Document ID: chunk:federal_register_of_legislation:F2023L00010:body:0:p23
Version: federal_register_of_legislation:F2023L00010
Segment Type: other
Provision Reference: 
Character Range: 61364–64431

revised the drafting of the modifications. The Board developed a Fatal-Flaw Review draft version of the Standard to identify any unintended consequences of the revisions made to the proposed modifications.

Stakeholder feedback on the Fatal-Flaw Review draft version
BC25            In October 2022, the Board issued for comment a Fatal-Flaw Review draft version of the Standard. The Board received written submissions on the draft Standard from three respondents, who also responded to ED 320. The Board also received comments from Panel members during a Panel meeting held in November 2022.
BC26            Of the three respondents who provided a written submission:
(a)                    one supported all the Board's proposals;
(b)                   one supported all the proposed principles in the draft Standard but commented that certain areas of the draft Standard can be refined; and
(c)                    the ED respondent who disagreed with most aspects of the ED 320 proposals elaborated on their disagreement with the Board's proposals.
BC27            The respondent referred to in paragraph BC26(c) expressed the following concerns about the proposals in their submissions on ED 320 and the Fatal-Flaw Review draft:
(a)                    fair value measurements of some assets would be affected by an entity's subjective assessment of whether the asset is held primarily for its ability to generate net cash inflows (which therefore would determine whether the asset's fair value measurement is subject to the proposed modifications to AASB 13). Uniform guidance on fair value measurement should be applicable to all reporting entities, regardless of their sector, because the principles of valuation hold regardless of the sector in which the entity controlling the asset operates;
(b)                   modifying AASB 13, such as adding to AASB 13 criteria that constrain when an alternative use may be identified as an asset's highest and best use and introducing non-financial influences into the concept of financial feasibility, would be likely to result in departures from the principles of IFRS 13; and
(c)                    the notion that hypothetical not-for-profit public sector market participant buyers exist for public sector entity assets is ethereal and unrealistic. The respondent considers that the hypothetical transaction underpinning the fair value concept in AASB 13 should be supported by actual market activity, or the generation of actual cash flows that support assumptions about what that market activity might be.
BC28            In addition, the respondent made the following comments:
(a)                    fair value and market value are one and the same. The same estimate of fair value should result for a given asset, regardless of whether the market approach, income approach or cost approach is used; and
(b)                   the costs associated with the provision of community service obligations are never more transparent than when a new public sector asset is valued at less than its cost of acquisition,