Document ID: chunk:federal_register_of_legislation:F2024L00075:reg:38:p31
Version: federal_register_of_legislation:F2024L00075
Segment Type: reg
Provision Reference: reg 38 (pt 31/76)
Character Range: 119610–122734

Standards are not consistent with the measurement requirements or the disclosure principles for superannuation entities.

Statement of financial position
BC65            The AASB noted a superannuation entity would recognise a difference between total assets and total liabilities (including members' accrued benefits and any obligations to employer-sponsors) in a number of circumstances, including when:
(a)                   it has an operational risk reserve; and
(b)                   the amount of net assets attributable to defined benefit members is greater or less than such members' accrued benefits.
BC66            The AASB noted the net assets attributable to defined benefit members would not exceed such members' accrued benefits if:
(a)                   the relevant trust deed terms or legislation required any surplus be applied for the benefit of members, in which case the entity would be presently obliged to such members;
(b)                   an employer-sponsor agreed to apply surplus assets to enhance defined benefit members' benefits in the past, and it is reasonable to assume that this practice would continue, in which case the employer-sponsor would arguably have a constructive obligation to meet the enhanced benefits; or
(c)                   the trustee agreed to pay surplus assets to an employer-sponsor and this meets the relevant prudential requirements, in which case the entity would be presently obliged to the employer-sponsor.
BC67            The AASB also noted that, where trust deeds or the relevant legislation is silent with respect to surplus assets, and there is no established practice, the entity would present a residual interest in the net assets as equity because the entity has no present obligation with respect to surplus assets.
BC68            Where net assets attributable to defined benefit members is less than defined benefit members' accrued benefits, the AASB noted in the Bases for Conclusions to ED 179 and ED 223, that unless there is a specific contractual arrangement between the entity and employer-sponsor, the deficit would not in itself give rise to a receivable controlled by the entity.  (However, also see paragraphs BC138 to BC141.)  This is because, in the absence of a contract, the payment of any future contributions by the employer-sponsor to address the deficit:
(a)                   would not meet the definition of a financial instrument under AASB 132 Financial Instruments: Presentation; and
(b)                   would not be virtually certain to be received, as required to recognise a 'reimbursement' under AASB 137 Provisions, Contingent Liabilities and Contingent Assets.
BC69            In relation to ED 179 and ED 223, the AASB decided, where the amount of a superannuation entity's total assets does not equal its total liabilities (including defined contribution members' vested benefits, defined benefit members' accrued benefits and any obligations to employer-sponsors), the residual is in the nature of equity in the context of Australian Accounting Standards.  Accordingly, to ensure consistency with other entities,