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Conceptual Framework and SPFS

The AASB is exploring how to introduce the IASB’s revised Conceptual Framework for Financial Reporting (RCF) into Australia and improve the consistency, comparability and transparency of financial reports prepared in accordance with Australian Accounting Standards (AAS).

To start this conversation, in May 2018 the AASB released a Consultation Paper which proposes a two-phased approach to apply the RCF in Australia and to address two key issues, the:

  1. reporting entity concept clash between what is in current Australian requirements versus what is in the IASB’s RCF
  2. special purpose financial statements (SPFS) problem, caused by Australia’s unique accounting requirements that allow entities to self-asses as ‘Reporting entities’ or not; and prepare free-form SPFS for entities who have self-assessed as ‘Nonreporting entities’.

The SPFS issues have resulted in vastly divergent reporting practices, additional risk for Directors, preparers and auditors and have been questioned for many years now by the AASB, regulators, the media and other key stakeholders.

AASB Research Reports have highlighted the inconsistent application of Statement of Accounting Concepts SAC 1 Definition of the Reporting Entity and the lack of trust and transparency caused by SPFS in all sectors of the Australian economy.

Have your say: AASB Roundtables – Enhancing financial reporting and replacing SPFS

To be held in September, these roundtables aim to obtain your views on the Phase 2: Medium-term approach, in particular your preference on which alternative Tier 2 General Purpose Financial Statement framework the AASB should pursue (refer to Specific Matters for Comments in the paragraph 26 of the Consultation Paper).

Further information and registration.

Have your say: AASB Surveys

We are currently asking constituents contribute to research that will feed into this project by completing (and sharing) the following surveys:

  • SURVEY: Users of for-profit financial statements
  • SURVEY: Preparers of financial statements (SPFS and GPFS – RDR)

For-Profit User and Preparer Survey Results

The report presents results of the for-profit User and Preparer survey. This Report contributes to the AASB’s project to simplify and improve the Australian Financial Reporting Framework.


AASB Material

AASB Consultation Paper: Invitation to Comment ITC 39 Applying the IASB’s Revised Conceptual Framework and Solving the Reporting Entity and Special Purpose Financial Statement Problems May 2018
7 Key Facts: Applying the revised Conceptual Framework in Australia May 2018
AASB Briefing: Replacing the reporting entity concept and removing the option for special purpose financial statements May 2018
Summary document: outline of feedback received during the May briefing sessions Jun 2018
AASB Staff FAQ Oct 2018
AASB Webinar: view the webinar and download the presentation Jun 2018
AASB Roundtable: Enhancing financial reporting and replacing Special Purpose Financial Statements – Phase 2 proposals Sep 2018
AASB Research Report No 1 Application of the Reporting Entity Concept and Lodgment of Special Purpose Financial Statements Jun 2014
AASB Research Report No 5 Financial Reporting Requirements Applicable to Charities Oct 2017
AASB Research Report No 6 Financial Reporting Requirements Applicable to Public Sector Entities May 2018
AASB Research Report No 7 Financial Reporting Requirements Applicable to ForProfit Private Sector Companies May 2018
AASB Discussion Paper: Improving Financial Reporting for Australian Charities Nov 2017
Appendices to Charity Discussion Paper Nov 2017
AASB Submission to ACNC Legislative Review Feb 2018
AASB Staff Paper: Comparison of Standards for Smaller Entities Apr 2018
Podcast: AASB Chair Kris Peach  issues around applying the IASB’s Revised Conceptual Framework and solving the reporting entity and special purpose financial statement problems – Accountants Daily (28 minutes) Jun 2018

Articles and opinion pieces

AASB Staff are aware of the following articles available in mainstream media that support the AASB’s proposals. This is not an exhaustive list, and the AASB is aware that this does not necessarily depict the full story. The AASB strongly encourages stakeholders to form their views on this topic based on the full range of research and empirical evidence available.

Standards update by David Hardidge, Technical Director, Queensland Audit Office Insights - Issue 1, Winter 2018 (pp 6-7) Aug 2018
The End is Nigh – No more special purpose financial statements (SPFS) for many entities' by Carmen Ridley, AASB Member, CaseWare May 2018
'Mid-tier flags ‘monumental’ financial reporting changes' by Jotham Lian, Accountants Daily May 2018
Big Four: guardians of the guards infiltrate the infiltrators by Michael West, May 2018
When everyone’s special, no one is by Ceri-Ann Ross, Reporting Leader – Chartered Accountants Australia and New Zealand, LinkedIn Mar 2018

If you would like to share an article or a report that addresses this topic, please email Justine Keenan, AASB Senior Project Manager via