Federal Register of Legislation - Australian Government

Primary content

AASB 1 Standards/Accounting & Auditing as made
This Accounting Standard re-issues AASB 1 containing requirements relating to first-time adoption of Australian Accounting Standards.
Administered by: Treasury
General Comments: When applied or operative, this Standard supersedes AASB 1 - First-time Adoption of Australian Equivalents to International Financial Reporting Standards - July 2004, as amended. (F2005B00898)
Exempt from sunsetting by the Legislation (Exemptions and Other Matters) Regulation 2015 s12 item 18
Registered 08 Jul 2009
Tabling HistoryDate
Tabled HR11-Aug-2009
Tabled Senate11-Aug-2009
Date of repeal 31 Dec 2017
Repealed by AASB 1 - First-time Adoption of Australian Accounting Standards - July 2015

Explanatory Statement

 

 

Accounting Standard AASB 1
First-time Adoption of
Australian Accounting Standards

 

 

 

 

 

 

 

 

 

 

May 2009

 

 



EXPLANATORY STATEMENT

Reasons for Issuing AASB 1

The Standard was first issued in July 2004 as AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards in relation to the initial application of Australian equivalents to IFRSs for annual reporting periods beginning on or after 1 January 2005.

Subsequently, AASB 1 was amended many times to accommodate first-time adoption requirements resulting from new or amended Standards. As a result, the Standard became more complex and less clear. This new version of AASB 1 retains the substance of the previous version. However, the structure of the Standard has been changed to make it easier for the reader to understand and to better handle future changes.

AASB 1 First-time Adoption of Australian Accounting Standards is expected to have very little application in practice, as it would be relevant only to (1) Australian entities becoming reporting entities or presenting general purpose financial statements for the first time in the future and (2) reporting entities that had not previously applied IFRSs changing their domicile to Australia from overseas.

Nevertheless, AASB 1 is maintained by the AASB as part of the Australian Accounting Standards that correspond to IFRSs, to ensure that IFRS compliance can be maintained for for-profit entities in Australia, including those adopting Australian Accounting Standards for the first time. The term ‘Australian Accounting Standards’ refers to Standards (including Interpretations) made by the AASB that apply to any reporting period beginning on or after 1 January 2005.

Main Features of AASB 1

The Standard applies when an entity adopts Australian Accounting Standards for the first time by an explicit and unreserved statement of compliance with Australian Accounting Standards. It addresses concerns about the full retrospective application of Australian Accounting Standards when they are adopted by an entity for the first time.

In general, the Standard requires an entity to comply with each Standard effective at the end of its first Australian-Accounting-Standards reporting period. In particular, the Standard requires an entity to do the following in the opening Australian-Accounting-Standards statement of financial position that it prepares as a starting point for its accounting under Australian Accounting Standards:

(a)          recognise all assets and liabilities whose recognition is required by Australian Accounting Standards;

(b)          not recognise items as assets or liabilities if Australian Accounting Standards do not permit such recognition;

(c)          reclassify items that it recognised under its previous basis of accounting as one type of asset, liability or component of equity, but are a different type of asset, liability or component of equity under Australian Accounting Standards; and

(d)          apply Australian Accounting Standards in measuring all recognised assets and liabilities.

The Standard grants limited exemptions from these requirements in specified areas where the cost of complying with them would be likely to exceed the benefits to users of financial statements. The Standard also prohibits retrospective application of Australian Accounting Standards in some areas, particularly where retrospective application would require judgements by management about past conditions after the outcome of a particular transaction is already known.

The Standard requires disclosures that explain how the transition from the previous basis of accounting to Australian Accounting Standards affected the entity’s reported financial position, financial performance and cash flows.

Application Date

The Standard applies to an entity if its first Australian-Accounting-Standards financial statements are for an annual reporting period beginning on or after 1 July 2009. Earlier application is permitted for annual reporting periods beginning on or after 1 January 2005 but before 1 July 2009.

Consultation Prior to Issuing this Standard

The AASB issued Exposure Draft ED 159 Proposed Improvements to Australian Accounting Standards in October 2007. The AASB’s ED reproduced the International Accounting Standards Board’s proposals in its 2007 Annual Improvements Project Exposure Draft, which included the proposed restructuring of the corresponding IASB Standard, IFRS 1 First-time Adoption of International Financial Reporting Standards.

The AASB Exposure Draft sought constituents’ views on the proposed amendments. Nine submissions were received in respect of the proposals in ED 159 and the six submissions commenting on the proposal to restructure AASB 1 supported the proposal.

A Regulation Impact Statement has not been prepared in connection with the issue of this Standard as the restructured Standard clarifies existing requirements and does not have a substantial direct or indirect impact on business or competition.