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19RU-013 Removal of SPFS – ED 297

19RU-013 Removal of SPFS – ED 297

The AASB has released proposals which remove ability for certain for-profit private sector entities to prepare special purpose financial statements (SPFS). The proposals discuss who is in and out of scope and how an entity will transition from SPFS in detail. They work in conjunction with the proposals for a new GPFS-Tier 2 Simplified Disclosures Standard (ED 295).


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In a few words…

The AASB has issued ED 297 Removal of Special Purpose Financial Statements for Certain For-Profit Private Sector Entities (PDF 899KB) (ED 297). It is the next and most important step in the wider Australian financial reporting reform project currently being undertaken by the Australian Accounting Standards Board (AASB).

The AASB is proposing to remove the ability of certain for-profit private sector entities to prepare special purpose financial statements (SPFS). These entities will be required to prepare a form of general purpose financial statements (GPFS).

Who is impacted?
Who is impacted?

So for-profit entities regulated by ASIC (for example, large proprietary companies, small foreign-owned companies) who may currently be preparing SPFS will need to prepare and lodge GPFS – either Tier 1 or Tier 2. Entities not covered by the proposals may continue preparing financial statements using a framework determined by the directors or those charged with governance, which they consider meets the needs of their ‘special purpose’ users.

The proposals in ED 297:

  • will work in conjunction with the proposals for a new GPFS-Tier 2 Simplified Disclosures Standard (ED 295) – refer 19RU-012 Tier 2 Simplified Disclosures for further detail
  • does not change which entities are required by legislation to prepare financial statements
  • does not impact the not-for-profit (NFP) or public sector entities. The AASB has separate financial reporting reform projects in each of these areas.


The AASB proposes relief from restating and presenting comparative information in the year of transition for certain entities preparing GPFS for the first time to facilitate a proposed effective date of annual reporting periods beginning on or after 1 July 2020.

Submissions to the AASB on ED 297 are open until 15 November 2019.

How does it impact me – when effective?

The following diagram summarises the impacts of the combined AASB proposals and pronouncements issued since May 2019 – i.e. final AASB’s and Exposure Drafts.

Australian For-profit Financial Reporting Framework

If you are an entity that the above does not apply to then you may continue to prepare SPFS depending on the needs of your users (refer to the section below).

If you are within the scope of these proposals you may want to consider restructuring or updating your governing document (if applicable or required).

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.

 “The changes proposed by both ED 295 and ED 297 are significant.  They change a financial reporting framework that has been in place in Australia for the last 30 years.  

AASB has landed at a very different destination to where it started with the proposals in ITC 39 with respect to the GPFS-Tier disclosures.  

Further consideration by stakeholders will help determine how workable these proposals will be.  

I would strongly encourage all financial statements preparers and users to consider these proposals and provide comment – both positive and negative to the AASB by the deadline of 15 November 2019.”

Michael Voogt
Director, Department of Professional Practice


Further discussion on these detailed proposals and the wider Australian Financial Reporting Framework can be found in PDF version of this Reporting Update.

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