Document ID: chunk:federal_register_of_legislation:F2025C00209:reg:221:p16
Version: federal_register_of_legislation:F2025C00209
Segment Type: reg
Provision Reference: reg 221 (pt 16/73)
Character Range: 206666–209927

Special Purpose Financial Statement Problems and the subsequent ED 297 Removal of Special Purpose Financial Statements for Certain For-Profit Private Sector Entities.

      3.                AASB 2020-2 removes the ability to prepare SPFS for the following for-profit entities:

           1.                     for-profit private sector entities that are required by legislation to comply with either Australian Accounting Standards or accounting standards;

           2.                    other for-profit private sector entities that are required only by their constituting document or another document to comply with Australian Accounting Standards, provided that the relevant document was created or amended on or after 1 July 2021; and

           3.                     other for-profit entities that elect to prepare GPFS and apply the revised Conceptual Framework for Financial Reporting (Conceptual Framework) and the consequential amendments to other pronouncements set out in Accounting Standards AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework and AASB 2020-2 Amendments to Australian Accounting Standards – Removal of Special Purpose Financial Statements for Certain For-Profit Sector Entities.

      1.                To help reduce the cost burden for for-profit entities that will be affected by the removal of SPFS, and noting the comments received on ITC 39, the Board agreed to make further reductions to the disclosures that apply to Tier 2 entities compared to the GPFS Tier 2 RDR framework.

      2.                The Board also noted the strong preference expressed by respondents to ITC 39 for a framework that includes full R&M requirements in AAS on the grounds that it would enhance the comparability, consistency and transparency of the financial statements. Feedback from targeted outreach emphasised that users agreed the usefulness of information within financial statements for decision making is adversely affected where entities have not consistently applied R&M requirements. Further discussion of the Board's consideration on this matter is available in AASB 2020-2 paragraphs BC108−BC114.

      3.                While some respondents had called for more than one Tier 2 GPFS framework for for-profit entities, the Board noted that given the small number of for-profit entities required to publicly lodge financial statements with ASIC, which will be even less following the increase of the reporting thresholds for large proprietary companies (April 2019), the development and maintenance of more than two GPFS disclosure frameworks was not warranted. The Board further emphasised that entities without a statutory requirement to comply with AAS, such as those below the now doubled large proprietary thresholds, would be able to continue to tailor their financial statements to the needs of their specific users and therefore additional Tiers were not required. Further discussion of the Board's consideration on this matter is available in AASB 2020-2 paragraphs BC99−BC107.

      4.                However, separate targeted consultations will be undertaken in relation to the implementation of the IASB's revised Conceptual Framework by not-for-profit (NFP)