Document ID: chunk:federal_register_of_legislation:F2023C00381:reg:8:p21
Version: federal_register_of_legislation:F2023C00381
Segment Type: reg
Provision Reference: reg 8 (pt 21/28)
Character Range: 230583–236775

direction for its own Tier 2 framework in an attempt to retain trans-Tasman convergence for for-profit entities.

     BC151        The Board considered a range of options to determine the most appropriate solution to balance the urgency of solving the SPFS problem whilst providing sufficient time for stakeholders to transition:

Option                                                                                                                                               Advantages                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Disadvantages

     Option 1                                                                                                                                            * Stakeholders will have more time to prepare for the significant change to the financial reporting framework including education and collation of historical information                                                                                                                                                                                                                                                                                                             * Effective date would not be aligned with the change in proprietary company thresholds.  Large proprietary companies would likely need to prepare GPFS prior to the effective date to be consistent with Treasury's expectations regarding GPFS financial report by large proprietary companies
                                                                                                                                                         * Transitional relief may incentivise voluntarily early adoption                                                                                                                                                                                                                                                                                                                                                                                                                      * There is a strong desire for transparent and high-quality financial statements. The recent parliamentary inquiry highlighted even more the need for change in financial reporting.  Delaying the effective date is inconsistent with this
    * Effective date of 1 July 2021                                                                                                                      * The effective date would be consistent with the AASB's Due Process Framework that suggest an implementation period of 2 years
                                                                                                                                                         * Retaining transitional relief for those that early adopt provides an incentive to transition in a timely manner
    * Transitional relief available to all entities (R&M compliant and non-compliant) which elect to early adopt                                         * Software providers have expressed concerns about their ability to create templates in a timely manner and also the presentation of 'mixed' comparatives

    * No transitional relief to entities adopting from 1 July 2021

     Option 2                                                                                                                                            * Effective date would be aligned with the change in proprietary company thresholds                                                                                                                                                                                                                                                                                                                                                                                                   * Stakeholders are concerned they do not have sufficient time to prepare for such a significant change to the financial reporting framework including education and collation of historical information.  However, research strongly suggests that deferring the effective date of new standards does not necessarily result in entities using the extended lead time to better prepare for the new requirements, instead it is often used to delay starting to prepare.[47]
                                                                                                                                                         * The project will be completed more quickly, therefore responding to the strong desire for transparent and high-quality financial statements and recent parliamentary inquiry                                                                                                                                                                                                                                                                                                        * Software providers have expressed concerns about their ability to create templates in a timely manner and also the presentation of 'mixed' comparatives
No change to transitional relief and effective date                                                                                                      * There are only a maximum of 7,295 entities expected to be effected, and with the effect for the majority of these entities (5,589) expected to be limited to providing additional disclosures only coupled with the transitional relief an earlier effective date was considered reasonable                                                                                                                                                                                         * The effective date is not consistent with the