Project Summary
(Last Updated: 10 March 2010)
The staff of the AASB have prepared this summary for information purposes only. The Board decisions described are tentative and do not change current accounting pronouncements unless otherwise indicated. Official positions of the AASB are determined only after extensive due process and deliberations. While this summary is occasionally updated, it does not provide a comprehensive review or statement of events and should not be treated as such.
PROJECT OUTLINE
Introduction and background
The Board considered a project proposal at its 29-30 July 2009 meeting and decided to undertake a project as described in the project outline (as at August 2009).
Since August 2009, the project plan included in the project outline has been revised in relation to Part 1 Phase 1 Service Performance Reporting. Here is the revised project plan (2 Feb 2010).
Given the broad scope of the project, it is broken down into a preliminary research stage and then the following Phases:
Phase 1: New financial and non-financial disclosures (including service performance reporting)
Phase 1 will explore what useful information is not currently required to be disclosed by private sector not-for-profit entities, and consider whether to develop requirements or other guidance to fill the gaps. Consideration will be given to relevant work being undertaken by the International Public Sector Accounting Standards Board and the New Zealand Financial Reporting Standards Board (FRSB). The work on service performance reporting will be undertaken jointly with New Zealand. Part 1 of Phase 1 will focus on service performance reporting. The implications of the Boards’ Differential Reporting project will need to be considered for service performance reporting.
Part 2 of Phase 1 will consider other disclosures that are not within the scope of service performance reporting. The timing of Part 2 is dependent on the outcome of the Part 1.
Phase 2: Assessment of existing disclosure requirements
Phase 2 will identify current disclosures that, on cost-benefit grounds, should be removed or re-oriented to meet private sector not-for-profit specific needs. The timing of Phase 2 is dependent on the outcome of Phase 1.
A Possible Phase 3: Presentation of private sector not-for-profit entity general purpose financial statements
OUTCOMES TO DATE AND MAJOR BOARD DECISIONS
Part 1 of Phase 1: Service Performance Reporting
At its September 2009 meeting, the Board considered a range of threshold issues pertinent to Part 1 of Phase 1 of the project – service performance reporting by private sector not-for-profit entities, for the purpose of identifying working assumptions upon which to develop the project. The Board tentatively decided that work should proceed on the assumption that service performance reports might comprise both financial and non-financial information of a quantitative or qualitative nature, and might include disaggregated/program financial information that is pertinent to an assessment of an entity’s service performance. The Board intends considering further whether information about service performance falls within the scope of general purpose financial statements.
At the joint AASB and NZ FRSB October 2009 meeting, the Boards noted their respective project work on Service Performance Reporting, including the range of entities that would be potentially affected. The scope of the AASB project is private sector not-for-profit entities whereas the scope of the FRSB project is public benefit entities (which include both the private and public sectors). The Boards discussed the potential benefits and challenges of working jointly, particularly in light of the different project scopes. The Boards observed that if the focus of the work were on developing general principles, the different scopes should not be an impediment to a joint project. Accordingly, staff have prepared a joint project plan, including a time line, considered by the Boards at their December 2009 meetings. The plan addresses ways to ensure the project is progressed efficiently and in a timely manner, and includes the use of a joint sub-committee undertaking a substantial amount of the review function and preliminary decision making, with the Boards being kept informed of progress throughout.
At its December 2009 meeting, the Board considered issues, including those raised by Project Advisory Panel members, relating to the Board’s ongoing consideration of service performance reporting. The Board decided to continue its work on service performance reporting albeit that the Conceptual Framework project has not yet addressed the broader questions of the scope of general purpose financial statements and financial reporting, but it will monitor the developments of that project. The Board also decided to adopt a working principle for constraining the type of information that the Board would consider requiring in service performance reports as: ‘service performance information that relates to an entity’s principal objectives’. It will consider the implications of that principle for matters such as the measurability and auditability of information that might be included in service performance reports, and the suitability of a through-the-eyes-of-management approach to identifying such information at a future meeting. The Board also observed that the principal objectives of not-for-profit entities and the needs of users in relation to those objectives are potentially different from the principal objectives of for-profit entities and their related users’ needs and, accordingly, decided that the current project should not include for-profit entities within its scope.
Details of decisions made to-date in relation to the specific issues relating to Part 1 of Phase 1 are available in the Board Minutes.
Part 2 of Phase 1: Other additional disclosures
Part 2 of Phase 1 has not commenced yet.
Phase 2: Assessment of existing disclosure requirements
Phase 2 has not commenced yet.
NEXT STEPS
The joint subcommittee will consider: (a) the features of service performance reports found in practice that might help in the development of comprehensive principles; and (b) the need for application guidance/illustrative examples.
CONTACT INFORMATION
Robert Keys, Deputy Technical Director
Tel: (03) 9617 7624
Email: rkeys@aasb.gov.au
BOARD MINUTES/ACTION ALERTS
For the Board decisions on the major conceptual and technical issues considered to date, refer to the following extracts of the approved Board minutes/Action Alerts:
2009: Action Alert 9-10 December; Minutes 28-29 October;Minutes 23-24 September; Minutes 29-30 July;
REFERENCES
Selected Board agenda papers made publicly available:
[Note: the following papers are provided as an historical record of the agenda papers made publicly available since the commencement of the project. They have not been updated to reflect subsequent developments or Board deliberations. They do not provide authoritative interpretations of existing pronouncements.]
References relating to Part 1 of Phase 1
Board Meetings
AASB meeting, 9 – 10 December 2009
Joint AASB FRSB meeting, 28 – 29 October 2009
AASB meeting, 23 – 24 September 2009
AASB meeting, 29 – 30 July 2009
Selected Items Sent to Project Advisory Panel
Mail out, 19 February 2010
Mail out, 17 November 2009
Selected Items Sent to Project Subcommittee
Mail out, 10 March 2010