Document ID: chunk:federal_register_of_legislation:F2023C00381:reg:25:p7
Version: federal_register_of_legislation:F2023C00381
Segment Type: reg
Provision Reference: reg 25 (pt 7/47)
Character Range: 37230–40421

might not result in compliance with IFRS Standards after 1 January 2020.
(e) Option 5 – Implement the revised Conceptual Framework from 1 January 2020 when it first becomes applicable to maintain compliance with IFRS Standards and IFRS Standards as a base for Australian Accounting Standards.  Under Option 5, the Australian reporting entity concept would be retained but the name amended and minimum requirements for special purpose financial statements would be prescribed by the Board.

     BC12            The Board considered the benefits of and barriers to each of these options, and supported Option 1 as its preferred approach.  Option 1 is the Board's preferred approach because it:
(a) allows for-profit entities with public accountability and entities that voluntarily report compliance with IFRS Standards to continue to do so;
(b) allows all other entities to continue preparing special purpose financial statements in the short term while the Board undertakes consultation and outreach activities and determines the appropriate Tier 2 general purpose financial statements framework to replace special purpose financial statements;
(c) maintains IFRS Standards as a base for all entities in the medium term;
(d) solves the reporting entity problem in the medium term;
(e) solves the special purpose financial statements problem in the medium term;
(f) allows time for the Board to consult and determine any not-for-profit modifications that may be necessary to the revised Conceptual Framework in accordance with The AASB's Not-for-Profit Entity Standard-Setting Framework; and
(g) facilitates comparability and ensures there are appropriate accounting standards for each type of entity required to comply with Australian Accounting Standards.

     BC13            ITC 39 noted the importance of maintaining compliance with IFRS Standards for certain entities in Australia.  As Australian Accounting Standards incorporate IFRS Standards, compliance with Australian Accounting Standards (Tier 1) results in compliance with IFRS Standards for for-profit entities.  Compliance with Australian Accounting Standards is often required by legislation.

     BC14            When deciding that Phase 1 should be limited to for-profit entities with public accountability, the Board reconfirmed the importance of the definition of public accountability included in International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs).  Internationally, entities with public accountability must apply the full IFRS Standards, rather than the IFRS for SMEs.  Therefore the Board reconfirmed its view that for-profit entities in Australia with public accountability (as defined) should be required to prepare Tier 1 general purpose financial statements.  Due to the importance of the IFRS for SMEs definition of public accountability, the Board decided that the IASB's amendments to the definition of public accountability should be reflected in the definition included in AASB 1053 Application of Tiers of Australian Accounting Standards.

Stakeholder engagement

     BC15            After issuing ITC 39, the Board held targeted outreach with key stakeholders,