Federal Register of Legislation - Australian Government

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AASB 1031 - Materiality - December 2013

Authoritative Version
AASB 1031 Standards/Accounting & Auditing as made
This accounting standard makes cross-references to other Australian Accounting Standards and the Framework for the Preparation and Presentation of Financial Statements that contain guidance on materiality.
Administered by: Treasury
General Comments: When applied or operative, this Standard supersedes AASB 1031 Materiality (July 2004, as amended).
Exempt from sunsetting by the Legislation (Exemptions and Other Matters) Regulation 2015 s12 item 18
Registered 06 Feb 2014
Tabling HistoryDate
Tabled HR11-Feb-2014
Tabled Senate11-Feb-2014

Explanatory Statement

 

 

Accounting Standard AASB 1031
Materiality

December 2013

 

 

Australian Government - Australian Accounting Standards Board



EXPLANATORY STATEMENT

Reasons for Issuing AASB 1031

Australian Accounting Standards that apply to annual reporting periods beginning on or after 1 January 2005 incorporate International Financial Reporting Standards (IFRSs), which comprise Accounting Standards and Interpretations issued by the International Accounting Standards Board (IASB).  The adoption of IFRSs in Australia is in accordance with a strategic direction made by the Financial Reporting Council (FRC).

As noted in the Preface to AASB 1031 Materiality (July 2004), at the time AASB 1031 was issued the Framework for the Preparation and Presentation of Financial Statements contained limited guidance on materiality in comparison to AASB 1031.  Accordingly, as part of the AASB’s implementation of the FRC’s strategic direction, the AASB decided to retain AASB 1031, in a revised format, to ensure that the meaning of materiality remained well explained.

The AASB has a policy of not providing unnecessary local guidance on matters covered by IFRSs.  As a consequence, the AASB decided to withdraw AASB 1031 as was proposed in AASB Exposure Draft ED 243 Withdrawal of AASB 1031 Materiality.  In making its decision to withdraw AASB 1031, the AASB noted that it would not expect the withdrawal to change practice regarding the application of materiality in financial reporting.  In particular, the withdrawal of AASB 1031 would not change the level of disclosure presently specified by other accounting standards.

The withdrawal of AASB 1031 requires consequential amendments to all Australian Accounting Standards (including Interpretations) to remove references to AASB 1031.  Until all such references have been removed, revised AASB 1031 (December 2013) is an interim Standard that cross-references to other Standards and the Framework for the Preparation and Presentation of Financial Statements (as identified in AASB 1048 Interpretation of Standards)[1] (Framework) that contain guidance on materiality.  Once all the references to AASB 1031 have been removed from Standards, AASB 1031 (December 2013) will be withdrawn.

Main Features of AASB 1031

AASB 1031 (December 2013) supersedes the previous version of AASB 1031, issued in July 2004 (as amended).

Application Date

AASB 1031 is applicable to annual reporting periods beginning on or after 1 January 2014.  Early adoption is not permitted.

Main Requirements

AASB 1031 provides references to other Standards and the Framework that contain guidance on materiality.

Changes from AASB 1031 (July 2004, as amended)

AASB 1031 (December 2013) differs from AASB 1031 (July 2004, as amended) in that it removes the Australian guidance on materiality that is not available in IFRSs.  It also directs constituents to other Australian pronouncements that contain guidance on materiality.

 

Consultation Prior to Issuing AASB 1031 (December 2013)

In June 2013, as noted above, the AASB issued Exposure Draft ED 243 Withdrawal of AASB 1031 Materiality.

The AASB received a total of eight submissions from Australian constituents on ED 243.  The majority of submissions received were generally supportive of the proposals to withdraw AASB 1031.  The AASB considered comments made in the submissions in developing AASB 1031 as an interim standard, pending removal of references to AASB 1031 from all other standards – at which time AASB 1031 will be able to be formally withdrawn.

A Regulation Impact Statement has not been prepared specifically in connection with the issue of AASB 1031 as the amendments made do not have a substantial direct or indirect impact on business or competition, are of a minor or machinery nature or clarify existing requirements.

 

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011

Accounting Standard AASB 1031 Materiality

Overview of the Accounting Standard

AASB 1031 makes cross-references to other Australian Accounting Standards and the Framework for the Preparation and Presentation of Financial Statements (as identified in AASB 1048 Interpretation of Standard) that contain guidance on materiality.

AASB 1031 is an interim Standard pending the amendment of all other Standards (including Interpretations) to remove any references to AASB 1031.  Removal of those references will facilitate the withdrawal of AASB 1031.

Human Rights Implications

AASB 1031 is issued by the AASB in furtherance of the objective of facilitating the Australian economy.  It does not diminish or limit any of the applicable human rights or freedoms, and thus does not raise any human rights issues.

Conclusion

AASB 1031 is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 



[1]      AASB Framework for the Preparation and Presentation of Financial Statements was amended in December 2013.