Document ID: chunk:federal_register_of_legislation:F2023C00188:reg:7:p45
Version: federal_register_of_legislation:F2023C00188
Segment Type: reg
Provision Reference: reg 7 (pt 45/91)
Character Range: 129552–132796

180, but instead to refocus its project following issue of IFRS 15 Revenue from Contracts with Customers.

Alternative approaches considered

BC10            In developing this Standard, the Board considered whether to base the income recognition and measurement principles for a not-for-profit entity on those set out in:

(a)                    AASB 1004 Contributions;

(b)                   IPSAS, including IPSAS 23;

(c)                    AASB 120 Accounting for Government Grants and Disclosure of Government Assistance; or

(d)                   AASB 15 Revenue from Contracts with Customers.

BC11            The Board decided not to develop proposals based on the accounting specified by AASB 1004 (as in force at that time), having regard to constituent feedback leading to the Board undertaking the project.  In addition, the Board observed that the approach in AASB 1004 does not acknowledge that a non-reciprocal transfer may be made on terms and conditions representative of a liability as defined in the Framework for the Preparation and Presentation of Financial Statements.

Using the IPSAS 23 exchange/ non-exchange approach

BC12            Unlike the income recognition requirements in AASB 1004, IPSAS 23 requires liabilities to be recognised in relation to non-exchange transactions when transferred assets are received on the condition that the recipient entity must:

(a)                    consume the future economic benefits embodied in the transferred assets as specified; or if not,

(b)                   return the future economic benefits to the transferor.

BC13            The Board observed that it had previously considered adopting an approach similar to that used in IPSAS, and exposed this for comment as part of ED 180.  However, the Board had received constituent feedback that the:

(a)                    definition of a 'non-exchange transaction' in IPSAS (a transaction in which "an entity either receives value from another entity without directly giving approximately equal value in exchange, or gives value to another entity without directly receiving equal value in exchange") was similar to the non-reciprocal definition and therefore would still be ambiguous and difficult to apply in practice; and

(b)                   the notion of a liability in ED 180 was too narrow.

BC14            Having regard to the above, the Board decided not to develop proposals based on IPSAS in this project for the following reasons (see also paragraphs BC177–BC179):

(a)                    IPSAS employs an exchange/non-exchange distinction to determine the accounting for income; with non-exchange being defined similarly to non-reciprocal in Australian Accounting Standards.  The Board observed that part of the reason for undertaking this project was in response to constituent feedback of challenges in identifying a transaction as a reciprocal/non-reciprocal transaction, and concerns that the consequential accounting did not reflect the true underlying financial performance of the entity.  Accordingly, the Board considered that basing its project proposals on existing IPSAS would not meet its objective in undertaking this project; and

(b)                   the IPSASB is currently developing