Document ID: chunk:federal_register_of_legislation:F2023C00381:reg:25:p40
Version: federal_register_of_legislation:F2023C00381
Segment Type: reg
Provision Reference: reg 25 (pt 40/47)
Character Range: 135352–138550

section details the matters considered by the Board in developing those proposals and this Standard, including where relevant the Board's decisions on how to address stakeholder feedback as part of the exposure process.

Scope

     BC68            For-profit private sector entities preparing financial statements under the Corporations Act 2001 that are affected by this Standard are principally:

          (a)                    large proprietary companies;[33]

          (b)                   unlisted public companies (other than companies limited by guarantee);

          (c)                    small proprietary companies controlled by a foreign company;

          (d)                   financial services licensees; and

          (e)                    small proprietary companies with crowd-sourced funding.

     These have all been identified by the Board as being likely to have users dependent on their GPFS (see paragraph BC40-BC42 and category 4 in the Summary of scope table in paragraph BC93 below).

     BC69            In addition to Corporations Act 2001 entities covered by paragraph BC68, some other types of entities are also affected by this Standard. For example, for-profit co-operatives and incorporated associations required by state or territory legislation to prepare financial statements in accordance with AAS or accounting standards are also subject to this Standard.

     BC70            Some respondents to ED 297 questioned whether it was appropriate to include entities that are not required to publicly lodge financial statements within the scope of the Standard, such as large proprietary companies that are not required to lodge financial reports with ASIC if they meet certain conditions outlined in section 1408 of the Corporations Act 2001 (exempt proprietary companies). However, the Board decided against such an exemption on the basis that the relevant legislation requires compliance with accounting standards for a reason, whether or not articulated by the other regulator, regardless of whether the financial statements are publicly lodged. The Board also noted a number of these entities would have been required to comply with the SGE legislation and would have benefited from the increase in the large proprietary thresholds, so the impacted number of entities is considerably reduced. Further, the Board preferred to limit any special rules or exceptions in the proposals, consistent with recommendations in the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

     BC71            Entities not subject to this Standard (or the requirements in AASB 2019-1) continue to be able to prepare SPFS if they classify themselves as non-reporting entities, and where the SPFS are prepared other than in accordance with AAS. For these entities, the financial reporting framework applied in the SPFS would continue to be determined by the accounting policies selected by the directors or those charged with governance. For example, the directors or those charged with governance could adopt a basis of preparation based on AAS, the Tier 2 GPFS framework, RG 85, the IFRS for SMEs