Document ID: chunk:federal_register_of_legislation:F2022C01110:reg:20:p10
Version: federal_register_of_legislation:F2022C01110
Segment Type: reg
Provision Reference: reg 20 (pt 10/40)
Character Range: 64712–67798

large, to include more comprehensive information in the general purpose financial statements;
(b)                   a subsidiary may be required to apply Tier 1 requirements by its parent; and
(c)                    some entities may find it more convenient or beneficial to continue to apply Tier 1 requirements in their circumstances.  Examples include entities:
(i)                     contemplating future listing on the stock exchange;
(ii)                   planning to engage in activities as their primary business that would classify them as holders of assets in a fiduciary capacity for a broad group of outsiders; and
(iii)                 preferring to state compliance with full IFRSs because they are primarily engaged in international business.

The Role of Other Regulators
BC40            The Board noted that other regulators, legislators and stakeholders play an important role in the application of Standards, including providing exemptions in certain circumstances.  For example, as noted in paragraph BC4, small proprietary companies are exempted from financial reporting under the Corporations Act.
BC41            The Board noted that some respondents to ITC 12 expressed concern about possible inconsistencies in practice that may arise if the Board were to specify rules rather than principles for determining which Tier of reporting is applicable to which entities.  This is due to complexities involved in determining the application of different Tiers of reporting requirements to entities of different sizes and with varying levels of economic, social and political significance across different economic sectors.  To help avoid these inconsistencies and to facilitate the application of different Tiers of reporting requirements in an effective and efficient manner, the Board decided that other regulators, legislators or stakeholders should have a role in determining the application of Standards under the revised framework.  Accordingly, the Board decided that, except for the cases where a clear-cut and timeless application criterion can be used by the Board or a clear-cut judgement can be made based on relevant factors, the application issue would best be dealt with by other regulators, legislators and stakeholders (see, for example, paragraphs BC39(a) and (b)).

Applicability of the Different Tiers to NFP Entities

Public Accountability
BC42            The Board considered whether the notion of public accountability as defined by the IASB could usefully be applied to the NFP sector.  It noted that, although there are some who argue that the IASB definition of public accountability may cover some NFP entities on the grounds that they hold funds in a fiduciary capacity for a broad group of outsiders, the IASB definition has a for-profit context that makes it unsuitable for the NFP sector.
BC43            The Board also considered using a modified definition of public accountability in the NFP sector context.  The Board noted the disparate views among constituents about whether such a notion can effectively be modified and used to