Document ID: chunk:federal_register_of_legislation:F2022C01110:reg:20:p16
Version: federal_register_of_legislation:F2022C01110
Segment Type: reg
Provision Reference: reg 20 (pt 16/40)
Character Range: 81312–84273

entities other than those required by the Board to apply Tier 1 requirements, the Board should develop non-mandatory guidance, in the form of qualitative criteria, to help public sector regulators consistently identify entities falling under each of the two Tiers of reporting requirements.
BC63            The Board explored the possibility of providing guidance, noting there are a range of qualitative factors that could be considered, including the following:
(a)                    the entity's coercive power to obtain public funds: the Board noted this notion of coercive power is a narrow criterion and on its own would be helpful only in a limited number of cases for jurisdictions in identifying entities falling under each Tier;
(b)                   level of public funds used by the entity: entities in the public sector vary in the degree to which they are publicly funded, the discretion over the distribution or expenditure of public funds, and the nature of that spending (for example, operational compared with income redistribution);
(c)                    risk profile: generally, risk in the public sector is a reference to uncertainty in achieving an organisation's objectives and more comprehensive disclosures may be warranted where an entity is seen as having a high risk profile;
(d)                   level of complexity: the level of complexity of public sector entities varies with the nature, diversity and range of their activities, which may also point to the existence of a wide range of stakeholders; and
(e)                    financial profile: the financial profile of a public sector entity may point to its economic significance and ability in providing services, which would in turn have an impact on the level of public interest.
BC64            The Board noted that, while each of the above factors may be a useful indicator to help regulators in identifying entities that should disclose more comprehensive information in their general purpose financial statements, no single criterion, by itself, would be likely to provide a conclusive basis for a jurisdiction to distinguish between Tier 1 and Tier 2 entities in the public sector.
BC65            The Board noted these factors as a whole were taken into account in its decision to classify the Australian Government and State, Territory and Local Governments as Tier 1 entities (see paragraph BC52).  Accordingly, the Board concluded that these factors as a whole would be likely to benefit regulators across public sector jurisdictions in identifying the population of entities that could be of greater interest to users of general purpose financial statements, including the public at large.  The Board noted regulators may develop their own size thresholds to identify those entities about which there would be sufficient interest to justify applying Tier 1 requirements.  To arrive at consistent results, the Board noted it might be appropriate to use a number