Document ID: chunk:federal_register_of_legislation:F2024C00046:body:0:p68
Version: federal_register_of_legislation:F2024C00046
Segment Type: other
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Character Range: 177008–179947

the conclusions in this Standard, which amends AASB 13 Fair Value Measurement for application by not-for-profit public sector entities. It sets out the reasons why the Board developed the Standard, the approach taken to developing the amendments and the key decisions made. In making decisions, individual Board members gave greater weight to some factors than to others.

Reasons for undertaking the 'Fair Value Measurement for Not-for-Profit Public Sector Entities' Project

Majority of non-financial assets in the public sector are measured at fair value
BC2               The Financial Reporting Council (FRC) issued a direction to the Board to require the Whole of Government (WoG) and the General Government Sector (GGS) to harmonise with Government Finance Statistics (GFS) requirements. Consequently, AASB 1049 Whole of Government and General Government Sector Financial Reporting requires each WoG and GGS to elect an accounting treatment that aligns with GFS principles and requirements where an Accounting Standard permits a choice (AASB 1049 paragraph 13). Because GFS requires assets and liabilities to be measured at current market value, this has resulted in each WoG and GGS electing to apply the revaluation model as its accounting policy and measure its non-financial assets, such as property, plant and equipment, at fair value under AASB 13.
BC3               Although AASB 1049 requires only WoG and GGS to align with GFS principles, some stakeholders from the public sector have informed the Board that the Treasury or Finance Department (or other authority) or the Office of Local Government in each jurisdiction has issued instructions to require the other public sector entities in their jurisdiction to also elect the accounting treatments that align with GFS principles, which has led to the majority of non-financial assets of public sector entities being measured at fair value.

Inconsistency in applying the requirements of AASB 13
BC4               The Board initially considered the application of AASB 13 for not-for-profit and public sector entities in 2011 when IFRS 13 Fair Value Measurement was issued. At its March 2011 and June 2011 meetings, the Board decided not to include any not-for-profit entity modifications to the requirements of IFRS 13 adopted in AASB 13. At that time, the Board considered that even though many non-financial assets in the public sector might have a specialised nature or that observable market inputs might not be readily available, a public sector entity would be able to measure the fair value of such assets at current replacement cost, under the cost approach in IFRS 13.
BC5               At its December 2014 meeting, the Board considered feedback from stakeholders regarding the application of AASB 13. The Board decided to undertake a narrow-scope project to give relief from certain AASB 13 disclosures, limited to items of property, plant and equipment within