Release of revised framework on removal of special purpose financial statements

AASB Update

This article follows the release of an AASB conceptual framework on the removal of special purpose financial statements.

As discussed earlier this year, the AASB are undertaking a project which is likely to reduce the number of entities who can produce special purpose financial statements in conjunction with the release of the revised IASB Conceptual Framework in Australia.

The AASB have recently decided to break the project into three phases and once the Framework is released for the relevant entities, they will be unable to prepare special purpose financial statements. The AASB is currently working on the format and content for the general-purpose financial statements which are not IFRS compliant (i.e. those non-publicly accountable entities).

The three phases are as follows:

Project Phases

Phase 1

Publicly accountable entities

  • Short term project – expected to be little impact since publicly accountable entities should be preparing general purpose financial statements
  • Entities who choose to provide an IFRS compliant statement will also be included
  • Entities in this phase will need to consider whether the changes to the framework will have any impact to assets / liabilities / income and expenses when adopted.
Phase 2

Other for-profit entities required to comply with accounting standards

  • Medium term project
  • Likely to be two phases of general purpose financial statements – Tier 1 will be full general purpose financial statements. AASB considering the format and content of Tier 2.
Phase 3

Not-for-profit entities required to comply with accounting standards

  • Medium term project
  • AASB considering three tiers of financial reporting for the NFP sector with potentially a cash standard for small NFP entities.

Final comments

Bentleys will continue to monitor the progress of this project and communicate with clients who are preparing special purpose financial statements and other affected entities.

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