Document ID: chunk:federal_register_of_legislation:F2023C00190:reg:9b:p11
Version: federal_register_of_legislation:F2023C00190
Segment Type: reg
Provision Reference: reg 9B (pt 11/41)
Character Range: 138304–141367

would be required if an entity did not comply with all the recognition and measurement requirements in Australian Accounting Standards.

     BC28            The Board decided that Options 1 and 2 together were most appropriate, as they best inform financial statement users about the special purpose financial statements and best address the issues identified in paragraphs BC2-BC12 above.

     BC29            In considering the application of Australian Accounting Standards to special purpose financial statements, the Board noted that section 45A of the Corporations Act 2001 requires the assessment of thresholds for small and large proprietary companies to be determined on a consolidated basis (ie the parent and the entities it controls (subsidiaries)) in accordance with the accounting standards even if the standards do not otherwise apply to some or all of the companies concerned.  For the purposes of this section, the question of whether a proprietary company controls another entity is to be decided in accordance with the requirements of Australian Accounting Standards (ie AASB 10 Consolidated Financial Statements) even if the standards do not otherwise apply to the company.

     BC30            The Board considered whether an explicit statement that an entity does not have subsidiaries, or investments in associates or joint ventures was required.  The Board noted that entities preparing either Tier 1 or Tier 2 general purpose financial statements[20] are not required to make these statements and accordingly an explicit statement in these circumstances should not be required.

     BC31            The Board decided that in situations where an entity's financial statements do not consolidate some or all of its subsidiaries, information about the consolidated financial statements of the entity's parent is likely to be useful to enable financial statement users to at least be able to know if and where they can access some consolidated information, even if it is incorporated into a wider group.  While this requirement arguably improves transparency in financial reporting, the Board decided not to mandatorily require disclosure of this information as such information is currently not required to be provided by entities preparing Tier 2 general purpose financial statements.  The Board acknowledged that entities preparing Tier 2 general purpose financial statements would already be required to prepare consolidated financial statements and therefore such a disclosure would not be necessary as when preparing general purpose financial statements all subsidiaries must be consolidated (unless the parent entity applies the exemption in AASB 10).  Ultimately this is one of the notable differences between special purpose financial statements and general purpose financial statements, as in contrast, where an entity is preparing special purpose financial statements, users cannot be sure whether an entity did not consolidate its subsidiaries due to the exemption in AASB 10 or whether it was because it was determined that