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6 Jun. 2019

Conceptual Framework for Financial Reporting

New Conceptual Framework for Financial Reporting:  A new Conceptual Framework has been issued for for-profit private sector entities that have public accountability and are required by legislation to comply with Australian Accounting Standards. 

In addition, other for-profit entities may voluntarily elect to apply the new Conceptual Framework, which applies to annual reporting periods beginning on or after 1 January 2020.

The new Conceptual Framework incorporates the IASB’s meaning of ‘reporting entity’, which differs significantly from the reporting entity concept in current Australian pronouncements, and also has revised definitions and recognition criteria for assets and liabilities and a new chapter on measurement.  Having the new Conceptual Framework in place is important so that entities that currently claim compliance with IFRS Standards can continue to do so.

Consequential amendments to Standards and Interpretations through AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework support the issue of the new Conceptual Framework.  The amendments also retain the Australian reporting entity concept for all entities not applying the new Conceptual Framework.

The AASB is continuing to develop Phase 2 of the financial reporting framework project, which will extend the Conceptual Framework to additional for-profit private sector entities.