential reporting regime. The changes are in part driven by the recent release by the IASB of a new Conceptual Framework that contains an inconsistent definition of 'reporting entity;'. The AASB consultation is in two phases:
- Phase 1 sought to ensure that entities which are currently IFRS compliant can use the new conceptual framework. Our recently lodged submission agreed with the AASB's proposed approach but cautioned against progressing their Phase 1 approach without an exposure draft (ED) that would allow stakeholders to address the specific implications of the proposals once the direction had in principle approval.
- Phase 2 is more controversial with the AASB proposals requiring all entities that lodge financial statements with regulators to produce a Tier 2 general purpose report. Currently SAC 1 permits non reporting entities to lodge a special purpose report. In the place of SPFRs, ITC 39 offers two alternatives for application to its expanded second tier of entities, a reduced disclosure regime and a specified disclosure regime (see ITC 39 for more details).
Initial member feedback expressed concerns with the AASB's identified options, which we raised in our Phase 1 submission. It encouraged the AASB to undertake further research and consultation which is underway.
Have your say
Our survey is now closed. Thank you to all those who contributed to this research effort and to our Phase 2 submission. However feedback on ITC 39 can still be provided to the AASB until 9 November 2018.
Where to from here
The AASB has recently decided to focus its immediate work on ITC 39 Phase 2 on “for profit entities” only. However work on reform of the not for profit sector and the public sector are still ongoing as part of the broader framework reform project. Discussion papers for not for profits and Public Sector have been published and the AASB intends to publish a further NFP discussion paper to get more feedback on how to proceed for these entities once it concludes discussions with the ACNC and other NFP regulators. More information on all these projects is on the AASB website.
Conceptual Framework and SPFS
Learn more about the AASB Framework projectRead more
AASB Framework reform project summary
The objective of the project is to clarify and simplify the Australian financial reporting framework, in conjunction with government policymakers and regulators.Read more