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19RU-012 Tier 2 Simplified Disclosures – ED 295

19RU-012 Tier 2 Simplified Disclosures – ED 295

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.

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Tier 2 simplified disclosures ED 295 infographic

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.

Timing

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.

What's being proposed

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.

Key features

Simplified Disclosures Standard key features infographic

 “Based on our initial reading, overall, the following was observed:

  • the level of disclosures in these proposals are more extensive that some entities currently provide in SPFS
  • in comparison to the current Tier 2 (RDR) framework the level of disclosures in these proposals have been considerably reduced
  • the current proposals will require certain disclosures in some traditional areas where SPFS do not provide disclosures – for example related parties and income taxes.”

Michael Voogt
Director, Department of Professional Practice

 

The AASB published a staff paper (PDF 1.59MB) which compares the current RDR disclosures with the proposed simplified disclosures.

Presentation

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.
 

More KPMG resources are planned

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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KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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