Document ID: chunk:federal_register_of_legislation:F2025C00172:body:0:p96
Version: federal_register_of_legislation:F2025C00172
Segment Type: other
Provision Reference: 
Character Range: 253151–256137

Aus17.1 stated that AASB 127 did not attempt to identify all groups and reporting entities in the public sector.  Nevertheless, paragraph Aus17.5 described the nature of some reporting entities in the public sector.  Paragraph Aus17.7 also discussed identifying economic entities in relation to Ministerial portfolios and functions with separate objectives.  The Board decided that it was not appropriate to include these general statements in the implementation guidance since the nature of reporting entities in the public sector is a fundamental issue beyond the scope of AASB 10 (see paragraph BC4).
BC22 The statement in paragraph Aus17.2 that control of an entity by the government may be indicated by the accountability of the entity to the Parliament (or the Executive or a Minister) and by the government holding the residual financial interest in the net assets of the entity has not been incorporated into the implementation guidance.  Accountability to the Parliament, the Executive or a Minister might or might not indicate that the government has substantive rights in relation to the entity, so the power criterion might not be satisfied.  Holding the residual financial interest in the entity shows that the government has exposure or rights to variable returns from the entity, but does not indicate whether the government has the ability to use power over the entity to affect the government's returns.  Consequently, these two factors are insufficient to conclude whether an entity is controlled by the government.
BC23 Paragraph Aus17.3 listed circumstances that, individually or in combination, indicate that an entity is accountable to Parliament, the Executive or a Minister.  The circumstances listed in paragraphs Aus17.3(a)–(d) are addressed in paragraphs B15 and IG9 in terms of rights that can give an investor power in relation to an investee.  However, paragraph Aus17.3(e) has not been included in the implementation guidance because a requirement to submit reports to Parliament might reflect either protective or substantive rights, and hence is not useful as an indicator of power.  Paragraph Aus17.3(f) regarding an entity established through legislation has been updated and included in paragraph IG7.
BC24 Paragraph Aus17.4 listed circumstances that indicate whether a government has a residual financial interest in the net assets of another entity.  These circumstances (exposure to residual liabilities and the right to receive residual net assets on dissolution of the entity) indicate that the government would be exposed to variable returns from the entity.  These returns are covered by the investment returns noted in paragraph B57(a).
BC25 Paragraph Aus17.6 stated that a government will usually control statutory authorities that it has established through legislation.  This circumstance has been addressed through paragraph IG7 in respect of whether the government has power over an entity established through legislation.  Power is just