Document ID: chunk:federal_register_of_legislation:F2023C00381:reg:8:p5
Version: federal_register_of_legislation:F2023C00381
Segment Type: reg
Provision Reference: reg 8 (pt 5/28)
Character Range: 173599–176489

Standard would need to apply the IFRS for SMEs Standard (with it being the only Tier 2 GPFS framework), or a third tier of GPFS reporting would need to be created;

          (b)                   to achieve a consistent Tier 2 GPFS framework, additional transitional costs would be expected to arise because based on the data in paragraph BC20, it is estimated that a majority of ASIC regulated entities currently lodging SPFS are already complying with the R&M requirements in AAS. To achieve a consistent Tier 2 GPFS framework and implement the IFRS for SMEs Standard, all of these entities, approximately 8,800 of the 10,500 specified for-profit entities lodging financial statements with ASIC (subsequent to Treasury increasing the thresholds used from determining what constitutes a large proprietary company) would need to change their accounting policies to adjust for the different R&M requirements contained in the IFRS for SMEs Standard. That is, all of the specified for-profit entities preparing Tier 1 GPFS, Tier 2 GPFS or SPFS which comply with the R&M requirements in AAS.

          In comparison only the 10% that currently don't comply with the R&M requirements in AAS and potentially the 14% where it's unclear whether or not they have complied with the R&M requirements in AAS (approximately up to 1,700 entities in total) would be required to change their accounting policies to align with the R&M requirements in AAS. Therefore, a larger population of preparers would see an increase in the costs associated with the transition from SPFS to GPFS if the Tier 2 GPFS framework were based on different R&M requirements; and

          (c)                    having different R&M requirements is not consistent with ASIC and other regulators' views that the full R&M requirements of accounting standards should be applied in order to give a 'true and fair view' of the financial position and performance of an entity.[42]

          (d)                   there is no need for a third tier of GPFS reporting as approximately 98.7% of the 840,000 trading entities only have an obligation to prepare and lodge a tax return with the ATO. Further, creating a third tier would require objective criteria on which to make this separation, and Treasury has just consulted on the thresholds used for determining what constitutes a large proprietary company and determined there should only be a large, small distinction. Also, small foreign-controlled entities would likely be required to use the R&M requirements of their parent entities that are unlikely to be using the IFRS for SMEs Standard, and finally, approximately 90%[43] of unlisted public companies preparing and lodging financial statements with ASIC already comply with the R&M requirements in AAS. Subsidiaries would also need to provide additional information to be compliant with IFRS Standards for the purpose of