Document ID: chunk:federal_register_of_legislation:F2022C01110:reg:20:p30
Version: federal_register_of_legislation:F2022C01110
Segment Type: reg
Provision Reference: reg 20 (pt 30/40)
Character Range: 119738–122738

to apply the applicable recognition and measurement requirements, whether they had previously initially applied recognition and measurement requirements consistent with AASB 1 or a predecessor to AASB 108, whichever was applicable at the time.
BC19            The Board noted that in some cases entities would not have applied, or only selectively applied, applicable recognition and measurement requirements in preparing their most recent previous annual financial statements.  Consistent with the rationale in paragraph BC89 of AASB 1053 (June 2010), the Board concluded that such entities should be treated differently from those that had applied all applicable recognition and measurement requirements in those financial statements.  Accordingly, the Board decided that such entities would need to apply AASB 1, or, as explained in paragraph BC17 above, Tier 2 reporting requirements retrospectively in accordance with AASB 108, on first transition to Tier 2 reporting requirements.
BC20            The Board noted the concern expressed by one respondent to ED 248 (see paragraph BC4 above) that allowing an entity to apply AASB 108 rather than AASB 1 in the circumstances proposed would mean that an entity making such an election would not be required to include the type of reconciliation of financial statements that would be required if AASB 1 were to be required to be adopted.  The respondent regards the reconciliations as useful for in-depth understanding of an entity's financial statements and obtaining comparative information.
BC21            The Board decided that the disclosure requirements in AASB 108 in relation to change of accounting policies provide adequate information to users to understand the nature and effect of changes arising from an entity applying Tier 2 requirements for the first time.

Transition between Tiers
BC22            The Board considered whether the requirements in AASB 1053 (June 2010) relating to transition between Tiers warranted clarification and concluded that paragraphs 21 and 23 of AASB 1053 are adequate.  However, it decided to add a footnote to paragraph 21(a) to acknowledge that the AASB 108 option in AASB 1 would not be relevant if the transition from Tier 2 to Tier 1 is first-time adoption, rather than resumption, of Tier 1.  For consistency, the Board also decided to amend paragraph 22, which provides guidance on paragraph 21(a).

Analysis of Disclosure Requirements for Tier 2 entities
BC23            Consistent with paragraphs BC15 and BC16 above, the Board concurred with the view that applying paragraphs 23A and 23B of AASB 1 (which specify disclosures about the reasons for stopping and resuming or commencing the application of Australian Accounting Standards and the reasons for the accounting policies adopted to effect that resumption or commencement) would not entail material additional costs for Tier 2 entities.  These paragraphs were introduced into AASB 1 by AASB 2012-5.
BC24            Accordingly, the Board