New accounting standards for 30 June 2021
We are currently in a period of minimum changes for accounting standards and therefore the new standards for June reporting entities are not expected to have a significant impact for the majority of organisations.
The table below provides a summary of the standards and commentary about the changes and the entities impacted.
| New standard | Overview of changes | Affected entities |
|---|---|---|
| AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a business | Clarifies the definition of a business to assist in determining whether a transaction involves the acquisition of assets or a business. Introduces an optional concentration test which is a practical expedient when most of the fair value is attributed to a particular asset. | Entities who are acquiring multiple assets in a particular transaction should refer to the revised definition to ensure the transaction is being appropriately accounted for as either a business combination or acquisition of assets. |
| AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material | Updates to the definition of material, in particular to confirm that material information should not be obscured by immaterial information. | Entities needing guidance about whether a transaction or balance is material. The revised definition should result in more meaningful (and shorter) financial statements as entities should consider whether information included provides material information or is acting to obscure material information. |
| AASB 1059 Service Concession Arrangements: Grantors | Provides accounting requirements for public sector grantors in a service concession arrangement. | Public sector entities who have service concession arrangements (i.e. where the provision of a public service has been ‘outsourced’ to another entity to provide the service on their behalf). |
| AASB 2019 – 7 Amendments to Australian Accounting Standards – Disclosure of GFS Measures of Key Fiscal Aggregates and GAAP / GFS Reconciliations | Permits relief from certain disclosures in the financial statements of general government sector entities and whole of government financial statements. | General government sector entities and whole of government who choose to take advantage of the optional relief. |
| Conceptual Framework for Financial Reporting | New chapters on measurement and revised definitions of assets and liabilities along with clarification of certain reporting concepts. | Applicable to for-profit private sector publicly accountable entities only. Impact is unlikely to be significant, however if an entity is developing a new accounting policy then the revised framework should be used, if relevant to the entity. |
| AASB 2019 -3 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform | Modification of certain hedge accounting requirements in relation to uncertainty arising from the interest rate benchmark reform. | Entities who are applying hedge accounting for interest rate risk may be impacted depending on the index used. |
| AASB 2019 – 5 Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards Not Yet Issued in Australia | Confirms that entities who provide an IFRS compliance statement in their financial statements should disclose the impact of standards issued by IASB which have not yet been issued in Australia. | Entities providing an IFRS compliance statements (for profit entities preparing Tier 1 general purpose financial statements) should have a process in place to identify IASB standards which have yet to be issued in Australia at the signing date of the financial statements. |
| AASB 2020-4 Amendments to Australian Accounting Standards – COVID-19 Related Rent Concessions | Provides a practical expedient for lessees who have received rental concessions in the form of deferrals or waivers and meet certain conditions* to treat the concessions as variable lease payments rather than lease modifications. | Lessees who have received rental concessions who choose to apply the practical expedient will reflect the benefit through the income statement rather than having to recalculate the lease liability and right of use asset. |
* Note that AASB 2021-3 Amendments to Australian Accounting Standards – Covid-19 Related Rent Concessions beyond 30 June 2021 (available for early adoption) extends the criteria regarding the due date for the rental payments from 30 June 2021 to 30 June 2022.
Contact your local Bentleys audit and assurance expert for assistance with your financial reporting.
We, at Bentleys, are doing everything we can to help businesses come out of this challenging time in good shape.
For resources to assist with your year-end tax planning, visit our EOFY portal.
Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.
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