Document ID: chunk:federal_register_of_legislation:F2023C00381:reg:8:p8
Version: federal_register_of_legislation:F2023C00381
Segment Type: reg
Provision Reference: reg 8 (pt 8/28)
Character Range: 181683–184912

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 majority of the lending institutions interviewed mentioned that in the case of group structures, they require the consolidated financial statements of the group to make their lending decisions and that these are particularly important when:

          (a)                    there is structural subordination within group structures;

          (b)                   there is a deed of cross guarantee;

          (c)                    banks have legal recourse to the assets of the consolidated group;

          (d)                   lending to a subsidiary is in the form of a credit enhancement to the whole group; and

          (e)                    lending to a subsidiary that does not have substantial operations and it is a financing vehicle.

     BC118        Similarly, feedback from users mentioned that in order to make decisions, they require:

          (a)                    consolidated financial statements including note disclosures (which include all assets, liabilities, revenues and expenses of the parent and all subsidiaries); and / or

          (b)                   consolidated financial statements including note disclosures plus some parent entity information to understand their dividend paying capacity.

     BC119        The feedback noted in paragraphs BC117-BC118 provided further support to the Board's view that consolidated financial statements are essential to provide users with transparent and complete information about the financial position and financial performance of the group and the entities in the group.

     BC120        Further information on the Board's decisions in relation to the revised Tier 2 GPFS framework is available in the Basis for Conclusions to AASB 1060.

     BC121        Although the Board decided that a revised Tier 2 GPFS framework would help facilitate the removal of SPFS, it also decided that transitional relief in addition to what is currently available in AASB 1 was warranted to further assist entities with transition from SPFS to Tier 2 GPFS where they choose to early adopt this Standard, as noted in paragraphs BC122-BC135.

Transition

Feedback from ITC 39

     BC122        In developing this Standard, the Board acknowledged that some entities might incur additional costs, particularly on transition from SPFS to Tier 2 GPFS. As such, the Board included specific matters for comment in ITC 39 seeking feedback on what transitional relief should be provided, in addition to that already available in AASB 1. Feedback on transitional relief was also sought by the Board in its roundtable discussions, surveys, webinar and individual meetings with stakeholders.

     BC123        Feedback from outreach activities related to Phase 2 of ITC 39 and specifically on transitional matters was mixed. Whilst some constituents agreed that AASB 1 would be sufficient to facilitate transition, others were either unclear on whether AASB 1 would be sufficient, or