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19 Mar. 2020

New simplified disclosure standard for For-Profit and Not-for-Profit Tier 2 entities

AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities has been developed in conjunction with AASB 2020-2 Amendments to Australian Accounting Standards – Removal of Special Purpose Financial Statements for Certain For-Profit Private Sector Entities  to:

(a) provide Tier 2 reporting requirements for those for-profit entities that will be prohibited from preparing special purpose financial statements (SPFS) when AASB 2020-2 becomes operative, that appropriately balance the needs of users with the costs of moving from SPFS to Tier 2; and

(b) reduce the reporting burden of for-profit and not-for-profit entities using the current Tier 2 reporting requirements for preparing general purpose financial statements. 

AASB 1060 does not change:

  • Which entities are permitted to apply Tier 2 reporting requirements;
  • and the recognition and measurement requirements of Tier 2, which are the same as for Tier 1.

The disclosures that are relevant to Tier 2 entities are now set out in a separate, stand-alone Standard and shading will no longer be used to indicate which of the disclosure requirements in the other Australian Accounting Standards can be omitted. 

If you have to step up from SPFS to general purpose financial reports as a result of AASB 2020-2, you will have an overall increase in disclosures (eg in related parties, tax and financial instruments), but you will also be able to remove some disclosures as a result of not having to fully comply with the currently mandatory standards (AASB 101, AASB 107, AASB 108, AASB 1048 and AASB 1054).

AASB 1060 applies for financial years beginning on or after 1 July 2021, but early adoption is encouraged via special transitional relief from disclosing certain comparative information in the first year of adoption that is provided in AASB 2020-2.