Document ID: chunk:federal_register_of_legislation:F2023C00381:reg:25:p30
Version: federal_register_of_legislation:F2023C00381
Segment Type: reg
Provision Reference: reg 25 (pt 30/47)
Character Range: 106555–109829

– 78% of primary users expressed concern that SPFS do not consistently apply R&M requirements in AAS;

          (b)                   93% of primary users and over 95% of other users said that comparability, transparency, comprehensibility and consistency are all paramount; and

          (c)                    there is dissatisfaction with SPFS that needs to be addressed, particularly around the lack of related party disclosures, lack of comparability and that the extent to which entities comply with the R&M requirements in AAS is unclear to users.

     BC39            The Board also conducted a range of meetings with users to understand their needs and received six formal submissions on ITC 39 from users of financial statements (out of the 33 responses relevant to this phase of the project). In those formal submissions, the Board noted that all of those respondents:

          (a)                    noted, or referred to, the lack of comparability, consistency and transparency currently caused by SPFS that needs to be resolved; and

          (b)                   supported public lodgement of financial statements that comply with all of the R&M requirements in AAS. Consistency, transparency and comparability were noted as important to users in their responses, with one user also noting the importance of consistent financial reporting to facilitate computer-based analysis and use of financial information.

     BC40            In addition to the information in paragraph BC38, the Board also noted other evidence that clearly indicates the existence of users who would benefit from having access to GPFS rather than SPFS. For example:

          (a)                    over 98,000 copies of financial statements were purchased during the year ending 30 June 2018 from ASIC. Of those financial statements purchased, 80% were of proprietary companies, 16% were of unlisted public companies and 4% were of small foreign-controlled companies;[20]

          (b)                   anecdotally, data aggregators[21] rely on publicly available information to assist their clients with determining the viability, capacity and credit risk associated with a company; and

          (c)                    as noted in paragraph BC35, Treasury indicated in the Explanatory Statement accompanying the revision of the large proprietary company thresholds its expectation that there are users dependent on the GPFS of large proprietary companies, given their economic significance. Further, that Explanatory Statement noted that average access rates through ASIC of the revised (smaller) population of large proprietary companies was significantly higher (on average 3.6 times per company) than the proprietary companies that would no longer have an obligation to prepare and lodge financial statements with ASIC (on average 1.8 times per company).

     BC41            Despite the relatively lower access rates for small foreign-controlled companies and unlisted public companies noted in paragraph BC40(a), the Board noted its expectation that users of those financial statements would also benefit from having access to GPFS rather than SPFS given that:

          (a)                    small foreign-controlled companies have been specifically required to