Document ID: chunk:federal_register_of_legislation:F2023L00951:body:0:p4
Version: federal_register_of_legislation:F2023L00951
Segment Type: other
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Character Range: 8924–12137

not part of, AASB 2023-3 Amendments to Australian Accounting Standards – Disclosure of Non-current Liabilities with Covenants: Tier 2.

Introduction
     BC1               This Basis for Conclusions summarises the Australian Accounting Standards Board's considerations in reaching the conclusions in this Standard. It sets out the reasons why the Board developed the Standard, the approach taken to developing the Standard and the bases for the key decisions made. In making decisions, individual Board members gave greater weight to some factors than to others.

Reasons for proposing these amendments
     BC2               The Board issued AASB 2020-1 Amendments to Australian Accounting Standards – Classification of Liabilities as Current or Non-Current in March 2020 and AASB 2022-6 Amendments to Australian Accounting Standards – Non-current Liabilities with Covenants in December 2022. These Standards amended AASB 101 Presentation of Financial Statements to improve the information an entity provides in its financial statements about liabilities arising from loan arrangements for which the entity's right to defer settlement of those liabilities for at least twelve months after the reporting period is subject to the entity complying with conditions specified in the loan arrangement (often referred to as 'covenants'). AASB 2022-6 also amended an example in AASB Practice Statement 2 Making Materiality Judgements regarding assessing whether information about covenants is material for disclosure.
     BC3               The amendments made by AASB 2020-1 and AASB 2022-6 principally affect the classification and disclosure of current and non-current liabilities for entities applying Tier 1 reporting requirements.[1] It is appropriate for the Board to consider making 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 to ensure consistency in the terminology and presentation requirements across Australian Accounting Standards.

Issue of Exposure Draft ED 323
     BC4               The Board's proposals with respect to the amendments finalised in this Standard were exposed for public comment in March 2023 through Exposure Draft ED 323 Disclosure of Non-current Liabilities with Covenants – Proposed Amendments to Tier 2.
     BC5               The significant issues considered by the Board in developing ED 323 are addressed in the following section.

Relevance of the amendments to AASB 1060
     BC6               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.
     BC7               Applying this approach, ED 323 proposed that in relation to the amendments made by AASB 2020-1 and AASB 2022-6 to AASB 101:
          (a)                    where AASB 1060 contains a corresponding paragraph, AASB 1060 should be updated in a similar manner. If the corresponding paragraph in AASB 1060 (paragraph 40) is not updated, entities may