New Requirements for Financial Reporting – 30 June 2024

New accounting standards

As we noted in our November/December 2023 update, the new standards are not likely to have a significant impact on your financial statements at 30 June 2024.

As a reminder, we provide below a high level summary of the new standards:

  • Amendments to AASB 101 have shifted the focus from a comprehensive listing of significant accounting policies to disclosing only material accounting policy information. This move aims to enhance the relevance and understandability of financial disclosures by concentrating on information that genuinely impact the users’ understanding and decision-making processes regarding financial statements.
PRACTICAL STEPS FOR IMPLEMENTATION
Identify Key TransactionsStart by reviewing the most significant transactions specific to your business that influence financial outcomes. Focus your policy disclosures on these areas.
Assess MaterialityDetermine the materiality of each accounting policy based on whether its omission or misstatement could influence the economic decisions of users of the financial statements.
Streamline DisclosureEliminate redundant or immaterial policy disclosures that do not add value to the financial statement users. This streamlining will make the notes more accessible and focused.

The other amendments to the standards are unlikely to have any significant impact for entities. Further information on each of these can be found under the following headings in the November/December 2023 update.

  • AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction
  • AASB 2023-2 Amendments to Australian Accounting Standards – International Tax Reform – Pillar Two Model Rules (AASB 2023-4 is the equivalent Tier 2 standard)
  • AASB 2022-7 Editorial Corrections to Australian Accounting Standards and Repeal of Superseded and Redundant Standards

Not a new accounting standard, but new disclosure requirements in the financial statements of public companies

From 30 June 2024 year-end, a significant addition to the annual financial reporting requirements for public companies will come into effect under the Corporations Act 2001 (the Act). Both listed and unlisted public companies are now required to include a consolidated entity disclosure statement which includes specified information from the Act.

Standalone financial statements are required to include a statement noting that they do not have any consolidated entities and therefore the requirements are not relevant to them.

OVERVIEW OF NEW DISCLOSURE REQUIREMENTS
Disclosure contentThe consolidated entity disclosure statement must include comprehensive details about each entity within the corporate group, including:
- entity’s name
- structure (such as a company, partnership, or trust)
- incorporation country
- percentage of ownership by the parent company, and
- its tax residency.
Enhanced transparencyThe primary purpose of this disclosure is to illuminate the tax residency of all entities within the group. This measure is in response to a global push for greater tax transparency, intending to give stakeholders a clearer view of the tax landscapes in which the group operates.
Enhanced Directors’ declaration requirementIn addition to the disclosure requirements in the financial statements, Directors must also certify that the consolidated entity disclosure statement is “true and correct” – a declaration that carries a greater assertion of accuracy compared to the traditional “true and fair” requirement for the financial statements.

The CEO / CFO declaration for listed companies is also required to give the same ‘true and correct’ statement.
Audit considerationsThe consolidated entity disclosure statement is subject to auditing. However, it is important to note that at the time of writing, the specifics of how this element will be audited are not yet determined, adding a layer of uncertainty for auditors and companies alike.

For assistance with your financial reporting requirements, contact your local Bentleys audit and assurance advisor.

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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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