Document ID: chunk:federal_register_of_legislation:F2025C00209:reg:221:p67
Version: federal_register_of_legislation:F2025C00209
Segment Type: reg
Provision Reference: reg 221 (pt 67/73)
Character Range: 348580–351872

Board members gave greater weight to some factors than to others.

Background

Tier 1 amendments

 1.                In June 2023, the AASB issued AASB 2023-1 Amendments to Australian Accounting Standards – Supplier Finance Arrangements. The Standard amends AASB 107 Statement of Cash Flows and AASB 7 Financial Instruments: Disclosures to require an entity to provide additional disclosures about its supplier finance arrangements.

 2.                The additional information will enable users of financial statements to assess how supplier finance arrangements affect an entity's liabilities, cash flows and exposure to liquidity risk. The amendments require an entity to disclose the terms and conditions of the arrangements, the carrying amount of the liabilities that are part of the arrangements, the carrying amounts of those liabilities for which the suppliers have already received payment from the finance providers, the range of payment due dates and the effect of non-cash changes.

 3.                These amendments arose from the issuance of International Financial Reporting Standard Supplier Finance Arrangements (Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures) by the International Accounting Standards Board (IASB) in May 2023.

 4.                The amendments made by AASB 2023-1 introduced disclosure requirements for entities applying Tier 1 reporting requirements. Therefore, it was appropriate for the Board to consider whether similar amendments to the Tier 2 Standard AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities were required.

Issue of Exposure Draft ED 328

 1.                The Board's proposals with respect to the amendments finalised in this Standard were exposed for public comment in December 2023 through Exposure Draft ED 328 Supplier Finance Arrangements: Tier 2 Disclosures.

 2.                The significant issues considered by the Board in developing ED 328 are addressed in the following section.

Relevance of the amendments to AASB 1060

 1.                The AASB For-Profit Entity Standard-Setting Framework and the AASB Not-For-Profit Entity Standard-Setting Framework outline the approach adopted by the Board for considering whether to add to or amend disclosure requirements in AASB 1060 when the IASB makes amendments to full IFRS Standards.

 2.                The standard-setting frameworks first consider whether the amendments introduce a significant recognition and measurement difference between full IFRS Standards and the IFRS for SMEs Accounting Standard. If they do not, the standard-setting frameworks state that no further action is required unless:

          1.                     the disclosures address a matter of public policy;

          2.                    the disclosures are of particular relevance in the Australian environment; or

          3.                     the amendments clarify or reduce existing disclosure requirements in full IFRS Standards.

 3.             The Board noted that the disclosure requirements were added to IFRS Standards to address users' need for information relating to an entity's liquidity position and cash flow. The feedback from Australian users