Document ID: chunk:federal_register_of_legislation:F2023C00381:reg:8:p7
Version: federal_register_of_legislation:F2023C00381
Segment Type: reg
Provision Reference: reg 8 (pt 7/28)
Character Range: 178993–181962

of moving to the IFRS for SMEs Standard would outweigh the costs noted above.

     BC111        The Board also noted that any possible reduction in on-going compliance costs or alleviation of concerns that the R&M requirements of IFRS Standards are too complex which may arise from having the IFRS for SMEs Standard as the Tier 2 GPFS framework, would not be significant enough to outweigh the loss of benefit to users (ie the loss of consistency and comparability of R&M requirements in AAS), because as noted above, the IFRS for SMEs Standard still requires consolidated financial statements and equity accounting, along with deferred tax accounting, lease accounting, fair valuing of derivatives and other complex financial instruments and related party disclosures that are not substantively different from the full requirements in AAS.

     BC112        The Board further noted that 65% of respondents to Phase 2 of ITC 39 did not agree with having the IFRS for SMEs Standard as the Tier 2 GPFS framework in Australia.

     BC113        In light of the above, as noted in paragraph BC98, the Board decided to create a new and separate Tier 2 GPFS framework that would have the R&M requirements of Tier 1 (including consolidation and equity accounting) and the disclosure requirements of the IFRS for SMEs Standard.

     BC114        The new Tier 2 GPFS framework replaces the existing Tier 2 GPFS RDR framework and is available for application by for-profit private sector entities that do not have public accountability, NFP private sector entities and public sector entities other than the Australian Government and State, Territory and Local Governments.

Consolidation requirements of Tier 2 GPFS framework

     BC115        Anecdotally, the Board is aware that some entities preparing SPFS are parent entities but do not prepare consolidated financial statements, and some of those entities are also not providing an explanation as to why they have not prepared consolidated financial statements.

     BC116        While considering how best to revise the Tier 2 GPFS framework, the Board also contemplated whether it was possible to provide financial information about subsidiaries in a more cost effective way, such as by providing summary financial information in the consolidated financial statements of the parent instead of a complete set of financial statements for the subsidiary. The Board undertook research (AASB Research Report No. 13 Parent, Subsidiary and Group Financial Reporting) to assess the suitability of current reporting requirements where the views of different lending institutions were sought. The feedback received showed there is a need for both a full set of subsidiary financial statements and the consolidated financial statements of the group. Feedback received from users in response the AASB's user survey and submissions to ITC 39 also highlighted the need for consolidated financial statements.

     BC117        The