The AASB is exploring how to introduce the IASB’s revised Conceptual Framework for Financial Reporting (RCF) into Australia and improve the consistency, comparability and transparency of financial reports prepared in accordance with Australian Accounting Standards (AAS).
To start this conversation, in May 2018 the AASB released a Consultation Paper which proposes a two-phased approach to apply the RCF in Australia and to address two key issues, the:
- reporting entity concept clash between what is in current Australian requirements versus what is in the IASB’s RCF
- special purpose financial statements (SPFS) problem, caused by Australia’s unique accounting requirements that allow entities to self-asses as ‘Reporting entities’ or not; and prepare free-form SPFS for entities who have self-assessed as ‘Nonreporting entities’.
The SPFS issues have resulted in vastly divergent reporting practices, additional risk for Directors, preparers and auditors and have been questioned for many years now by the AASB, regulators, the media and other key stakeholders.
AASB Research Reports have highlighted the inconsistent application of Statement of Accounting Concepts SAC 1 Definition of the Reporting Entity and the lack of trust and transparency caused by SPFS in all sectors of the Australian economy.
Have your say: AASB Roundtables – Enhancing financial reporting and replacing SPFS
To be held in September, these roundtables aim to obtain your views on the Phase 2: Medium-term approach, in particular your preference on which alternative Tier 2 General Purpose Financial Statement framework the AASB should pursue (refer to Specific Matters for Comments in the paragraph 26 of the Consultation Paper).
Further information and registration.
Articles and opinion pieces
AASB Staff are aware of the following articles available in mainstream media that support the AASB’s proposals. This is not an exhaustive list, and the AASB is aware that this does not necessarily depict the full story. The AASB strongly encourages stakeholders to form their views on this topic based on the full range of research and empirical evidence available.
If you would like to share an article or a report that addresses this topic, please email Justine Keenan, AASB Senior Project Manager via standard@aasb.gov.au.