Thursday, June 23, 2022
To support greater transparency and comparability in the special purpose financial statements (SPFS) of certain for-profit private sector entities, AASB 2022-4 requires the SPFS to include disclosures that inform users of the basis upon which they have been prepared.
Following the issue of AASB 2020-2 Amendments to Australian Accounting Standards – Removal of Special Purpose Financial Statements for Certain For-Profit Private Sector Entities, for-profit private sector entities that are required only by their constituting document or another document (being a document created before 1 July 2021 and not amended on or after that date) to prepare financial statements that comply with Australian Accounting Standards can continue to prepare SPFS.
When such entities prepare SPFS that refer to Australian Accounting Standards, AASB 2022-4 requires the financial statements to disclose the basis upon which the decision to prepare SPFS was made and information about the material accounting policies applied in the SPFS, including the extent of compliance or otherwise of those accounting policies with the recognition, measurement, consolidation and equity accounting requirements in Australian Accounting Standards. The new disclosure requirements will be added to AASB 1054 Australian Additional Disclosures.
The financial statements will also be required to disclose the entity’s reporting framework, that the entity is a for-profit entity and that the financial statements are special purpose financial statements. These disclosure requirements are already included in AASB 1054 and will be applied to these entities.
AASB 2022-4 applies to annual reporting periods ending on or after 30 June 2022. It finalises the proposals in Exposure Draft ED 302, which was issued by the AASB in June 2020 for public comment.