On 16 August 2018 the AICD lodged a submission (Phase 1 submission) with the Australian Accounting Standards Board on the short-term approach proposed in the Consultation Paper (CP) – Applying the IASB’s Revised Conceptual Framework and Solving the Reporting Entity and Special Purpose Financial Statement (SPFS) Problems.
In this submission, the AICD indicated our overall support for the short-term approach outlined in the CP. This approach will enable entities to continue to comply with International Financial Reporting Standards (IFRS) where relevant. For those entities where IFRS is not relevant, the AICD supports the AASB proposal to continue to allow them to adopt the existing Framework and prepare SPFS if appropriate.
However, we highlight the following matters for further consideration by the AASB:
- For publicly accountable entities within a wholly owned group structure currently producing SPFS, further assessment of user needs should be undertaken prior to any standard being introduced; and
- We consider the introduction of two conceptual frameworks into the Australian reporting framework is a significant change that warrants application of regular consultation requirements, which includes the issue of an Exposure Draft.
In regards to the AASB’s medium term approach, the AICD notes that it does not support an increase in regulatory burden for for-profit entities or not-for-profit entities. Therefore, we would be unlikely to support any proposed changes to the reporting framework to be considered as part of Phase 2, without a significant financial reporting threshold increase (across for-profits and not-for-profits) sufficient to balance the increased reporting burden. We will explore this matter further in our Phase 2 submission, due in November 2018.
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