AASB September 2019 meeting deliberations on Australian financial reporting framework included extension of comment period for ED 295 (Simplified Disclosures) and ED 297 (Removal of SPFS) as well as amendments to proposals in ED 293 (SPFS disclosure of recognition and measurement requirements).
The Australian Accounting Standards Board (AASB) met in September 2019 and discussed the following issues relating to the Australian financial reporting reform project:
The amendments are further discussed below. The AASB has not as yet issued an amending Australian Accounting Standard (Standard) which updates AASB 1054 Australian Additional Disclosures. We plan to provide a further update when the amending Standard is issued.
To implement the Conceptual Framework for Financial Reporting (RCF) in Australia the AASB is undertaking an Australian financial reporting reform project.
The Australian financial reporting framework is undergoing its most significant overhaul in three-plus decades. To understand how the different pieces fit together, the respective entities affected and related application dates we have developed a website – visit kpmg.com/au/gpfs
The AASB agreed to extend the comment period for ED 295 and ED 297 by two weeks from 15 November 2019 to 30 November 2019 in response to stakeholders’ feedback.
Feedback requested a longer extension. This was not provided as the AASB considers “it is important to progress the projects so that any final Standards, resulting from the proposals in the EDs, will be available for entities to early adopt by 30 June 2020”.
Further details relating to ED 295 are discussed in 19RU-012 Tier 2 Simplified Disclosures – ED 295.
Further details relating to ED 297 are discussed in 19RU-013 Removal of SPFS – ED 297.
The AASB’s current expectation is that final Standards resulting from the proposals in ED 295 & ED 297 will be effective for annual periods ending on or after 30 June 2021.
ED 293 proposed to amend AASB 1054. It would impact all entities preparing special purpose financial statements (SPFS) that are required, through legislation, to comply with AASB 101 Presentation of Financial Statements and AASB 1054. This includes:
The disclosures proposed by ED 293 do not require entities to change their existing accounting policies. They are instead based on an entity’s existing financial reporting policies and practices.
Following stakeholder feedback, the AASB decided that the proposal in ED 293 would not apply to for-profit private sector entities preparing SPFS, unless the proposals in ED 297 to prohibit SPFS are not finalised.
The AASB acknowledged stakeholder feedback that the amendments would only be relevant to these entities for a short period of time if the proposals in ED 297 are finalised as expected by 30 June 2020 and costs are likely to outweigh benefits.
Following stakeholder feedback, the AASB decided that some amended proposals from ED 293 would apply to NFP entities, irrespective of the proposals in ED 297 being finalised.
The AASB acknowledged that there is less clarity in SPFS R&M requirements for charities and that any new disclosures would be without undue cost to preparers (i.e. cost/benefit analysis).
The amended proposals will not be re-exposed. The AASB’s current expectation is that amending Standard will be effective for annual periods ending on or after 30 June 2020.
Further discussion on the NFP proposed amendments can be found in the PDF version of this Reporting Update.
“The proposed additional disclosures are based on an entity’s existing financial reporting and practices. The additional compliance cost should be minimal.
As an interim measure, before any future changes to the NFP financial reporting framework, the proposals will address (albeit to a limited extent) the AASB’s concerns on the need to improve comparability, consistency, transparency and enforceability in SPFS.
The decision to not only apply the proposals to for-profit entities for 30 June 2020 balance dates is understandable in light of stakeholder feedback.
The biggest change to the Australian for-profit financial reporting framework is proposed by ED 295 & ED 297. Should these changes not proceed, or be significantly amended, the AASB will need to reconsider any future direction.”
– Michael Voogt
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