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4 Jul. 2019

Exposure Draft: Amendments to Australian Accounting Standards - Disclosure in Special Purpose Financial Statements of Compliance with Recognition and Measurement Requirements

ED 293 proposes to require entities lodging special purpose financial statements (SPFS) with the Australian Securities and Investments Commission and not-for-profit entities lodging SPFS with the Australian Charities and Not-for-profits Commission to disclose an explicit statement as to whether or not the accounting policies applied in the SPFS comply with all the recognition and measurement (R&M) requirements in Australian Accounting Standards (AAS).

Information about whether these entities have subsidiaries or investments in associates or investments in joint ventures and how they have accounted for these interests would also be required.

Although users of SPFS should be able to demand any information they need, this is not always the case and the proposals in ED 293 are aimed at addressing concerns that the quality of disclosures in a significant number of SPFS is not adequate to enable users to determine what additional information they might need. 

This is an interim measure intended to provide greater transparency to users of publicly lodged SPFS and to improve the comparability of SPFS with other financial statements whilst the AASB proceeds with its broader project, which proposes to remove the ability for certain entities to prepare SPFS when they are required to comply with AAS and replace them with general purpose financial statements.

The AASB considers the proposed disclosures would require minimal effort and cost, yet would result in significant improvement in the transparency of information provided to users of SPFS.
The ED proposes that the disclosures apply to annual reporting periods ending on or after 30 June 2020 and entities are encouraged to early adopt the proposed disclosures.

AASB staff have prepared a high level summary to assist with understanding these proposals.

Please submit your comments to the AASB by 19 August 2019 via the AASB website, LinkedIn or email.