Document ID: chunk:federal_register_of_legislation:F2023C00188:reg:7:p75
Version: federal_register_of_legislation:F2023C00188
Segment Type: reg
Provision Reference: reg 7 (pt 75/91)
Character Range: 212629–215687

defines materiality as "omissions or misstatements of items are material if they could, individually or collectively, influence the economic decisions that users make on the basis of the financial statements".  The Board observed that materiality is commonly understood as applying to the whole financial statements as well as at an individual transaction level.  The Board concluded it was not providing guidance on interpreting materiality, but providing relief from the normal manner in which materiality would otherwise apply to the entity in respect of inventories.  That is, in the absence of the practical expedient, an entity would be required to recognise receipts of inventories for which the consideration paid was significantly less than fair value (including transfers for no or nominal consideration) where the inventory overall could materially affect the entity's financial position and financial performance.

Grant income

BC118        The Board noted that constituents in local government were particularly concerned about the implications of the revised recognition requirements to certain periodic grant funding received by these entities.  The Board considered the application of the underlying principles in this Standard to such grants, and decided there was no conceptual basis for supporting an exception to the general requirements in the Standard.

Rates received in advance of the rating period

BC119        The Board observed that under the former income recognition requirements, rates received by local governments were generally recognised as income on receipt by the local government.  The Board heard that some constituents considered income to be prematurely recognised where amounts were received in advance of the rating period, as the local government is obliged to refund the amount prepaid until the start of the rating period.  The Board expects that it may be possible for the timing of income recognition to be later under this Standard compared to the previous requirements.  In acknowledgement of the significance of rates to a local government's financial performance, the Board decided to confirm its decision in ED 260 for the final Standard to include an example on rates received in advance, to explain the accounting that applies under this Standard (and its interaction with other Australian Accounting Standards).

Disclosure

BC120        The Board decided that, consistent with other recent Australian Accounting Standards, AASB 1058 should specify a disclosure objective.  The Board observed that specifying an overall disclosure objective avoids the need for detailed and prescriptive disclosure requirements to accommodate the varied types of transactions within the scope of AASB 1058.

BC121        The Board decided to include disclosure requirements to help an entity meet the disclosure objective.  The Board observed that those disclosures should not be viewed as a checklist of minimum disclosures, because some disclosures may be relevant for some entities but may be irrelevant for others.