Document ID: chunk:federal_register_of_legislation:F2022C01110:reg:20:p12
Version: federal_register_of_legislation:F2022C01110
Segment Type: reg
Provision Reference: reg 20 (pt 12/40)
Character Range: 70321–73397

as publicly accountable in the general sense of the term.

Size Thresholds
BC47            The Board proposed in ITC 12 that NFP entities that prepare general purpose financial statements that exceed nominated size thresholds should be required to apply Tier 1 requirements.  The size thresholds proposed were:
           * Consolidated revenue for the financial year of the entity and the entities it controls (if any) of $25m.
           * Consolidated assets at the end of the financial year of the entity and the entities it controls (if any) of $12.5m.
BC48            Some respondents to ITC 12 preferred the use of size thresholds in comparison to the use of a modified notion of public accountability as the basis for identifying reporting Tiers on the grounds that it is relatively objective and would provide consistency in identifying entities that fall under different Tiers.  However, other respondents were concerned about using size thresholds, citing the following reasons:
(a)                    size thresholds are arbitrary;
(b)                   size thresholds will become outdated over time; and
(c)                    particularly in the public sector, unless jurisdiction-specific thresholds are prescribed, it would lead to similar entities applying different requirements across different State and Territory jurisdictions.
BC49            There were also differences of view between respondents as to the amounts of the appropriate thresholds.  Some thought the thresholds noted in paragraph BC47 are too low and should be raised to be comparable to 'important' entity thresholds contemplated for the for-profit sector noted in paragraph BC33.  Others thought the thresholds being contemplated are too high, which would mean that too few NFP entities would apply full IFRSs as adopted in Australia.  Yet others thought that the ratio of thresholds (revenue twice the assets) is not appropriate for many asset-rich entities in the NFP sector.
BC50            Respondents' comments on the comparability of thresholds between private and public sector NFP entities and their difference from those contemplated for 'important' entities in the for-profit sector did not reflect any convergence of views.  Some respondents thought that public sector NFP entities are inherently of greater public interest than private sector NFP entities.  Others thought that the thresholds should take account of the fact that the resources at the disposal of public sector NFP entities are generally significantly greater than those at the disposal of private sector NFP entities.  Some expressed the view that public interest would not differ between the for-profit and NFP sectors.  Others expressed the view that entities within the public sector are all of public interest and expressed concern that size thresholds would give a misleading perception of an increase in public interest proportional to an increase in an entity's size.
BC51            Consistent with the Board's conclusions in relation to size thresholds for for-profit entities, the Board concluded