For many years, directors of most for-profit private entities have enjoyed the liberty of determining the type of financial statements they will prepare for an entity. The discretion to prepare an often much less detailed set of Special Purpose Financial Statements (SPSF) to meet their reporting requirements will soon be removed.
In March 2020, the Australian Accounting Standard Board (AASB) released 2 new financial reporting standards, AASB 2020-2 and AASB 1060, which apply for the financial years ending 30th June 2022. Early adoption is encouraged, with transactional relief available to entities that choose this option. Click here to review.
These standards have been adopted to bring Australian financial reporting standards within the framework of the International Financial Reporting Standards (IFRS). Improved transparency, comparability and consistency of financial statements are the primary drives behind these changes.
AASB 2020-2 removes the ability of for-profit entities with reporting requirements requiring compliance with Australian Accounting Standards to prepare SPSFs. These changes will affect:
- Large Proprietary companies* including grandfathered entities
- Unlisted public companies (other than companies limited by guarantees)
- Small foreign-controlled companies
- Australian Financial Services Licensees (AFSL)
- Small proprietary companies with crowd-sourced funding
- Trusts where the trust deed is created on or after 1st July 2021 and there is a requirement to preparer financial statements in accordance with AAS.
Are you prepared for these changes?
Feedback on responses received will be published in the next ebulletin.
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