Skip To Content | Contact Us | About AASB | Links

AASB on Twitter AASB on LinkedIn

Breadcrumbs

Stuff

News

10 Jun. 2020

Exposure Draft: Minimum disclosures for certain for-profit entities’ special purpose financial statements

In the limited circumstances where for-profit private sector entities are able to continue preparing SPFS, ED 302 proposes minimum disclosure requirements regarding the accounting policies applied, including non-compliance with Australian Accounting Standards, with effect from the 2020/21 financial year. Comments are due to the AASB by 11 September 2020.

Following the issue of AASB 2020-2, the preparation of special purpose financial statements (SPFS) in the for-profit private sector is limited, with only certain for-profit private sector entities permitted to prepare SPFS when compliance with Australian Accounting Standards is specified.

Who do these proposals apply to?

The following entities would be required to make the proposed disclosures, if they are preparing SPFS:

(a) for-profit private sector entities that are required by legislation to prepare financial statements that comply with either Australian Accounting Standards (AAS) or accounting standards. The ability of these entities to prepare SPFS is temporary as these entities will be required to prepare general purpose financial statements for annual periods beginning on or after 1 July 2021, in accordance with AASB 2020-2; and

(b) other for-profit private sector entities that are required only by their constituting document or another document to prepare financial statements that comply with AAS. The ability of these entities to prepare SPFS is limited to circumstances where the constituting or other document requiring compliance with AAS was created or last amended before 1 July 2021.

When are the disclosures proposed to apply?

The ED proposes that the disclosures apply to annual reporting periods ending on or after 30 June 2021, such as the 2020/21 financial year. Entities are encouraged to apply the proposed disclosures earlier than that, e.g. the 2019/20 financial year.

What disclosures would be required?

ED 302 proposes requiring entities to:

(a) disclose the reason why the entity is preparing SPFS;
(b) disclose the entity’s material accounting policies, including details of any changes in those policies;
(c) disclose whether subsidiaries and investments in associates or joint ventures have been accounted for in accordance with AASB 10 and AASB 128;
(d) where a material accounting policy does not comply with the recognition and measurement requirements in AAS, disclose an indication of how it does not comply; and
(e) disclose whether or not the SPFS overall comply with the recognition and measurement requirements in AAS.

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.

When and how to comment

Please submit your comments to the AASB by 11 September 2020 via the AASB website, LinkedIn or email.