Document ID: chunk:federal_register_of_legislation:F2023C00190:reg:3:p3
Version: federal_register_of_legislation:F2023C00190
Segment Type: reg
Provision Reference: reg 3 (pt 3/4)
Character Range: 30334–33529

made (there are one or more instances of compliance / non-compliance not having been assessed) (see Examples 6 and 7 below).

     IG10             Based on the AASB's research, some of the most frequent examples of non-compliance with recognition and measurement requirements in Australian Accounting Standards include:

          (a)                    in accounting for income, recognition of grant income for a specified time period, or which has no conditions that need to be met, is deferred until the related expenses are incurred, or all grant income is deferred, without assessing whether a performance obligation exists, which does not comply with AASB 15 Revenue from Contracts with Customers or AASB 1058 Income of Not-for-Profit Entities;

          (b)                   in accounting for property, plant and equipment, assets were not depreciated based on their useful lives, which does not comply with AASB 116 Property, Plant and Equipment;

          (c)                    in accounting for impairments, the recoverable amount for impairment testing was calculated on an undiscounted basis, which does not comply with AASB 136 Impairment of Assets; and

          (d)                   in accounting for employee benefits, the long-term provision for long service leave is not recognised, or not discounted, which does not comply with AASB 119 Employee Benefits.

Application of the consolidation and equity accounting requirements

     IG11             In relation to paragraph 9A(b) of this Standard, information about the accounting for subsidiaries and investments in associates and joint ventures is fundamental for a user's understanding of the scope of the financial statements.  Some entities are required to determine their financial reporting requirements based on the application of recognition and measurement requirements in Australian Accounting Standards, including consolidation, for example a proprietary company subject to section 45A of the Corporations Act 2001 is required to determine whether it is a small or large proprietary company on a consolidated basis (ie the parent and the entities it controls (subsidiaries)) in accordance with the accounting standards even if the standards do not otherwise apply to some or all of the companies concerned.  Other entities, typically lodging financial reports with the ACNC, make their assessments based on individual entity circumstances only.  In instances where legislation does not require assessment on a consolidated basis, and an entity has not made an assessment of whether its interests in other entities are subsidiaries, associates or joint ventures, an entity shall make a statement that they have not been assessed (see Example 2 below).

     IG12             Exemptions from consolidation of subsidiaries are provided in AASB 10, paragraphs 4(a) and Aus4.1 (as modified by paragraph Aus4.2), including when the entity is a wholly-owned subsidiary and its ultimate parent produces consolidated financial statements that are available for public use and comply with accounting standards.  Directors preparing special purpose financial statements might have other reasons for non-consolidation of