Document ID: chunk:federal_register_of_legislation:F2023C00190:reg:9b:p7
Version: federal_register_of_legislation:F2023C00190
Segment Type: reg
Provision Reference: reg 9B (pt 7/41)
Character Range: 126533–130094

understanding how closely the entity's existing accounting policies are aligned to the recognition and measurement requirements in Australian Accounting Standards would also help entities assess the impact of any future transition from special purpose financial statements to general purpose financial statements.

Issue of Exposure Draft ED 293

     BC15            The Board's proposals with respect to the disclosures in special purpose financial statements finalised in this Standard were exposed for public comment in July 2019 as part of Exposure Draft ED 293 Amendments to Australian Accounting Standards – Disclosure in Special Purpose Financial Statements of Compliance with Recognition and Measurement Requirements (ED 293).

     BC16            The significant issues considered by the Board in developing ED 293 are addressed in the following section.

Significant issues

Scope

     BC17            In deciding who should be required to make the disclosures proposed in ED 293, the Board considered The AASB's For-Profit Entity Standard-Setting Framework and The AASB's Not-for-Profit Entity Standard-Setting Framework, and decided the proposals would be consistent with both frameworks and therefore ED 293 proposed that they should apply to for-profit and not-for-profit entities.

     BC18            In making this decision, the Board had particular regard to the following factors:

          (a)                    the uncertainty about whether or not the accounting policies applied in the financial statements comply with all the recognition and measurement requirements in Australian Accounting Standards described in paragraph BC6 above, coupled with the findings of AASB Research Report 12 Financial Reporting Practices of For-Profit Entities Lodging Special Purpose Financial Statements (August 2019)[12] significantly adversely impacts financial statement users in both the for-profit and not-for-profit sectors;

          (b)                   financial statement users have noted during AASB outreach to date[13] the lack of, and need to improve, comparability, consistency, transparency and enforceability in special purpose financial statements;

          (c)                    the evidence of diversity in the application of, and compliance with, the recognition and measurement requirements in Australian Accounting Standards in special purpose financial statements noted in Research Report 11 (refer to paragraph BC6 above) and Research Report 12;[14]

          (d)                   the significant number of charities preparing special purpose financial statements and the low levels of explicit statements of compliance with the recognition and measurement requirements in Australian Accounting Standards therein (refer paragraph BC6 above); and

          (e)                    the requirements of Australian Auditing Standards as they relate to special purpose financial statements (refer to paragraph BC26 below).

     BC19            When deciding which for-profit and not-for-profit entities should be required to make the disclosures proposed in ED 293, the Board considered whether the disclosures should be required by:

          (a)                    all entities preparing special purpose financial statements (including those preparing financial statements voluntarily); or

          (b)                   all entities preparing special purpose financial statements that are required by legislation or otherwise to comply with Australian Accounting Standards; or

          (c)                    only