Document ID: chunk:federal_register_of_legislation:F2022C01110:reg:20:p9
Version: federal_register_of_legislation:F2022C01110
Segment Type: reg
Provision Reference: reg 20 (pt 9/40)
Character Range: 61964–64998

of Tier 2; and
(d)                   keeping size thresholds that identify 'important' entities up-to-date would entail additional maintenance and monitoring costs.

For-Profit Entities in the Public Sector
BC35            The Board noted that the definition of public accountability it has adopted has a for-profit private sector orientation as it is based on the definition included in the IFRS for SMEs.  The Board noted that the nature of for-profit entities in the public sector may differ from that in the private sector in that many Government Business Enterprises (GBEs) also undertake social policy obligations.  Moreover, the ownership group in many for-profit public sector entities is not a broad group.  The Board noted that, although these entities are typically seen as publicly accountable in the general sense of the term, they do not typically fall under the definition of public accountability used for the private sector.
BC36            Some respondents to ED 192 expressed the view that GBEs should be included in Tier 1 because of their commercial significance and their participation in markets in competition with private sector for-profit entities.  Others noted that, while it is acknowledged there is a relatively high level of public interest in relation to GBEs, it is also important that those public sector entities that compete with private sector entities in Tier 2 are not disadvantaged through the application of more onerous financial reporting requirements.
BC37            Some respondents supported an approach where GBEs would by default be classified as Tier 2 entities, with the caveat that the public sector entity that 'regulates' the respective entities would determine whether individual entities should apply the disclosure requirements of Tier 1.  This approach, it was noted, could result in GBEs achieving the same level of financial reporting as for-profit private sector entities of similar nature and size.
BC38            The Board concluded that, consistent with the role of other regulators under the revised differential reporting framework (see paragraphs BC40-BC41), the determination of the Tiers of reporting requirements under which for-profit public sector entities should report would best be left to relevant public sector regulators in each jurisdiction.

Entities Eligible for Tier 2 Requirements can Elect to Adopt Tier 1 Requirements
BC39            The Board concluded that an entity that is eligible to adopt Tier 2 requirements should be permitted to adopt Tier 1 requirements.  This is on the basis that:
(a)                    a relevant regulator may decide that in certain circumstances it is more beneficial to the users of financial statements, including the public at large, to include more comprehensive information in the general purpose financial statements;
(b)                   a subsidiary may be required to apply Tier 1 requirements by its parent; and
(c)                    some entities may find it more convenient or beneficial to continue to