Document ID: chunk:federal_register_of_legislation:F2024L00075:reg:38:p20
Version: federal_register_of_legislation:F2024L00075
Segment Type: reg
Provision Reference: reg 38 (pt 20/76)
Character Range: 87702–90763

which had requirements that lead defined contribution and defined benefit superannuation plans to prepare their financial statements on different bases.
BC5               There were also deficiencies in AAS 25 when compared to the requirements in Australian Accounting Standards applied by other entities.  These include AAS 25 permitting entities not to recognise member liabilities in respect of defined benefit members.
BC6               Only limited improvements were made to AAS 25 since its issue in 1993.[2]

The AASB's policy on IFRS
BC7               In 2004, when the AASB was implementing the decision to adopt IFRS, it considered the merits of IAS 26 Accounting and Reporting by Retirement Benefit Plans, which was originally issued in 1987 and has changed little since that time.  The AASB concluded that IAS 26 should not be adopted in Australia because its application by Australian superannuation entities would be unlikely to result in financial statements that meet users' information needs and would potentially reduce the quality of financial reporting by superannuation entities.
BC8               In particular, the AASB considered that IAS 26 would not result in useful information on the capacity of a superannuation entity to meet its member liabilities.  For example, IAS 26:
(a)                   contemplates that a plan would invest in assets for which it is impossible to estimate fair value, and permits those assets to be measured at an amount other than fair value; and
(b)                   permits the actuarial present value of 'promised retirement benefits' to be based on either current or projected salary levels.
BC9               In contrast to IAS 26, AAS 25 required all assets held by a superannuation plan to be measured at a current value (consistent with Australian prudential measurement requirements).  The AASB also considered other relevant IFRS being adopted in Australia and noted that the requirements of IAS 26 are highly dissimilar from the requirements of most other IFRS.  For example, in contrast to IAS 26, IAS 19 Employee Benefits (AASB 119 Employee Benefits) requires plan assets attributable to defined benefit obligations to be measured at fair value in determining an employer-sponsor's net defined benefit obligations.
BC10            The AASB considers that the reasons identified for not adopting IAS 26 (and retaining AAS 25) remain valid in respect of AASB 1056.
BC11            The AASB also considered the implications of withdrawing AAS 25 and requiring superannuation entities to apply, where appropriate, Australian Accounting Standards.  The AASB concluded that, while the financial reporting requirements for superannuation entities can, in many respects, be enhanced by being more closely aligned with corresponding requirements of other Standards, there remains a need for a specific Standard to help ensure the general purpose financial statements (GPFSs) of superannuation entities cater for the needs of users.

Users of the general purpose financial statements of superannuation