Welcome to Beyond the Numbers, our monthly newsletter which brings you a summary of the latest developments from local and international standard setters and regulators.
Click on one of the Newsletter sections below:
|In case you missed it|
Financial Reporting Changes for AFS Licensees
ASIC has announced new financial reporting requirements for Australian financial services (AFS) licensees which requires Tier 1 general-purpose financial statements (GPFS) to be prepared for some licensees.
AFS licensees that previously prepared special purpose financial reports (SPFRs) in the last year, and that do not prepare reports under Chapter 2M, can choose to defer the new disclosure requirements to financial years commencing on or after 1 July 2022.
Relief under AASB 1 for Transition to General-Purpose Financial Statements
The AASB has issued AASB 2022-2 Amendments to Australian Accounting Standards – Extending Transition Relief under AASB 1 which could ease the transition to GPFS by amending AASB 1 and AASB 1053.
AASB 2022-2 amends AASB 1 by allowing entities preparing GPFS for the first time to measure its assets and liabilities at the carrying amounts that would be included in the parent’s consolidated financial statements where the parent has already adopted IFRS Standards. The amendment also permit a parent to use the carrying amounts in a subsidiary, joint venture or associate’s separate financial statements where the entity has previously adopted IFRS Standards. These requirements previously only referred to Australian Accounting Standards. However, changes to AASB 2022-2 now also refer to IFRS Standards.
AASB 2022-2 amends AASB 1053 to allow for-profit private sector entities transitioning from unconsolidated Tier 2 – Reduced Disclosure Requirements GPFS to consolidated Tier 2 – Simplified Disclosures GPFS to apply AASB 1 when preparing consolidated financial statements for the first time.
AASB 2022-2 applies to annual reporting periods ending on or after 30 June 2022.
AASB 15 Illustrative Examples for Not-for-Profit Entities
The AASB has published AASB 2022-3 Amendments to Australian Accounting Standards – Illustrative Examples for Not-for-Profit Entities accompanying AASB 15 which amends the illustrative examples for not-for-profit entities accompanying AASB 15 Revenue from Contracts with Customers.
The amendments clarify treatment of upfront fees charged by not-for-profit entities to its customers or members. The amendments do not change the requirements of AASB 15.
The Basis of Conclusions includes the decision to retain the accounting policy choice on an ongoing basis for not-for-profit private sector lessees to elect to initially measure a class of right-of-use assets arising under concessionary leases at cost or at fair value.
AASB 2022-3 applies to annual reporting periods beginning on or after 1 July 2022, with earlier application permitted.
AASB Action Alert - May 2022
A summary of the AASB’s meeting held on 18 May has been issued. Key topics discussed include:
- Development of the Not-for-Profit Private Sector Financial Reporting Framework; and
- The AASB’s sustainability reporting project.
ASIC Focus Areas for 30 June 2022 Reporting
ASIC has published its financial statement focus areas for the reporting period ending 30 June 2022.
Key focus areas highlighted include:
- Asset values
- Solvency and Going Concern Assessments
- Events occurring after year end and before completing the financial report
- Disclosures in the financial report and Operating and Financial Review (OFR)
A Final Reminder: Tier 2 – Simplified Disclosures GPFS
A final reminder that entities which are required to apply the Tier 2 – Simplified Disclosures GPFS will be required to mandatorily transition to Simplified Disclosures this 30 June 2022 (for annual reporting periods beginning 1 July 2021), if not already done so.
Those entities that are applying the new requirements for the first time in its 30 June 2022 financial statements will be required to restate its 2021 comparatives.
Guidance on Related Party Transactions for Charities
The ACNC has issued an update which requires all charities (except Basic Religious Charities) to report related party transactions in the Annual Information Statement from the start of their 2023 reporting period.
The ACNC provides the following recommendations for charities to manage related party transaction:
- Maintaining a related party transactions register which contains sufficient information to allow the charity to make disclosures in line with its requirements;
- Having an appropriate policy and procedure when dealing with related party transactions; and
- Managing conflicts of interest in line with Governance Standard 5: Duties of Responsible People
In addition, the ACNC has also issued a template register of related party transactions which can be used by small charities to manage related party transactions.
IASB meeting – May 2022
The agenda and papers for the IASB’s meeting held on 23 - 27 May 2022 are available. Topics discussed included:
- Post-implementation Review of IFRS 9 – Classification and Measurement;
- Goodwill and Impairment; and
- Primary Financial Statements.
Compilation of Agenda Decisions
The IFRS Foundation has compiled agenda decisions published by the IFRS Interpretations Committee from November 2021 to April 2022.
The agenda decisions included in this compilation relate to:
- IFRS 9 Financial Instruments;
- IFRS 16 Leases;
- IAS 7 Statement of Cash Flows; and
- IAS 20 Accounting for Government Grants and Disclosure of Government Assistance.
National Tax Roadshow
Don’t miss out on the remaining in-person and online events as part of our very popular national tax roadshow.
At each session, National Tax Director, David Montani will focus on what you need to know to ensure you don’t miss out on any potential tax concessions. He will also be providing a post-election tax outlook.
These events are highly recommended for all business owners and shouldn’t be missed.
To find out the details for an event near you or to register (either for online or in-person), visit our website here.
Financial Reporting Update
A recording of our Financial Reporting Update exploring the key financial reporting and regulatory changes for 30 June 2022, is now available.
Next Newsletter – Autumn Edition
Among other things, Nexia Australia Chairman Mal Di Giulio discusses his outlook on the current state of the Australian market and raises thought-provoking questions for the medium-to-long term.
The publication also looks at measures that can be taken to avoid missing out on tax concessions when exiting a business as well as the accounting for research and development tax incentives.
We’re here to support you.
If you would like to discuss further any of the information provided in these updates and how it may impact you, please contact your Nexia Advisor.