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15 Aug. 2019

Research Report 12 Financial Reporting Practices of For-Profit Entities Lodging Special Purpose Financial Statements

The AASB commissioned a research project into how extensively special purpose financial statements (SPFS) are used by for-profit large proprietary, small foreign controlled companies and unlisted public companies (other than companies limited by guarantee) lodging with ASIC, remains extensive at 71% (2011 66%).

The findings of Research Report 12 also indicate a lack of transparency, as for 34% of those preparing SPFS, the extent of compliance with recognition and measurement (R&M) requirements in Australian Accounting Standards was not clear. The Report’s findings provide the basis for the AASB to evaluate the likely costs for the approximately 7,300 companies impacted by the proposals in forthcoming ED 297 to remove the ability for large proprietary, small foreign controlled companies and unlisted public companies (other than companies limited by guarantee) to publicly lodge SPFS. The proposals would replace SPFS with the ED 295 proposals to replace the current Tier 2 Reduced Disclosure Requirements with the same R&M Requirements but further simplified disclosures. The benefits of the proposed reductions in disclosure (ED 295) would also be available for not-for-profit entities currently using RDR.