Document ID: chunk:federal_register_of_legislation:F2023C00190:reg:9b:p6
Version: federal_register_of_legislation:F2023C00190
Segment Type: reg
Provision Reference: reg 9B (pt 6/41)
Character Range: 123490–126834

whether or not the accounting policies applied in the financial statements comply with all the recognition and measurement requirements in Australian Accounting Standards.  These new disclosures are an interim measure aimed at addressing these concerns given the project proposing to remove special purpose financial statements will take some time, particularly for the not-for-profit entities.

     BC11            In considering whether such disclosure was necessary, the Board also considered whether any existing disclosure requirements in Australian Accounting Standards or other pronouncements required the disclosure of similar information.

     BC12            The Board noted that paragraph 117 of AASB 101 Presentation of Financial Statements, which applies not only to general purpose financial statements but also directly to the special purpose financial statements of entities required to prepare financial reports in accordance with the Corporations Act 2001,[10] requires an entity to disclose its significant accounting policies.  The Board also noted that, where it applies, paragraph 6.1 of Accounting Professional and Ethical Standard APES 205 Conformity with Accounting Standards (October 2015) issued by the Accounting Professional and Ethical Standards Board (APESB) also requires that an entity's special purpose financial statements clearly identify "the significant accounting policies adopted in the preparation of the special purpose financial statements".[11] The Board however noted that while these disclosures provide information about an entity's accounting policies, they would not necessarily provide users with sufficient information about an entity's compliance with all the recognition and measurement requirements in Australian Accounting Standards.

     BC13            On the basis of the considerations outlined in paragraphs BC2-BC12 above, the Board decided that an amendment to Australian Accounting Standards to require entities to disclose an explicit statement as to whether or not the accounting policies applied in the financial statements comply with all the recognition and measurement requirements in Australian Accounting Standards was urgently needed to provide greater transparency to users of publicly lodged special purpose financial statements and to improve the comparability of special purpose financial statements.  The Board also acknowledged that disclosure of this information is not sufficient to address the problems of special purpose financial reporting, however it provides a practical interim means of improving the quality of information provided to users of special purpose financial statements.

     BC14            The Board noted that, when preparing the required disclosure, entities would need to consider how their existing accounting policies compare with all the recognition and measurement requirements in Australian Accounting Standards.  While the Board confirmed that the amendment would not require an entity to change its existing accounting policies, understanding how closely the entity's existing accounting policies are aligned to the recognition and measurement requirements in Australian Accounting Standards would also help entities assess the impact of any future transition from special purpose financial statements to general purpose financial