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6 Sep. 2018

AASB Meeting: A shift in focus regarding the Conceptual Framework project

During the AASB meeting held on 5 September, the Board decided that proposals in ITC 39 will apply only to for-profit entities.

As foreshadowed in ITC 39, the approach to removing special purpose financial statements for not-for-profit (NFP) private sector entities is dependent on ACNC Legislation Review proposals, and discussions with the ACNC and state and territories about reporting requirements. As a result of feedback from the NFP sector and recent promising discussions with the ACNC and the other regulators, the AASB considers that the proposals in ITC 39 are most relevant to for-profit-entities only.

As a result, the AASB has elected to shift the focus of our September roundtables to purely cover the for-profit private sector.

While the Board’s aim to replace special purpose financial statements with a simple, comparable, proportionate, transparent financial reporting framework remains unchanged, the Board recognises the journey for NFP private sector entities will be very different to that of the for-profit private sector. In this regard, the Board will continue to extensively research optimal outcomes, collaborate with regulators, and regularly consult with NFP entities to ensure a simple and fair framework, and a smooth transition for NFP private sector entities. The impact of removing special purpose financial statements is more significant, there are more options to consider, and therefore a longer timeframe is needed to consider the best outcome for the NFP private sector.

A separate consultation document will be issued by the AASB in due course – with targeted proposals for NFP private sector entities.

The removal of special purpose financial statements is expected to have little impact in the NFP public sector. The AASB’s preference is to pursue financial reporting reform in the public sector via consultation based on the AASB Discussion Paper: Improving Financial Reporting for Australian Public Sector.