- The AASB is progressing proposals to reform reporting requirements for small and medium entities currently lodging special purpose financial statements with regulators
- The changes are a response to longstanding criticism of the inadequacy of the application of the “reporting entity” concept in SAC 1 as a principle for producing consistent, comparable and transparent financial reports
- Make sure you have your say as the reforms progress- comments close in November
Have your say on the AASB’s planned reforms
What is the AASB doing?
The AASB is progressing its proposals to remove "special purpose" financial statements as an option for lodging entities in the for-profit private sector. These reforms were flagged in its consultation paper ITC 39 Applying the IASB's Revised Conceptual Framework and Solving the Reporting Entity and Special Purpose Financial Statement Problems. That paper proposed reform in two phases, Phase 1 of which only impacted entities that are reporting entities. Change was needed here to allow them to adopt the IASB's revised Conceptual Framework and continue to claim IFRS compliance. AASB 2019-1, the amending standard implementing those reforms has now been released and applies from 1 January 2020.
The more controversial proposals are in Phase 2, which will impact those entities lodging special purpose financial statements with regulators as non-reporting entities (using SAC 1). The AASB plans to remove SAC 1, requiring these entities to prepare general purpose financial statements that will need to comply with the recognition and measurement requirements of all AASB standards. Revised Reduced disclosure requirements will also be included, based even more closely on the IFRS for SMEs standard than the current regime (under AASB 1053).
How can I contribute?
We encourage members to have their say on these proposals which will reshape Australia's financial reporting landscape in a way not achieved since the adoption of IFRS in 2005.
To help inform our advocacy work, we recently conducted a member survey, the results of which will inform our submission. However now the AASB’s detailed proposals have been released, more specific feedback is being sought on the following ED’s.
- ED 295 General Purpose Financial Statements – Simplified Disclosure for For- profit and Not-for-profit Tier 2 entities. A proposed separate disclosure standard , based more directly on the IFRS for SMEs standard, will replace the current Reduced Disclosure Regime ( AASB 1053) and become the disclosure requirements component of the general purpose financial statements that the AASB plans to apply to for-profit lodging entities when it removes SAC 1. These new proposals will also be of interest to any entity (FP or NFP) currently using RDR in their financial statements as they too will be able to adopt the further reduced disclosure reductions. Comments close on 15 November 2019.
- ED 297 Removal of Special Purpose Financial Statements for Certain For-profit private sector entities This ED proposes the removal of special purpose reports as an option for those entities required by legislation to prepare financial statements the comply with Australian accounting standards (with some exceptions) Comments close on 29 November 2019.
Read the AASB ED’s
Read the AASB EDs and have your say on the AASB reformsDownload here
CA ANZ survey results
Read more about our survey results and submissions.Read More
The future of special purpose reporting. By Amir Ghandar CA Reporting and Assurance Leader CA ANZ (June 2019).Download here