Document ID: chunk:federal_register_of_legislation:F2023C00190:reg:9b:p3
Version: federal_register_of_legislation:F2023C00190
Segment Type: reg
Provision Reference: reg 9B (pt 3/41)
Character Range: 114745–117886

indicated that disclosures in financial statements have become overly complex.

Reconciliation of Net Operating Cash Flow to Profit (Loss)

     BC12            The AASB and the FRSB have relocated the requirement to disclose a reconciliation of net operating cash flow to profit or loss when an entity uses the direct method to present its statement of cash flows [that were contained in AASB 107 Statement of Cash Flows and NZ IAS 7 Statement of Cash Flows] to their respective separate disclosure standards and to harmonise the disclosure requirements across both jurisdictions.

     BC13            The Boards, in forming the view to retain the requirement for a reconciliation of net operating cash flow to profit or loss, acknowledged the weight of comments received on AASB ED 200B / FRSB ED 122 from constituents who opposed the proposal to remove this requirement.

     BC14            The Boards noted that the IASB has recently considered requiring a reconciliation of net operating cash flow to profit or loss in the context of its Financial Statement Presentation project.

Basis for Conclusions on AASB 2019-4

This Basis for Conclusions accompanies, but is not part of, AASB 1054.  The Basis for Conclusions was originally published with AASB 2019-4 Amendments to Australian Accounting Standards – Disclosure in Special Purpose Financial Statements of Not-for-Profit Private Sector Entities on Compliance with Recognition and Measurement Requirements.

Introduction

     BC1               This Basis for Conclusions summarises the Australian Accounting Standards Board's considerations in reaching the conclusions in this Standard.  It sets out the reasons why the Board developed the Standard, the approach taken to developing the Standard and the bases for the key decisions made.  In making decisions, individual Board members gave greater weight to some factors than to others.

Background

Reasons for issuing this Standard

     BC2               Australia is the only jurisdiction with a 'reporting entity' concept that effectively permits entities to self-assess what type of financial reporting they do when they are required by legislation or otherwise (such as by a constitutional document) to prepare financial statements in accordance with Australian Accounting Standards (issued by the Australian Accounting Standards Board).  Therefore, unlike other jurisdictions, in Australia two similar entities might prepare very different sets of financial statements, one preparing general purpose financial statements using a robust and consistent framework, and the other preparing special purpose financial statements with self-selected requirements.  The Board notes that the self-selection is subject to some constraints, imposed by paragraphs 7 and 10 to 12 of AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.

     BC3               Appendix A of AASB 1053 Application of Tiers of Australian Accounting Standards defines what a reporting entity is,[3] and Statement of Accounting Concepts SAC 1 Definition of the Reporting Entity also sets out the reporting entity concept.  Paragraph