Document ID: chunk:federal_register_of_legislation:F2024L00075:reg:38:p32
Version: federal_register_of_legislation:F2024L00075
Segment Type: reg
Provision Reference: reg 38 (pt 32/76)
Character Range: 122426–125609

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, a superannuation entity should present any residual interest as equity in accordance with applicable Standards.

Statement of changes in equity
BC70            Under AAS 25, a superannuation entity is not required to present a statement of changes in equity.
BC71            The AASB noted that, while superannuation entities have no equityholders as such, they often have equity, particularly in the form of reserves.  The AASB also noted that an entity's reserving policy could have implications for the amounts credited to defined contribution members' accounts.  Accordingly, ED 179 and ED 223 proposed that, when appropriate, a superannuation entity should present a statement of changes in equity in accordance with AASB 101.

Responses to ED 179 and ED 223 proposals on statement of financial position and statement of changes in equity
BC72            Some respondents expressed concerns with presenting a difference between total assets and total liabilities in the statement of financial position.  They suggested such presentation might be misleading to users where, for example:
(a)                   an entity has several groups of defined benefit members and the difference is attributable to only one or some of these groups;
(b)                   there is no specific contractual arrangement between the entity and relevant employer-sponsor(s) but it is probable the employer-sponsor(s) will make sufficient future contributions to eliminate any deficit; or
(c)                   there is an expectation any surplus (reserves) of the entity will be used for the future benefit of members.
BC73            The AASB noted these concerns, but concluded they are not sufficient to justify an entity not presenting a difference between assets and liabilities in its financial statements because:
(a)                   the extent of any surplus or deficit of net assets is useful information regarding the entity's capacity to pay defined contribution members' benefits and/or financial position (solvency) with respect to defined benefit members' entitlements;
(b)                   if an entity considers users of its financial statements might misunderstand the implications of any surplus or deficit, consistent with paragraph 55 of AASB 101, the entity would present additional line items by way of explanation, and/or make further note disclosures; and
(c)                   unless there is a present obligation at reporting date to pay reserves to a member and/or employer-sponsor, the reserve is equity in accordance with Australian Accounting Standards.
BC74            Several respondents were also concerned an entity might be permitted or required to present its liabilities for defined contribution and defined benefit members' benefits as a single line item under the ED 179 proposals.  The AASB noted, because defined contribution member liabilities