Document ID: chunk:federal_register_of_legislation:F2024L00075:reg:38:p27
Version: federal_register_of_legislation:F2024L00075
Segment Type: reg
Provision Reference: reg 38 (pt 27/76)
Character Range: 108074–111225

might provide to its members.

Measurement of assets at fair value
BC44            AAS 25 required a superannuation plan to measure its assets at market value less costs that would be expected to be incurred in realising the proceeds from their disposal.  The AASB considered a number of alternative approaches, including measuring assets:
(a)                   in a manner consistent with the approach under AAS 25;
(b)                   in accordance with the various requirements of relevant Australian Accounting Standards; and
(c)                   in a manner consistent with AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts, under which assets are required to be measured at fair value through profit or loss where that is required or permitted in other Australian Accounting Standards.
BC45            With respect to approaches (b) and (c), the AASB noted some Australian Accounting Standards currently provide a choice between alternative measurement methods, particularly cost and fair value through profit or loss, and some require cost or fair value through other comprehensive income, for particular types of assets.  However, the AASB regards measurement of superannuation entity assets at cost or at fair value through other comprehensive income to be inconsistent with the needs of users in the investment performance of superannuation entities, and inconsistent with the prudential measurement requirements.
BC46            The AASB concluded the AAS 25 approach is an appropriate starting point, and that there are a number of compelling arguments in favour of requiring a superannuation entity to use fair value through profit or loss rather than net market value.
BC47            Both net market value measurements and fair value measurements provide useful information for users of the financial statements of a superannuation entity about:
(a)                   the capacity of a superannuation entity with defined contribution members to pay benefits as the information reflects the interests of members; and
(b)                   the financial position (solvency) of a superannuation entity with defined benefit members as the information reflects the capacity of the entity to meet member liabilities.
However, the approach for measuring assets under AAS 25 is inconsistent with the approach for measuring equivalent assets under other Australian Accounting Standards.  In addition, fair value measurement is more comprehensively dealt with in the accounting literature, in particular, AASB 13 Fair Value Measurement.  Accordingly, the AASB considers requiring fair value measurement would enhance the comparability of the financial statements of superannuation entities with other entities.
BC48            Both ED 179 and ED 223 proposed that superannuation entities measure their assets at fair value through profit or loss, with the exception of tax assets, and any assets arising from insurance arrangements the entity provides to its members.
BC49            Most of the respondents that specifically commented on the ED 179 and ED 223 asset measurement proposals expressed general agreement