Australian Additional Disclosures

This compiled Standard applies to annual periods beginning on or after 1 January 2020 that end before 30 June 2020. Earlier application is permitted for annual periods beginning on or after 1 January 2014 but before 1 January 2020. It incorporates relevant amendments made up to and including 21 November 2019.

Prepared on 2 March 2020 by the staff of the Australian Accounting Standards Board.

Compilation no. 3

Compilation date:  31 December 2019

Obtaining copies of Accounting Standards

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© Commonwealth of Australia 2020

This work is copyright.  Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission.  Requests and enquiries concerning reproduction and rights should be addressed to The National Director, Australian Accounting Standards Board, PO Box 204, Collins Street West, Victoria 8007.

Contents

Comparison with IFrs Standards

Accounting Standard

AASB 1054 Australian Additional Disclosures

from paragraph

Objective 1

Application 3

Reduced Disclosure Requirements 5A

Definitions 6

Compliance with Australian Accounting Standards 7

Reporting Framework 8

General Purpose or Special Purpose Financial Statements 9

Audit Fees 10

Imputation Credits 12

Reconciliation of Net Operating Cash Flow to Profit (Loss) 16

IFRS Standard Not Yet Issued in Australia 17

COMPILATION DETAILS

BASIS FOR CONCLUSIONS

BASIS FOR CONCLUSIONS ON AASB 2019-5

Australian Accounting Standard AASB 1054 Australian Additional Disclosures (as amended) is set out in paragraphs 1 – 17.  All the paragraphs have equal authority.  Paragraphs in bold type state the main principles.  AASB 1054 is to be read in the context of other Australian Accounting Standards, including AASB 1048 Interpretation of Standards, which identifies the Australian Accounting Interpretations, and AASB 1057 Application of Australian Accounting Standards.  In the absence of explicit guidance, AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies.

Comparison with IFRS Standards

AASB 1054 Australian Additional Disclosures includes disclosure requirements and definitions which are additional to International Financial Reporting Standards issued by the International Accounting Standards Board (IASB).

Compliance with AASB 1054 is not needed for IFRS compliance.

Accounting Standard AASB 1054

Australian Additional Disclosures

Objective

1                     The objective of this Standard is to set out Australian-specific disclosure requirements that are in addition to disclosure requirements in International Financial Reporting Standards.

Application

2                        [Deleted by the AASB]

3                        This Standard applies to annual reporting periods beginning on or after 1 July 2011.

[Note:  For application dates of paragraphs changed or added by an amending Standard, see Compilation Details.]

4                        This Standard, or individual disclosure requirements, may be applied to annual reporting periods beginning on or after 1 January 2005 but before 1 July 2011, provided that AASB 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project, or its relevant individual amendments, is also adopted early for the same period.  When an entity applies this Standard, or individual disclosure requirements, to such an annual reporting period, it shall disclose that fact.

5                        [Deleted by the AASB]

Reduced Disclosure Requirements

5A Paragraphs 10-17 of this Standard do not apply to entities preparing general purpose financial statements under Australian Accounting Standards – Reduced Disclosure Requirements. Entities applying Australian Accounting Standards – Reduced Disclosure Requirements may elect to comply with some or all of these excluded requirements.

5B The requirements that do not apply to entities preparing general purpose financial statements under Australian Accounting Standards – Reduced Disclosure Requirements are identified in this Standard by shading of the relevant text.

5C RDR paragraphs in this Standard apply only to entities preparing general purpose financial statements under Australian Accounting Standards – Reduced Disclosure Requirements.

Definitions

6                        The following terms are used in this Standard with the meanings specified.

Annual reporting period means the financial year or similar period to which annual financial statements relate.

Special purpose financial statements are financial statements other than general purpose financial statements.

Compliance with Australian Accounting Standards

7                        An entity whose financial statements comply with Australian Accounting Standards shall make an explicit and unreserved statement of such compliance in the notes.  An entity shall not describe financial statements as complying with Australian Accounting Standards unless they comply with all the requirements of Australian Accounting Standards.

RDR7.1 An entity whose financial statements comply with Australian Accounting Standards – Reduced Disclosure Requirements shall make an explicit and unreserved statement of such compliance in the notes.  An entity shall not describe financial statements as complying with Australian Accounting Standards – Reduced Disclosure Requirements unless they comply with all the requirements of Australian Accounting Standards – Reduced Disclosure Requirements.

Reporting Framework

8                        An entity shall disclose in the notes:

(a)                    the statutory basis or other reporting framework, if any, under which the financial statements are prepared; and

(b)                   whether, for the purposes of preparing the financial statements, it is a for-profit or not-for-profit entity.

General Purpose or Special Purpose Financial Statements

9                        An entity shall disclose in the notes whether the financial statements are general purpose financial statements or special purpose financial statements.

Audit Fees

Imputation Credits

Reconciliation of Net Operating Cash Flow to Profit (Loss)

IFRS Standard Not Yet Issued in Australia

Compilation details
Accounting Standard AASB 1054 Australian Additional Disclosures (as amended)

This compiled Standard applies to annual periods beginning on or after 1 January 2020 that end before 30 June 2020.  It takes into account amendments up to and including 21 November 2019 and was prepared on 2 March 2020 by the staff of the Australian Accounting Standards Board (AASB).

This compilation is not a separate Accounting Standard made by the AASB.  Instead, it is a representation of AASB 1054 (May 2011) as amended by other Accounting Standards, which are listed in the Table below.

Table of Standards

* The amendments made by this Standard are not included in this compilation, which presents the principal Standard as applicable to annual periods beginning on or after 1 January 2020 that end before 30 June 2020.

(a) Entities may elect to apply this Standard, or individual disclosure requirements, to annual reporting periods beginning on or after 1 January 2005 but before 1 July 2011, provided that AASB 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project, or the relevant individual amendments, is also applied to such periods.

(b) Entities may elect to apply this Standard to annual reporting periods beginning on or after 1 July 2009 but before 1 July 2013, provided that AASB 1053 Application of Tiers of Australian Accounting Standards, AASB 1054 Australian Additional Disclosures and AASB 2011-1 Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence Project are also applied to such periods.

(c) Entities may elect to apply this Standard to annual periods beginning on or after 1 January 2014 but before 1 July 2015.

(d) Entities may elect to apply this Standard to annual periods beginning before 1 January 2020.

Table of amendments

Basis for Conclusions

This Basis for Conclusions accompanies, but is not part of, AASB 1054.

Background

BC1               This Basis for Conclusions summarises the considerations of the Australian Accounting Standards Board and the Financial Reporting Standards Board (FRSB) of the New Zealand Institute of Chartered Accountants (NZICA) in reaching the conclusions in AASB 1054.  It also provides a context for the Boards’ decisions about harmonising the disclosure requirements.  It focuses on the issues that the Boards consider to be of greatest significance.  Individual Board members gave greater weight to some factors than to others.

Location of Additional Disclosures

BC2               The Boards discussed the merits of locating the additional domestic disclosure requirements in a separate disclosure standard compared with locating them within topic-based standards, which is the current practice.  Some members supported a separate disclosure standard largely on the basis that it would facilitate the topic-based standards being identical to International Financial Reporting Standards (IFRSs).  Other members expressed a preference for locating additional disclosures within topic-based standards for ease of use.  On balance, with the benefit of constituent responses to AASB ED 200B / FRSB ED 122 Proposed Separate Disclosure Standards, the Boards decided to locate the additional disclosures in separate disclosure standards on the basis that they view bringing the wording of Australian and New Zealand Standards closer to IFRSs as one of the greatest benefits of the Trans-Tasman Convergence project.

Definitions

BC3               The definition of ‘annual reporting period’ has been retained on the basis that it is used in application paragraphs of AASB Standards, consistent with terminology in the Australian Corporations Act 2001.

BC4               The definition of ‘special purpose financial statements’ has been retained on the basis that it is used in a disclosure requirement related to the AASB’s differential reporting framework.

Audit Fees

BC5               The AASB and the FRSB have relocated and amended the audit fee disclosure requirements contained in AASB 101 Presentation of Financial Statements and NZ IAS 1 Presentation of Financial Statements to their respective separate disclosure Standards and harmonised the disclosure requirements across both jurisdictions.

BC6               The AASB and the FRSB consider that the disclosure of audit fees is a matter of accountability and, given that the accountability environment is similar in both jurisdictions, they should have the same audit fee disclosure requirements.  The Boards also took the opportunity to simplify the disclosure requirements on the basis that in recent times both preparers and users have indicated that disclosures in financial statements have become overly complex.

BC7               The AASB and FRSB noted the usefulness of the notion of ‘related practice’ in audit fee disclosures in AASB 101 and decided to incorporate a similar notion that is common to both jurisdictions in the harmonised disclosures.  Accordingly, the Boards decided to include the notion of ‘network firm’ from APES 110 Code of Ethics for Professional Accountants issued by Accounting and Professional Ethical Standards Board (APESB) (February 2008) and Code of Ethics: Independence in Assurance Engagements issued by the NZICA (September 2008).  The Boards also decided not to define or provide explanatory material for ‘network firm’ on the basis that the notion is generally understood and preparers and auditors could refer to the relevant APESB and NZICA pronouncements.

BC8               The AASB and FRSB note that disclosures are made in the context of the scope of the entity reporting.  Accordingly, in the case of a group, disclosures made in accordance with paragraph 10 would include fees paid by the parent and its subsidiaries for each of the parent and its subsidiaries.

Imputation Credits

BC9               The AASB and the FRSB have relocated the imputation credit disclosure requirements contained in AASB 101 and NZ IAS 12 Income Taxes to their respective separate disclosure Standards and to harmonise the disclosure requirements across both jurisdictions.

BC10            The AASB and the FRSB noted that Australia and New Zealand are among a limited number of jurisdictions that have an imputation tax regime and acknowledge the decision usefulness of information about imputation credits to users of financial information.  Accordingly, the AASB and the FRSB decided that these disclosure requirements should be retained.

BC11            Given that both jurisdictions have disclosure requirements about imputation credits, and that the imputation regimes in each jurisdiction are highly similar, the Boards have harmonised the wording across both jurisdictions.  The Boards also took the opportunity to simplify the disclosure requirements on the basis that in recent times both preparers and users have indicated that disclosures in financial statements have become overly complex.

Reconciliation of Net Operating Cash Flow to Profit (Loss)

BC12            The AASB and the FRSB have relocated the requirement to disclose a reconciliation of net operating cash flow to profit or loss when an entity uses the direct method to present its statement of cash flows [that were contained in AASB 107 Statement of Cash Flows and NZ IAS 7 Statement of Cash Flows] to their respective separate disclosure standards and to harmonise the disclosure requirements across both jurisdictions.

BC13            The Boards, in forming the view to retain the requirement for a reconciliation of net operating cash flow to profit or loss, acknowledged the weight of comments received on AASB ED 200B / FRSB ED 122 from constituents who opposed the proposal to remove this requirement.

BC14            The Boards noted that the IASB has recently considered requiring a reconciliation of net operating cash flow to profit or loss in the context of its Financial Statement Presentation project.

Basis for Conclusions on AASB 2019-5

This Basis for Conclusions accompanies, but is not part of, AASB 1054.  The Basis for Conclusions was originally published with AASB 2019-5 Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards Not Yet Issued in Australia.

Introduction

BC1               This Basis for Conclusions summarises the Australian Accounting Standards Board’s considerations in reaching the conclusions in this Standard. It sets out the reasons why the Board developed the Standard, the approach taken to developing the Standard and the key decisions made. In making decisions, individual Board members gave greater weight to some factors than to others.

Reasons for issuing this Standard

BC2               In line with the Board’s Key Performance Indicators, when an IFRS Standard is issued by the International Accounting Standards Board (IASB), the Board aims to issue an equivalent Australian Accounting Standard within two months of the release of the IFRS Standard. The Board’s intention is that for-profit publicly accountable entities that comply with Australian Accounting Standards should be able to assert compliance with IFRS Standards.

BC3               The Board noted that, without these amendments, this would not be possible in a situation where an entity’s reporting date falls between the date of the IASB issuing an IFRS Standard and the AASB issuing the corresponding Australian Accounting Standard, as the AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors disclosure requirements would not apply in relation to that IFRS Standard. Under these circumstances, an entity would not be able to assert compliance with IFRS Standards unless it elected to make the disclosures set out in paragraphs 30 and 31 of AASB 108 in relation to that IFRS Standard.

BC4               The Board decided to add an additional disclosure requirement to AASB 1054 Australian Additional Disclosures requiring an entity that intends to comply with IFRS Standards to disclose the information in paragraphs 30 and 31 of AASB 108 on the potential effect on the entity’s financial statements of an IFRS Standard that has not yet been issued by the Board. This disclosure requirement will be particularly relevant to for-profit publicly accountable entities seeking IFRS compliance. Not-for-profit entities need not provide the disclosures if they are not able to or are not seeking to comply with IFRS Standards.

BC5               The disclosures set out in paragraphs 30 and 31 are not required of Tier 2 entities under Australian Accounting Standards – Reduced Disclosure Requirements. Similarly, these disclosures are not proposed to be required of Tier 2 entities in Exposure Draft ED 295 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities. Therefore, the Board decided it would be appropriate not to require Tier 2 entities to provide the disclosures in relation to new IFRS Standards not yet issued in Australia. Tier 2 entities preparing general purpose financial statements under the Reduced Disclosure Requirements will not be in compliance with IFRS Standards, and so such entities could not intend to comply with IFRS Standards. Although the disclosure requirement therefore would not apply to Tier 2 entities, the Board decided to make explicit the non-application to Tier 2 entities.

BC6               The Board also noted that the New Zealand equivalent of AASB 1054, Financial Reporting Standard FRS 44 New Zealand Additional Disclosures, has been amended similarly in relation to IFRS Standards that have not yet been issued in New Zealand. The AASB’s For-Profit Entity Standard-Setting Framework requires that, wherever possible, differences between accounting standards issued in Australia and New Zealand should be minimised to reduce costs for entities operating trans-Tasman.

Issue of Fatal-Flaw Review version

BC7               In October 2019, the Board issued a Fatal-Flaw Review version of the amendment for public comment with a two-week comment period. The Board decided to provide only a short comment period as it considered the matter was straightforward and not controversial. The Board received one submission on the Fatal-Flaw Review version. The Board considered the feedback received and decided that the proposed amending Standard did not require amendment and that further due process was not needed. Accordingly, the Board finalised the amending Standard to add the disclosure requirement to AASB 1054.