Document ID: chunk:federal_register_of_legislation:F2023C00381:reg:25:p42
Version: federal_register_of_legislation:F2023C00381
Segment Type: reg
Provision Reference: reg 25 (pt 42/47)
Character Range: 141128–144233

that are required to prepare financial statements that comply with AAS have greater levels of economic significance, size and resources compared to NFP private sector entities. Proportionately, specified for-profit private sector entities are a significantly smaller number (less than 1.5% of the population of trading entities are required to prepare financial statements in accordance with AAS – see paragraph BC101 for more details), whereas approximately 33% of charities (15,828 large and medium charities out of a total of 47,125 charities registered with ACNC)[37] are required to prepare financial statements in accordance with AAS. Due to the differences in characteristics, the Board consider it more appropriate to consider the merits of a third tier of general purpose financial reporting for the NFP sector, as part of a separate project; and

          (c)                    the unpublished Government (at the time of issuing this Standard) response to the ACNC legislative review which outlined the potential for change in reporting thresholds and obligations for affected entities. To proceed with NFP private sector financial reporting reform could be burdensome for certain NFP entities if the AASB would require them to comply with the R&M requirements in AAS, but the ACNC subsequently relieved them of any financial reporting obligations once the ACNC legislative review is finalised.

     BC74            Some respondents to ITC 39 were concerned about the NFP private sector being delayed and felt that the AASB should either prioritise the NFP private sector financial reporting framework reform, or should continue to work on it concurrently with the for-profit private sector financial reporting framework reform. The basis of those respondents' concerns were mixed. Some were concerned that considering the for-profit and NFP financial reporting frameworks separately was not consistent with the objective of transaction neutrality and that the Board would develop different reporting requirements for the NFP sector compared with the for-profit private sector, which would decrease comparability and consistency of financial reports. Others were concerned the NFP private sector has specific needs that should be considered in advance or else a framework may be imposed on the NFP private sector that is fit for purpose in the for-profit private sector but not in the NFP private sector.

     BC75            The Board considered this feedback and noted that The AASB's Not-for-Profit Entity Standard-Setting Framework provides for NFP sector specific modifications where justifiable. For this reason, notwithstanding the outcomes in the for-profit private sector, a thorough consideration of their appropriateness in accordance with The AASB's Not-for-Profit Entity Standard-Setting Framework would be required, and if the for-profit financial reporting framework was determined not to be suitable for NFP entities, the for-profit proposals would be modified as needed. This assessment would be required, even if the for-profit and NFP reforms were undertaken concurrently.