Document ID: chunk:federal_register_of_legislation:F2023C00381:reg:8:p3
Version: federal_register_of_legislation:F2023C00381
Segment Type: reg
Provision Reference: reg 8 (pt 3/28)
Character Range: 168084–171131

respondents) weren't sure. The Board however noted that of those respondents who answered 'yes' to this question, a number of them provided suggestions specific to the NFP sector.

     BC103        Some respondents felt that additional tiers of GPFS reporting with varying degrees of disclosure may be useful, as entities preparing financial statements range in size and complexity. The Board emphasised that entities without a statutory requirement to comply with AAS, such as those below the now doubled large proprietary company thresholds in the Corporations Act 2001, would be able to continue to tailor their financial statements to the needs of their specific users and therefore additional tiers of GPFS reporting were not required. Further, there are only an estimated maximum of approximately 4,500 entities (subsequent to Treasury increasing the thresholds used for determining what constitutes a large proprietary company) that may be required to prepare financial statements under Part 2M.3 of the Corporations Act 2001 who would be able to use a Tier 2 GPFS framework (including those currently preparing Tier 1 and Tier 2 GPFS).

     BC104        Further, separating this already small proportion of the total population (ie 1.3% or approximately 10,500 entities) into more than one tier would require objective criteria on which to make this separation. Treasury's consultation on its proposals to increase the thresholds used for determining what constitutes a large proprietary company considered this, and determined there should only be a large, small distinction.

     BC105        As noted in paragraph BC71, entities not subject to this Standard (or the requirements in AASB 2019-1) would continue to be able to prepare SPFS if they classify themselves as non-reporting entities.

     BC106        Further, as noted in paragraph BC45(b), the few AAS that are mandatory for SPFS are focussed on the presentation of and disclosure in financial statements, rather than R&M requirements, and cannot be considered an appropriate financial reporting framework. For this reason, when preparing SPFS, directors and those charged with governance are responsible for determining the financial reporting framework of the entity by specifying the accounting policies (ie R&M requirements). The directors and those charged with governance are also responsible for ensuring the financial reporting framework is appropriate to meet the needs of the users of their SPFS.

     BC107        A key theme noted through submissions and outreach on Phase 2 of ITC 39 was the need for comparability across publicly lodged financial statements, particularly in relation to R&M requirements (see paragraphs BC108-BC113). As such, the Board decided that creating additional tiers of GPFS reporting for such a small proportion of the total population of trading entities would not adequately meet the objective of creating a consistent and comparable financial reporting framework, and could lead to unnecessary complexity for financial statement