Document ID: chunk:federal_register_of_legislation:F2023C00381:reg:8:p4
Version: federal_register_of_legislation:F2023C00381
Segment Type: reg
Provision Reference: reg 8 (pt 4/28)
Character Range: 170860–173842

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 users of such a small proportion of the population when trying to determine which tier of GPFS reporting requirements have been applied to the financial statements. Further, separating this population into two separate tiers would require objective criteria on which to make this separation. As noted in paragraph BC104 above Treasury had consulted on the thresholds used for determining what constitutes a large proprietary company and determined there should only be a large, small distinction. Also, small foreign-controlled entities would likely be required to use the R&M requirements of their parent entities that are unlikely to be using the IFRS for SMEs Standard, and finally, approximately 90%[41] of unlisted public companies preparing and lodging financial statements with ASIC already comply with the R&M requirements in AAS.

R&M requirements of Tier 2

     BC108        The Board noted the strong preference expressed by respondents to Phase 2 of ITC 39 for a framework that includes the full R&M requirements in AAS as it would enhance the comparability, consistency and transparency of the financial statements. Feedback from targeted outreach emphasised that users agreed that the usefulness of information within financial statements for decision making is adversely affected where entities have not consistently applied the R&M requirements in AAS.

     BC109        The findings noted in Research Report 12 estimates that 76% of specified for-profit entities that are lodging SPFS with ASIC are complying with the R&M requirements in AAS (see paragraph BC20). Therefore, the Board considered that moving to a Tier 2 GPFS framework that is not based on the full R&M requirements in AAS is counter-intuitive when trying to improve the consistency, comparability, usefulness and credibility of financial reporting in Australia.

     BC110        The Board did however re-evaluate the suitability of the IFRS for SMEs Standard as the Tier 2 GPFS framework in Australia and reconfirmed that the full IFRS for SMEs Standard continues not to be a preferred option for the for-profit private sector in Australia for the following reasons:

          (a)                    users specifically identified the comparability of the R&M requirements in AAS as a key concern. The IFRS for SMEs Standard has different R&M requirements compared to AAS, and to meet user needs for comparability, all for-profit private sector entities within the scope of this Standard would need to apply the IFRS for SMEs Standard (with it being the only Tier 2 GPFS framework), or a third tier of GPFS reporting would need to be created;

          (b)                   to achieve a consistent Tier 2 GPFS framework,