Document ID: chunk:federal_register_of_legislation:F2021C01247:reg:10:p4
Version: federal_register_of_legislation:F2021C01247
Segment Type: reg
Provision Reference: reg 10 (pt 4/21)
Character Range: 15559–18692

of such a financial report, the explanation of management's[8] responsibility for the financial report shall also make reference to its responsibility for determining that the applicable financial reporting framework is acceptable in the circumstances.

Alerting Readers that the Financial Report is Prepared in Accordance with a Special Purpose Framework

14.               The auditor's report on a special purpose financial report shall include an Emphasis of Matter paragraph alerting users of the auditor's report that the financial report is prepared in accordance with a special purpose framework and that, as a result, the financial report may not be suitable for another purpose.  (Ref: Para. A20–A21)

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Application and Other Explanatory Material

Definition of Special Purpose Framework (Ref: Para  6)

A1.             Examples of special purpose frameworks are:

      *                  A tax basis of accounting for a financial report that accompanies an entity's tax return;

           * The cash receipts and disbursements basis of accounting for cash flow information that an entity may be requested to prepare for creditors;

           * The financial reporting provisions established by a regulator to meet the requirements of that regulator; or

           * The financial reporting provisions of a contract, such as a bond indenture, a loan agreement, or a project grant.

Aus A1.1 The Corporations Act 2001,[*] other applicable law or regulation, or certain parties, may determine whether a financial report is required to be prepared and whether compliance with Australian Accounting Standards is required. Australian Accounting Standards set out requirements for General Purpose Financial Statements. In some circumstances, entities are permitted to prepare Special Purpose Financial Statements as defined in AASB 1054 Australian Additional Disclosures. Such circumstances include for-profit private sector entities required only by their constituting document or another document (e.g., a loan agreement) to prepare financial statements that comply with Australian Accounting Standards, provided that the relevant document was created or last amended before 1 July 2021, as well as not-for-profit entities that assess themselves to be non-reporting entities.

A2.             There may be circumstances where a special purpose framework is based on a financial reporting framework established by an authorised or recognised standards setting organisation or by law or regulation, but does not comply with all the requirements of that framework.  An example is a contract that requires a financial report to be prepared in accordance with most, but not all, of the Financial Reporting Standards of Jurisdiction X.  When this is acceptable in the circumstances of the engagement, it is inappropriate for the description of the applicable financial reporting framework in the special purpose financial report to imply full compliance with the financial reporting framework established by the authorised or recognised standards setting organisation or by law or regulation.  In the above example of the