Document ID: chunk:federal_register_of_legislation:F2023C00381:reg:25:p14
Version: federal_register_of_legislation:F2023C00381
Segment Type: reg
Provision Reference: reg 25 (pt 14/47)
Character Range: 61236–64161

The second set would be frozen at the date the revised Conceptual Framework was issued, and would be applied by entities continuing to apply the existing Conceptual Framework.  Option 3 would not address the reporting entity clash.

     BC38            Option 4 is similar to Option 2, as it would result in a single conceptual framework, however similarly to Option 3, it would result in up to two sets of Australian Accounting Standards.  Option 4, like Option 3, would not address the reporting entity clash.

     BC39            While Option 1 results in there being two conceptual frameworks in operation for a period of time and does not resolve the reporting entity clash in the immediate term, the Board decided that it was the most appropriate Phase 1 approach for the following reasons:
(a) the application of the two conceptual frameworks is clearly defined and is less likely to cause confusion for constituents;
(b) Option 1 would address the reporting entity clash in the medium term;
(c) Option 1 would be more straightforward to unwind when implementing Phase 2;
(d) the revised Conceptual Framework contains new recognition and measurement requirements for assets, liabilities, income and expenses.  Unless an entity is applying the revised Conceptual Framework, it is not required to adopt those revised recognition and measurement requirements until Phase 2 is implemented.  That is, for entities applying the existing Conceptual Framework, the existing Conceptual Framework and the related references in Australian Accounting Standards are effectively frozen; and
(e) there is no need to consider whether other aspects of the revised Conceptual Framework need to be amended to accommodate retaining SAC 1, which includes the Australian definition of the term reporting entity.

     BC40            While Option 2 would result in a single conceptual framework, and would address the reporting entity clash, the Board decided that Option 2 was more likely to create confusion amongst constituents.  This is because under Option 2 it is less clear which elements of the revised Conceptual Framework would apply to certain entities and which would not.  Also, other entities would be required to apply the new recognition and measurement requirements in the revised Conceptual Framework in circumstances where an Australian Accounting Standard (or Interpretation) did not address an issue.  In addition, extensive work would be required to review all aspects of the revised Conceptual Framework to determine what other changes would be necessary to accommodate retaining SAC 1 and the Australian definition of the term reporting entity.

     BC41            The Board did not consider Option 3 or Option 4 to be viable, as both options would result in two sets of Australian Accounting Standards, which would be complex to manage (for example future compilations) and would present a much greater level of