AASB proposes amendments to AAS to increase transparency to users of publicly lodged SPFS

The Australian Accounting Standards Board has issued an exposure draft proposing to require entities lodging special purpose financial statements (SPFS) with either ASIC or the ACNC, to disclose whether or not the accounting policies applied in the financial statements comply with all the R&M requirements in AAS.

Where an entity’s accounting policies do not comply with the R&M requirements in AAS, the AASB is not proposing and does not expect a quantification or reconciliation of the extent of non-compliance.

The exposure draft also asks entities with subsidiaries, investments in associates or in joint ventures, to reveal whether or not they have been consolidated or equity accounted in a manner consistent with the requirements set out in AAS.

If the entity has not consolidated its subsidiaries or equity accounted its investments in associates or joint ventures consistently with those requirements, it should disclose that fact, and the reasons why. However, if the entity is a not-for-profit (NFP) entity, and it has not determined whether or not its interests in other entities give rise to interests in subsidiaries, associates or joint ventures, the entity should instead disclose that fact, the AASB explains.

“The AASB acknowledged that disclosure of this information is not sufficient to address the problems with publicly lodged SPFS, however the AASB decided that an amendment to AAS was urgently needed to provide greater transparency to users of publicly lodged SPFS and to also improve the comparability of SPFS,” the AASB said.

It has proposed that the amendments be applicable to annual periods ending on or after 30 June 2020, with early adoption encouraged.

According to the Board the newly proposed requirements are an interim measure, while it undertakes a broader project, which seeks to remove the ability for certain entities to prepare SPFS when they are required to comply with AAS and replace them with GPFS.

“Further, understanding the alignment between an entity’s accounting policies and the R&M requirements in AAS would help entities assess the impact of any future transition from SPFS to GPFS,” it added.

The AASB is now inviting public comments on any of the proposals in this exposure draft by 19 August 2019.