The AASB has released proposals for a new Tier 2 Simplified Disclosures Standard which will replace RDR disclosures. It will impact entities required to prepare general purpose financial statements who do not have public accountability as defined by Australian Accounting Standards. The proposals set the stage for the implement of Phase 2 of the wider project to adopted the revised Conceptual Framework for Financial Reporting in Australia.
The AASB has issued ED 295 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities (ED 295) (PDF 860KB).
It is a further step in the wider Australian financial reporting reform project currently being undertaken by the Australian Accounting Standards Board (AASB).
The wider project is to implement the Conceptual Framework for Financial Reporting (RCF) in Australia.
ED 295 proposes replacing the current Reduced Disclosure Requirements (RDR) in the Australian Accounting Standards (AAS) with a new, separate disclosure standard (the Simplified Disclosures Standard) that would apply to all entities that report under Tier 2. It will become the disclosure standard for all for-profit and not-for-profit (NFP) entities reporting under Tier 2.
The proposals also includes the principles and methodology to be used in determining Tier 2 disclosures going forward.
The Simplified Disclosures Standard has been developed based on the disclosures included in the IFRS for SMEs Standard. It does not impact recognition and measurement (R&M) requirements of AAS. Nor does it change which entities are required to apply Tier 2.
The AASB’s current expectation is that the Simplified Disclosures Standard proposed by ED 295 will be effective for annual periods ending on or after 30 June 2021.
Submissions to the AASB on ED 295 are open until 15 November 2019.
The Simplified Disclosures Standard has been developed based on the disclosures included in the IFRS for SMEs Standard. It does not impact R&M requirements of AAS. Nor does it change which entities apply Tier 2.
“Based on our initial reading, overall, the following was observed:
– Michael Voogt
The AASB published a staff paper (PDF 1.59MB) which compares the current RDR disclosures with the proposed simplified disclosures.
As a general rule, presentation requirements have been retained in existing AAS. The AASB notes in the proposals that it does not intend to make any changes to the presentation requirements or accounting treatments available under AAS.
Mechanically this means that presentation requirements in some AAS, for example AASB 107 Statement of Cash Flows, are replaced in their entirety by sections in the (new) Simplified Disclosures Standard.
Further resources to assist in assessing the impacts from a practical perspective will be developed. These will be available through your KPMG contact in the coming weeks.
Further discussion on these proposals and the wider Australian Financial Reporting Framework can be found in PDF version of this Reporting Update.
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