Document ID: chunk:federal_register_of_legislation:F2023C00190:reg:9b:p24
Version: federal_register_of_legislation:F2023C00190
Segment Type: reg
Provision Reference: reg 9B (pt 24/41)
Character Range: 175092–178102

BC4(b), and in any event it predates the change in proprietary company reporting thresholds under the Corporations Act 2001 and therefore does not provide any current analysis.  However, the Board came to the view that the Research Report provides evidence by analogy as there is no basis to expect that SPFS of the types of entities referred to in paragraph BC4(b) would have adopted better disclosure practices than the SPFS of the types of entities that were the focus of the Research Report (see paragraph BC7).  Furthermore, the evidence provided by the Research Report was supplemented by the findings of outreach undertaken in December 2018 to understand users' views as part of improving the Australian Financial Reporting Framework, which was considered by the Board at its April 2020 meeting (see paragraph BC8).

     BC7               AASB Research Report 12 indicated that for 34% of examined entities preparing and lodging SPFS with the Australian Securities and Investments Commission (ASIC) in 2018, the extent of compliance with R&M requirements in AAS was not clear.  After a detailed, qualitative assessment of the accounting policies of these unclear SPFS by the researchers, Research Report 12 concluded:

          (a)                    10% of the total population of SPFS did not appear to be following all R&M requirements in AAS, despite only 0.5% of the total clearly stating so;

          (b)                   76% appeared to follow all R&M requirements in AAS; and

          (c)                    the extent of compliance (or otherwise) with the R&M requirements in AAS of the remaining 14% of SPFS was unclear.

     BC8               The December 2018 research conducted via a survey of users of financial statements prepared by for-profit private sector entities found:

          (a)                    on average, 93% of primary users and more than 95% of other users said comparability, transparency, comprehensibility and consistency are what they need most in financial statements; and

          (b)                   only 43% of primary users and 56% of other users said they are satisfied with the information presented in SPFS.

     Respondents to this survey were generally involved with entities within the scope of AASB 2020-2, although there were a number involved with the types of entities referred to in paragraph BC4(b), such as limited partnerships, incorporated associations and trusts.  On that basis, the Board concluded the findings of the research are relevant in supporting the Board's view that users of SPFS prepared by entities within the scope of this Standard would benefit from specific SPFS disclosure requirements.

     BC9               In light of ED 297's limited scope and anticipating the proposals in ED 297 would not be reflected in a Standard for some time after ED 297 was published for comment, the Board had also issued Exposure Draft ED 293 Amendments to Australian Accounting Standards – Disclosure in Special Purpose Financial