Document ID: chunk:federal_register_of_legislation:F2022C01110:reg:20:p17
Version: federal_register_of_legislation:F2022C01110
Segment Type: reg
Provision Reference: reg 20 (pt 17/40)
Character Range: 84020–86924

regulators may develop their own size thresholds to identify those entities about which there would be sufficient interest to justify applying Tier 1 requirements.  To arrive at consistent results, the Board noted it might be appropriate to use a number of different size indicators such as total assets, revenue, and number of employees as the basis for thresholds.

Tier 2 Requirements
BC66            The Board decided to adopt the Reduced Disclosure Requirements (RDR) reflected in AASB 1053, rather than the IFRS for SMEs, as Tier 2 requirements.  The Board noted that the two approaches are fundamentally different because the RDR involve applying the same recognition and measurement requirements as Tier 1, whereas the IFRS for SMEs modifies the recognition and measurement requirements of full IFRSs.  In deciding between the RDR and the IFRS for SMEs, the Board also considered whether entities subject to Tier 2 requirements should be provided with an option of adopting the RDR or the IFRS for SMEs.

Reasons for Not Adopting IFRS for SMEs
BC67            Constituents' comments on the IFRS for SMEs were mixed.  While many supported its reduction in disclosure requirements, they expressed concern about introducing recognition and measurement requirements that are different from those included in full IFRSs.
BC68            There was also concern expressed about the differences in the hierarchies for determining accounting policies under the IFRS for SMEs and full IFRSs in the absence of a specific requirement.  It was noted that the hierarchy adopted in the IFRS for SMEs would lead to disparities in the choice of accounting policies by different entities as it gives precedence to the Conceptual Framework over full IFRSs as the source of guidance for determining accounting policies in the absence of a specific requirement.
BC69            Other respondents noted the additional initial and ongoing costs of training and education for two sets of standards both for the profession and at the tertiary level.
BC70            In its submission to the IASB on the proposed IFRS for SMEs, the AASB noted that the IFRS for SMEs in its proposed form would not be a stand-alone document and that to meet its stand-alone objective more topics and more treatment options would need to be included from full IFRSs.
BC71            Based on comments received from constituents, the AASB commented in its submission to the IASB that:
Some subsidiaries of publicly accountable entities would find it burdensome to apply the proposed IFRS for SMEs in preparing their general purpose financial statements.  They would need to prepare financial information based on the recognition and measurement requirements of full IFRSs for the purposes of the parent entity consolidation.  If such subsidiaries are not themselves publicly accountable but apply full IFRSs (as they are already applying full