More-stringent financial reporting obligations for AFSLs & certain for-profit entities
From the 2021–22
financial year, Australian Financial Services Licensees (“AFSLs”) and certain
for-profit entities will be subject to more-stringent financial reporting
obligations.
Recent amendments to the Australian Accounting Standards have removed the right of AFSLs and certain other for-profit, private-sector entities (see ‘who is affected’ below) to self-assess financial reporting requirements and prepare special-purpose financial reports.
Now they will prepare, as a minimum, Tier 2 general purpose financial statements (GPFS) that comply with all recognition and measurement (R&M) requirements in Australian Accounting Standards (AAS). To reduce any transition burden, the AASB has issued:
- a new
Tier 2 GPFS framework – see AASB 1060 General Purpose Financial
Statements – Simplified Disclosures for For-Profit and Not-for-Profit
Entities, based on IFRS for SMEs with less disclosures than the
current Tier 2 GPFS framework.
- transitional
relief, including relief from restating comparative information, for
entities that choose to early adopt the requirements (ie. before 1 July
2021).
WHO IS AFFECTED?
For-profit
companies preparing financial statements under the Corporations Act 2001,
principally:
- large
proprietary companies (including grandfathered companies);
- unlisted
public companies;
- small
foreign-controlled companies;
- financial
services licensees; and
- small
proprietary companies with crowd-sourced funding.
Other for-Profit:
- private
sector entities required by legislation to prepare financial statements
that comply with either Australian Accounting Standards (AAS) or
accounting standards (e.g. co-operatives and incorporated associations and
higher education providers);
- entities
whose constituting document or another document requires the preparation
of financial statements that comply with AAS, if created or amended in any
way, on or after 1 July 2021 (e.g. private sector trusts, partnerships,
self-managed superannuation funds and joint arrangements); and
- entities
(both private and public sector) that elect to prepare GPFS (e.g.
for-profit public sector entities or other for-profit private sector
entities).
WHO IS NOT
AFFECTED?
- Small proprietary companies
(unless foreign controlled);
- Not-for-profit entities as
their financial reporting framework will be considered via separate
targeted consultations;
- For-profit public sector
entities (unless they elect otherwise);
- Entities whose constituting
document or another document requires the preparation of financial
statements that comply with AAS if created or amended before 1 July 2021
(such as trusts);
- Entities Preparing:
- financial
statements that give a true and fair view without reference to compliance
with AAS or accounting standards such as gaming venue operators or
internet gaming licensees; or
- financial
information but not required to prepare financial statements as defined
in paragraph 10 of AASB 101 Presentation of Financial Statements such
as friendly societies, superannuation funds, retirement villages,
incorporated associations, housing societies; and
- entities
required only by their constituting or other document to prepare financial
statements that comply with “accounting standards”, “generally accepted
accounting practices or principles” or other terminology that is not
specifically AAS.
