Document ID: chunk:federal_register_of_legislation:F2023C00381:reg:25:p26
Version: federal_register_of_legislation:F2023C00381
Segment Type: reg
Provision Reference: reg 25 (pt 26/47)
Character Range: 95269–98404

addition to the research described above, the Board also conducted significant targeted outreach prior  to issuing the standard, where over 250 formal meetings were held with key stakeholders, including State, Territory and Commonwealth regulators, audit offices, large and small accounting firms, the Australian Securities Exchange (ASX), ASIC, the Australian Charities and Not-for-profits Commission (ACNC), credit rating agencies, professional bodies and users of financial statements (including analysts, investors and creditors) to help identify how implementing the RCF and removing the ability of certain for-profit private sector entities to prepare SPFS when they are required to prepare financial statements that comply with AAS, would impact Australian entities. The Board considered the feedback received, when developing the Standard.

Regulatory views and developments on SPFS

     BC26            The Board noted feedback from some stakeholders suggesting that it was the role of other regulators (rather than the AASB) to address any potential issues with SPFS. In particular, some stakeholders argued:

          (a)                    other regulators should specify or determine whether an entity is required to lodge GPFS;[13] and

          (b)                   if the reporting entity concept is not being applied correctly, this is a matter of enforcement for the appropriate regulator rather than a matter of standard-setting.

     BC27            Thus, the Board has paid particular regard to the views of other regulators, and noted the increasing regulatory interest in and concern about the use of SPFS to assess what role the Board should play in addressing the issues.

     BC28            The Board noted ASIC issued RG 85 in July 2005, which states "ASIC believes that non-reporting entities, which are required to prepare financial reports in accordance with Chapter 2M of the Corporations Act 2001 (Act), should comply with the recognition and measurement requirements of accounting standards"[14] "hence, the recognition and measurement requirements of accounting standards must also be applied in order to determine the financial position and profit or loss of any entity preparing financial reports in accordance with the Act".[15]

     BC29            RG 85 further states that "Directors of non-reporting entities must also consider carefully the need to make disclosures which are not directly prescribed by accounting standards, but which may be necessary in order for the financial statements to give a true and fair view",[16] and that those standards that must be applied by entities reporting under the Corporations Act 2001 are AASB 101 Presentation of Financial Statements, AASB 107 Statement of Cash Flows, AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, AASB 1048 Interpretation of Standards and AASB 1054 Australian Additional Disclosures. However, as noted in paragraph BC21, research into the extent of compliance with the R&M requirements in AAS by specified for-profit entities lodging SPFS with ASIC shows that at least 10% and potentially up to 24%