- 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
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. 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 are conducting member outreach to better understand the costs and impacts of the AASB's proposals via a survey. Please share your views with us to help shape our advocacy positions on this priority project.
However member views on these important reforms are welcome at any time via email.
We also encourage you to have your say on any or all of the following EDs due to be released by the AASB over the next 6 months.
- Amendments to AASB 1054 Australian Additional Disclosures. This will require the special purpose financial reports of for-profit and not-for-profit (NFP) entities who need to comply with this standard to disclose information on the compliance of the financial statements with the recognition and measurement requirements of the AASB standards (including the consolidation requirements). It was released in July as ED 293 with a comment period of 45 days closing on 19 August. The board intends to finalise an amended standard by December, but encourage voluntary early adoption of the changes to 30 June 2019 year ends in the interests of improved transparency.
- Amendments to the "reduced disclosure regime" (RDR). This new package, based more directly on the IFRS for SMEs standard, will 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 apply the "new" disclosure reductions. This will also be released in June with a comment period of 120 days.
- An amended definition of the term "not-for-profit". Given that framework reform is likely to result in differing reporting requirements for the for-profit and NFP sectors ED 291 Not-for-Profit Entity Definition and Guidance is proposing a more substantive definition of that term. It is open for comment until 9 September.
- Proposals to remove SAC 1 for for-profit lodging entities. This ED, implementing Phase 2 of the reforms is expected in August.
CA ANZ special purpose reporting survey
Have your say on the AASB reformsTake the survey
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CA ANZ welcomes your feedback on the AASB reporting reforms.Contact us
The future of special purpose reporting. By Amir Ghandar CA Reporting and Assurance Leader CA ANZ (June 2019).Download here