Document ID: chunk:federal_register_of_legislation:F2025C00209:reg:221:p22
Version: federal_register_of_legislation:F2025C00209
Segment Type: reg
Provision Reference: reg 221 (pt 22/73)
Character Range: 223406–226362

3.             The Board also noted that the simplified Tier 2 disclosures are contained in a separate Standard which might not be welcomed by preparers who prefer seeing the disclosure requirements together with the R&M requirements in each Standard. However, only four respondents to ED 295 did not like having a separate disclosure standard. Feedback at the roundtables and webinars was overwhelmingly positive.

      4.             Finally, for entities that were previously preparing SPFS, the adoption of AASB 2020-2 means a step-up in their disclosures. The disclosures will also likely exceed what would have been required under the SDR proposals outlined in paragraph BC13. However, there will be some disclosure relief, as SPFS currently are required to comply with all the disclosures in the mandatory standards (AASB 101, AASB 107, AASB 108, AASB 1048 and AASB 1054) which go beyond what is required under AASB 1060. Furthermore, the doubling of the reporting thresholds for large proprietary companies in April 2019 has already reduced the number of entities that are required to prepare and lodge financial statements with ASIC by approximately 2,300 companies, and the Board has further reduced the burden for affected entities by providing transitional relief for entities that are adopting AASB 2020-2 and AASB 1060 early, ie for financial years beginning before 1 July 2021. Further discussion of the Board's consideration on this matter is available in AASB 2020‑2 paragraphs BC122−BC153.

      5.             After considering both the advantages and disadvantages noted above, the Board was of the view that the simplified disclosures strike the right balance between user needs and cost to preparers and appropriately address the concerns raised by respondents to ITC 39. In particular, the Board noted the strong support for a consistent reporting framework which requires compliance with full R&M requirements in AAS but revisits the current disclosures that are required for Tier 2 entities under the RDR framework. The disclosures in AASB 1060 will not only be beneficial for entities that are already reporting under Tier 2 but also those entities that will have to step up from SPFS to Tier 2 GPFS when the  removal of SPFS for certain for-profit private sector entities that are required to prepare financial statements that comply with AAS or accounting standards through AASB 2020-2 becomes applicable.

Methodology and principles applied

      1.             In accordance with AASB 1053, Tier 2 requirements comprise the R&M requirements of Tier 1 but substantially reduced disclosure requirements. AASB 1053 sets out the eligibility criteria that entities must meet to report in accordance with the Tier 2 framework. This framework does not change those criteria.

      2.             The Board agreed to develop the new disclosures via a bottom-up approach, starting with the existing disclosures in the IFRS for SMEs