Document ID: chunk:federal_register_of_legislation:F2023C00381:reg:8:p6
Version: federal_register_of_legislation:F2023C00381
Segment Type: reg
Provision Reference: reg 8 (pt 6/28)
Character Range: 176210–179246

finally, approximately 90%[43] of unlisted public companies preparing and lodging financial statements with ASIC already comply with the R&M requirements in AAS. Subsidiaries would also need to provide additional information to be compliant with IFRS Standards for the purpose of consolidating into their parent's consolidated financial statements where the parent applies Tier 1 AAS or IFRS Standards;

          (e)                    the IFRS for SMEs Standard would result in reduced comparability between entities preparing full IFRS Standards compliant financial statements because of different accounting policy alternatives due to different R&M requirements;

          (f)                    in the event an entity moves to, or from, preparing financial statements applying full IFRS Standards, there would be costs involved in transitioning from the R&M requirements of one tier of reporting to another. Transition costs, and the ongoing costs of training and maintaining either two Tier 2 GPFS frameworks or even three tiers of GPFS reporting for users, preparers, auditors and regulators for only 1.3%[44] of actively trading entities would also outweigh any potential benefits;

          (g)                   the feedback received on Phase 2 of ITC 39 suggested that applying the consolidation and equity accounting requirements for the first time would be the most difficult aspect of transitioning from SPFS to GPFS, however consolidation and equity accounting are both required under the IFRS for SMEs Standard. As such, it does not appear that adopting the IFRS for SMEs Standard would mitigate these concerns;

          (h)                   using a single basis for the R&M requirements in AAS would support efficiency in the education of accountants and financial statement users;

          (i)                     the use of the IFRS for SMEs Standard would decrease harmonisation with New Zealand further than the requirements in this Standard, as the New Zealand financial reporting framework for for-profit entities has only two tiers and does not use the IFRS for SMEs Standard; and

          (j)                     despite the issues noted above that would be faced if the IFRS for SMEs Standard were to be adopted, the IFRS for SMEs Standard is based on full IFRS Standards, and does not appear to depart significantly from the IFRS Standards (see AASB Staff Paper Comparison of Standards for Smaller Entities (April 2018)). This is acknowledged by the IASB in the Basis for Conclusions to the IFRS for SMEs Standard¸ which also notes that the needs of users of financial statements of small and medium sized entities are similar in many ways to the needs of users of publicly accountable entities.[45] As such, it appears unlikely that the benefits of moving to the IFRS for SMEs Standard would outweigh the costs noted above.

     BC111        The Board also noted that any possible reduction in on-going compliance costs or alleviation of concerns that the R&M requirements of IFRS Standards are too