{"id":"F2022L01041","name":"Accounting Standard AASB 2022-4 Amendments to Australian Accounting Standards – Disclosures in Special Purpose Financial Statements of Certain For-Profit Private Sector Entities","slug":"accounting-standard-aasb-2022-4-amendments-to-australian-accounting-standards-disclosures-in-special","collection":"legislative_instrument","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":102540,"registerId":"commonwealth-F2022L01041-current","compilationNumber":null,"startDate":"2026-04-03","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"Obtaining a copy of this Accounting Stan","sectionType":"part","heading":"Obtaining a copy of this Accounting Standard","content":"# Obtaining a copy of this Accounting Standard\n\nThis Standard is available on the AASB website: www.aasb.gov.au.\n\nAustralian Accounting Standards Board\n\nPO Box 204\n\nCollins Street West\n\nVictoria 8007\n\nAUSTRALIA\n\nPhone: (03) 9617 7600\n\nE-mail: standard@aasb.gov.au\n\nWebsite: www.aasb.gov.au","sortOrder":0},{"sectionNumber":"Other enquiries","sectionType":"part","heading":"Other enquiries","content":"# Other enquiries\n\nPhone: (03) 9617 7600\n\nE-mail: standard@aasb.gov.au\n\nCOPYRIGHT\n\n© Commonwealth of Australia 2022\n\nThis 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.\n\nISSN 1036-4803","sortOrder":1},{"sectionNumber":"Contents","sectionType":"part","heading":"Contents","content":"# Contents\n\nPreface\n\nAccounting Standard\n\nAASB 2022-4 Amendments to Australian Accounting Standards – Disclosures in Special Purpose Financial Statements of Certain For-Profit Private Sector Entities\n\nfrom paragraph\n\nObjective 1\n\nApplication 2\n\nAmendments to AASB 1054 5\n\nAmendments to AASB 1057 7\n\nCOMMENCEMENT OF THE LEGISLATIVE INSTRUMENT 8\n\nbASIS FOR CONCLUSIONS\n\nAustralian Accounting Standard AASB 2022-4 Amendments to Australian Accounting Standards – Disclosures in Special Purpose Financial Statements of Certain For-Profit Private Sector Entities is set out in paragraphs 1 – 8. All the paragraphs have equal authority.","sortOrder":2},{"sectionNumber":"Preface","sectionType":"part","heading":"Preface","content":"# Preface\n\n## Standards amended by AASB 2022-4\n\nThis Standard makes amendments to AASB 1054 Australian Additional Disclosures (May 2011) and AASB 1057 Application of Australian Accounting Standards (July 2015).\n\n## Main features of this Standard\n\nMain requirements\n\nThis Standard amends AASB 1054 and AASB 1057 in relation to for-profit private sector entities that are required only by their constituting document or another document (being a document created before 1 July 2021 and not amended on or after that date) to prepare financial statements that comply with Australian Accounting Standards. The amendments require that when such entities prepare special purpose financial statements that refer to Australian Accounting Standards, the financial statements include disclosures that inform users of the basis upon which those financial statements were prepared.\n\nIn particular, the amendments made to AASB 1054 by this Standard require the special purpose financial statements to:\n\n(a) disclose the basis on which the decision to prepare special purpose financial statements was made;\n\n(b) disclose information about the material accounting policies applied in the special purpose financial statements, including information about changes in those policies;\n\n(c) where the entity has interests in other entities – disclose whether or not its subsidiaries and investments in associates or joint ventures have been consolidated or equity accounted in a manner consistent with the requirements set out in AASB 10 Consolidated Financial Statements or AASB 128 Investments in Associates and Joint Ventures, as appropriate. If the entity has not consolidated its subsidiaries or equity accounted its investments in associates or joint ventures consistently with those requirements, also disclose the reasons why;\n\n(d) for each material accounting policy applied and disclosed in the financial statements that does not comply with all the recognition and measurement requirements in Australian Accounting Standards (except for AASB 10 and AASB 128) – disclose an indication of how it does not comply;\n\n(e) disclose whether or not the financial statements overall comply with all the recognition and measurement requirements in Australian Accounting Standards (except for AASB 10 and AASB 128); and\n\n(f) comply with the disclosure requirements in paragraphs 8 and 9 of AASB 1054 regarding the reporting framework and the type of financial statements.\n\nThe amendments to AASB 1057 ensure that the for-profit private sector entities addressed in this Standard are made subject to Australian Accounting Standards – explicitly only AASB 1054 (in addition to AASB 1057) – so that the relevant disclosure requirements in AASB 1054 are applicable to their special purpose financial statements that are required to comply with the Standards.\n\nApplication date\n\nThis Standard applies to annual periods ending on or after 30 June 2022. Earlier application is permitted.","sortOrder":3},{"sectionNumber":"Standards amended by AASB 2022-4","sectionType":"part","heading":"Standards amended by AASB 2022-4","content":"## Standards amended by AASB 2022-4\n\nThis Standard makes amendments to AASB 1054 Australian Additional Disclosures (May 2011) and AASB 1057 Application of Australian Accounting Standards (July 2015).","sortOrder":4},{"sectionNumber":"Main features of this Standard","sectionType":"part","heading":"Main features of this Standard","content":"## Main features of this Standard\n\nMain requirements\n\nThis Standard amends AASB 1054 and AASB 1057 in relation to for-profit private sector entities that are required only by their constituting document or another document (being a document created before 1 July 2021 and not amended on or after that date) to prepare financial statements that comply with Australian Accounting Standards. The amendments require that when such entities prepare special purpose financial statements that refer to Australian Accounting Standards, the financial statements include disclosures that inform users of the basis upon which those financial statements were prepared.\n\nIn particular, the amendments made to AASB 1054 by this Standard require the special purpose financial statements to:\n\n(a) disclose the basis on which the decision to prepare special purpose financial statements was made;\n\n(b) disclose information about the material accounting policies applied in the special purpose financial statements, including information about changes in those policies;\n\n(c) where the entity has interests in other entities – disclose whether or not its subsidiaries and investments in associates or joint ventures have been consolidated or equity accounted in a manner consistent with the requirements set out in AASB 10 Consolidated Financial Statements or AASB 128 Investments in Associates and Joint Ventures, as appropriate. If the entity has not consolidated its subsidiaries or equity accounted its investments in associates or joint ventures consistently with those requirements, also disclose the reasons why;\n\n(d) for each material accounting policy applied and disclosed in the financial statements that does not comply with all the recognition and measurement requirements in Australian Accounting Standards (except for AASB 10 and AASB 128) – disclose an indication of how it does not comply;\n\n(e) disclose whether or not the financial statements overall comply with all the recognition and measurement requirements in Australian Accounting Standards (except for AASB 10 and AASB 128); and\n\n(f) comply with the disclosure requirements in paragraphs 8 and 9 of AASB 1054 regarding the reporting framework and the type of financial statements.\n\nThe amendments to AASB 1057 ensure that the for-profit private sector entities addressed in this Standard are made subject to Australian Accounting Standards – explicitly only AASB 1054 (in addition to AASB 1057) – so that the relevant disclosure requirements in AASB 1054 are applicable to their special purpose financial statements that are required to comply with the Standards.\n\nApplication date\n\nThis Standard applies to annual periods ending on or after 30 June 2022. Earlier application is permitted.","sortOrder":5},{"sectionNumber":"Accounting Standard AASB 2022-4","sectionType":"part","heading":"Accounting Standard AASB 2022-4","content":"# Accounting Standard AASB 2022-4\n\nThe Australian Accounting Standards Board makes Accounting Standard AASB 2022-4 Amendments to Australian Accounting Standards – Disclosures in Special Purpose Financial Statements of Certain For-Profit Private Sector Entities under section 334 of the Corporations Act 2001.\n\n| | Keith Kendall |\n| ------------------ | ------------- |\n| Dated 23 June 2022 | Chair – AASB |","sortOrder":6},{"sectionNumber":"Objective","sectionType":"part","heading":"Objective","content":"## Objective\n\n1 This Standard amends AASB 1054 Australian Additional Disclosures (May 2011) and AASB 1057 Application of Australian Accounting Standards (July 2015) in relation to certain for-profit private sector entities that are required only by their constituting document or another document to prepare financial statements that comply with Australian Accounting Standards. Where those entities prepare special purpose financial statements, the amendments require disclosure of specified information. In particular, this Standard amends:\n\n(a) AASB 1054, to require disclosure of particular information about the special purpose financial statements, including information that enables users of the financial statements to understand the material accounting policies applied in the financial statements, changes in those policies and whether or not the policies comply with all the recognition and measurement requirements in Australian Accounting Standards; and\n\n(b) AASB 1057, to extend the set of entities to which AASB 1057 and AASB 1054 apply. This is necessary in order to give effect to the amendments described in paragraph (a).","sortOrder":8},{"sectionNumber":"Application","sectionType":"part","heading":"Application","content":"## Application\n\n2 The amendments set out in this Standard apply to entities and financial statements in accordance with the application of AASB 1054 and AASB 1057.\n\n3 This Standard applies to annual periods ending on or after 30 June 2022. This Standard may be applied to annual periods ending before 30 June 2022.\n\n4 This Standard uses underlining, striking out and other typographical material to identify some of the amendments to AASB 1057, in order to make the amendments more understandable. However, the amendments made by this Standard do not include that underlining, striking out or other typographical material. Amended paragraphs are shown with deleted text struck through and new text underlined. Ellipses (…) are used to help provide the context within which amendments are made and also to indicate text that is not amended.","sortOrder":9},{"sectionNumber":"Amendments to AASB 1054","sectionType":"part","heading":"Amendments to AASB 1054","content":"## Amendments to AASB 1054\n\n5 Paragraphs 2, 9C and 9D are added as follows:\n\n2 The following table identifies the disclosure requirements that, in accordance with this Standard, apply to each type of entity to which this Standard applies:\n\n```html\n

Type of entity to which the paragraph is applicable

Subject of paragraphs

Paragraph numbers

Entities preparing general purpose financial statements

For-profit entities and not-for-profit entities, whether in the private sector or the public sector

Compliance with Australian Accounting Standards

7

Reporting framework

8

General purpose or special purpose financial statements

9

Audit fees

10, 11

Imputation credits

12-15

Operating cash flow reconciliation

16

IFRS Standard not yet issued in Australia

17

Entities preparing special purpose financial statements

For-profit private sector entities required only by their constituting document or another document (created before 1 July 2021 and not amended on or after that date) to prepare financial statements that comply with Australian Accounting Standards

Reporting framework

8

General purpose or special purpose financial statements

9

Information about special purpose financial statements

9C, 9D

Not-for-profit private sector entities required to comply with this Standard

Compliance with Australian Accounting Standards

7

Reporting framework

8

General purpose or special purpose financial statements

9

Information about special purpose financial statements

9A, 9B

Audit fees

10, 11

Imputation credits

12-15

Operating cash flow reconciliation

16

IFRS Standard not yet issued in Australia

17

\n```\n\n…\n\nGeneral Purpose or Special Purpose Financial Statements\n\n…\n\nInformation about special purpose financial statements\n\n…\n\n9C The special purpose financial statements of a for-profit private sector entity that is required only by its constituting document or another document (created before 1 July 2021 and not amended on or after that date) to prepare financial statements that comply with Australian Accounting Standards shall:\n\n(a) disclose the basis on which the decision to prepare special purpose financial statements was made;\n\n(b) disclose the following about the material accounting policies applied in the special purpose financial statements, if not already required by another Australian Accounting Standard:\n\n(i) the measurement basis (or bases) applied in preparing the special purpose financial statements; and\n\n(ii) the other accounting policies applied that are relevant to an understanding of the special purpose financial statements;\n\n(c) when a change in a material accounting policy has an effect on the current period or any prior period, disclose the following, if not already required by another Australian Accounting Standard:\n\n(i) the nature of the change in accounting policy;\n\n(ii) the reasons why applying the new accounting policy provides reliable and more relevant information;\n\n(iii) to the extent practicable, the amount of the adjustment for each financial statement line item affected, shown separately:\n\n(A) for the current period;\n\n(B) for each prior period presented; and\n\n(C) in the aggregate for periods before those presented; and\n\n(iv) an explanation if it is impracticable to determine the amounts to be disclosed under paragraph (iii).\n\nFinancial statements of subsequent periods need not repeat these disclosures;\n\n(d) where the entity has interests in other entities – disclose whether or not its subsidiaries and investments in associates or joint ventures have been consolidated or equity accounted in a manner consistent with the requirements set out in AASB 10 Consolidated Financial Statements or AASB 128 Investments in Associates and Joint Ventures, as appropriate. If the entity has not consolidated its subsidiaries or equity accounted its investments in associates or joint ventures consistently with those requirements, it shall also disclose the reasons why that is the case;\n\n(e) for each material accounting policy applied and disclosed in the financial statements that does not comply with all the recognition and measurement requirements in Australian Accounting Standards (except for AASB 10 and AASB 128), disclose an indication of how it does not comply; and\n\n(f) disclose whether or not the financial statements overall comply with all the recognition and measurement requirements in Australian Accounting Standards (except for AASB 10 and AASB 128).\n\n9D Implementation guidance and illustrative examples for certain for-profit private sector entities accompanies this Standard. It illustrates the application of the requirements in paragraph 9C.\n\n6 Implementation guidance and illustrative examples for certain for-profit private sector entities is attached to accompany AASB 1054 as set out on pages 9 to 14.","sortOrder":10},{"sectionNumber":"Amendments to AASB 1057","sectionType":"part","heading":"Amendments to AASB 1057","content":"## Amendments to AASB 1057\n\n7 Paragraphs 2 and 7 are amended (new text is underlined, deleted text is struck through) and paragraph 18A is added as follows:\n\n2 This Standard applies to:\n\n(a) each entity that is required to prepare financial reports in accordance with Part 2M.3 of the Corporations Act;\n\n(b) general purpose financial statements of each not-for-profit reporting entity;\n\n(c) each entity that elects to prepare financial statements that are, or are held out to be, general purpose financial statements;\n\n(d) financial statements of General Government Sectors (GGSs) prepared in accordance with AASB 1049 Whole of Government and General Government Sector Financial Reporting;\n\n(e) for-profit private sector entities that are required by legislation\\* to prepare financial statements that comply with either Australian Accounting Standards or accounting standards; and\n\n(f) other for-profit private sector entities that are required only by their constituting document or another document to prepare financial statements that comply with Australian Accounting Standards, provided that the relevant document was created or amended on or after 1 July 2021.\n\n\\* References in this Standard to ‘legislation’ mean legislation of a government in Australia.\n\n…\n\n7 Except as specified in paragraph 20C, AASB 101 Presentation of Financial Statements, AASB 107 Statement of Cash Flows, AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, and AASB 1048 Interpretation of Standards and AASB 1054 Australian Additional Disclosures apply to:\n\n(a) each not-for-profit entity that is required to prepare financial reports in accordance with Part 2M.3 of the Corporations Act;\n\n(b) general purpose financial statements of each not-for-profit entity that is a reporting entity;\n\n(c) each entity that elects to prepare financial statements that are, or are held out to be, general purpose financial statements;\n\n(d) for-profit private sector entities that are required by legislation to prepare financial statements that comply with either Australian Accounting Standards or accounting standards; and\n\n(e) other for-profit private sector entities that are required only by their constituting document or another document to prepare financial statements that comply with Australian Accounting Standards, provided that the relevant document was created or amended on or after 1 July 2021.\n\n…\n\n18A AASB 1054 Australian Additional Disclosures applies to:\n\n(a) each not-for-profit entity that is required to prepare financial reports in accordance with Part 2M.3 of the Corporations Act;\n\n(b) general purpose financial statements of each not-for-profit entity that is a reporting entity;\n\n(c) each entity that elects to prepare financial statements that are, or are held out to be, general purpose financial statements;\n\n(d) for-profit private sector entities that are required by legislation to prepare financial statements that comply with either Australian Accounting Standards or accounting standards; and\n\n(e) other for-profit private sector entities that are required only by their constituting document or another document to prepare financial statements that comply with Australian Accounting Standards.","sortOrder":11},{"sectionNumber":"Commencement of the legislative instrume","sectionType":"part","heading":"Commencement of the legislative instrument","content":"## Commencement of the legislative instrument\n\n8 For legal purposes, this legislative instrument commences on 29 June 2022.","sortOrder":12},{"sectionNumber":"Outcome of ED 302","sectionType":"part","heading":"Outcome of ED 302","content":"## Outcome of ED 302\n\nBC30 Following the consultation period, and after considering stakeholder comments, the Board decided to proceed with the proposals in ED 302, but with some significant changes. The Board’s bases for the proposals it decided to retain are articulated in the Basis for Conclusions accompanying ED 302, and are summarised here in paragraphs BC3-BC27. Accordingly, as noted in paragraph BC2(b), after providing an overview of the feedback received on ED 302, the remainder of this Basis for Conclusions focuses primarily on the significant proposals in ED 302 that the Board decided to change, and the rationale for doing so. It also addresses some issues raised by respondents to ED 302 that, although they did not give rise to changes to the proposals, warrant further explanation.\n\nFeedback from respondents on ED 302\n\nBC31 The Board received 13 formal comment letters on ED 302, with a mix of views from respondents.\n\nBC32 A number of respondents expressed concern that the cost of implementing the ED 302 proposals would exceed any benefits. This was particularly the case for those for-profit private sector entities with a legislative requirement to comply with AAS, given the proposals for these entities were proposed to be effective from 1 July 2020 and therefore would apply for only one year. This was because, as noted above, the amendments in AASB 2020-2 removed the ability of these entities to prepare SPFS for annual reporting periods beginning on or after 1 July 2021.\n\nBC33 A number of respondents also expressed concern that the proposed effective date of 1 July 2020 would provide insufficient time for entities to prepare for the new requirements. Furthermore, some respondents suggested delaying the proposed effective date to align with the operative date of AASB 2020-2. This would effectively exclude entities with a legislative requirement to comply with AAS from the scope of the proposals as well.\n\nBC34 The Board considered this feedback and decided, for the reasons noted in paragraphs BC38 and BC39, it was appropriate to delay the effective date of the final amendments and in doing so exclude those entities with a legislative requirement to comply with AAS or accounting standards from the scope of the Standard.\n\nBC35 Other significant matters considered by the Board in making this and other decisions are addressed below.\n\nScope\n\nBC36 The Board decided this Standard should apply only to those for-profit private sector entities required only by their constituting document or another document to prepare financial statements that comply with AAS, provided the relevant document was created before 1 July 2021 and not amended on or after that date. In paragraph BC85 of the Basis for Conclusions on AASB 2020-2, the Board explained that these entities were excluded from the scope of AASB 2020-2 and therefore permitted to continue preparing SPFS because they prepare financial statements for specific users, have no external regulator and the financial statements are not lodged on the public record. However, the Board remained concerned about the lack of transparency of SPFS that continue to refer to AAS. As a result, to help ensure users are adequately informed, it came to the view the SPFS of these entities should be required to disclose information about the extent of their compliance or otherwise with the R&M requirements in AAS. In addition, the Board noted anecdotally there would be some types of entities, such as securitised trading trusts, outside the scope of AASB 2020-2 (and therefore permitted to continue preparing SPFS) but lodging SPFS on the public record that are required only by their constituting document or another document to comply with AAS. Accordingly, in the absence of this Standard, there would be publicly available SPFS that do not necessarily specify whether or not they comply with R&M requirements of AAS, despite being required by a constituting or other document to comply with AAS. The Board was concerned this would not satisfy the needs of users.\n\nBC37 The Board also considered whether to broaden the scope of the requirements in this Standard to other entities that are not currently within the application paragraphs of AAS set out in AASB 1057, such as entities voluntarily preparing SPFS or entities preparing SPFS due to a requirement in their constituting document or another document to present a ‘true and fair view’ or to comply with ‘GAAP’ (whether generally accepted accounting principles or generally accepted accounting practices), without those terms being explicitly defined or specified as AAS. However, the Board decided the scope of this Standard should not include such entities for the same reasons it did not include them in the application paragraphs of AAS (see paragraph BC79 of the Basis for Conclusions on AASB 2020-2).\n\nBC38 As noted in paragraph BC34, the Board decided to exclude from the scope of this Standard for-profit private sector entities required by legislation to prepare financial statements that comply with either AAS or accounting standards (ie entities within the scope of AASB 2020-2). This acknowledges what would otherwise be a short-term effect of the proposals in ED 302 for these entities, caused by delays in the issue of this Standard due to the COVID-19 pandemic’s impact on the Board’s work program. The Board noted that, at the time of issuing ED 302, the implications of COVID-19 could not have been predicted. The basis for this decision is consistent with the reason for the earlier decision to exclude for-profit private sector entities from the scope of AASB 2019-4 (see paragraph BC47 of the Basis for Conclusions on AASB 2019-4).\n\nBC39 The Board concluded that excluding these entities from this Standard would allow them to use the extra time to prepare for transitioning to GPFS in accordance with AASB 2020-2 and it would be a reasonable and pragmatic way of providing some resource relief during the pandemic. The Board also concluded excluding these entities would have a limited adverse effect on users and, on that basis, the Board accepted the practical arguments expressed by some stakeholders that the introduction of new disclosure requirements for these entities would add unreasonable incremental time to prepare and audit SPFS for years ending on or after 30 June 2021.\n\nDisclosure regarding the reporting framework and whether the financial statements are general purpose or special purpose\n\nBC40 In addition to the proposed disclosure requirements in ED 302 that the Board decided to incorporate into this Standard, as noted in paragraph BC15(d), the Board considered whether selected pre-existing disclosure requirements in AASB 1054 should be required of entities within the scope of this Standard. In particular, the Board considered whether paragraphs 8 and 9 of AASB 1054 (relating to disclosure of the reporting framework under which the financial statements are prepared and whether the financial statements are SPFS or GPFS) should be required. As part of its consideration, the Board noted similar disclosures required by AASB 2019-4 apply only to not-for-profit private sector entities that were already within the scope of AASB 1054, whereas the scope of this Standard includes entities not previously within the scope of AASB 1054\\. Despite this, the Board concluded paragraphs 8 and 9 of AASB 1054 are consistent with the objective of this Standard and help describe the basis of accounting. Accordingly, the Board decided paragraphs 8 and 9 of AASB 1054 would provide useful information at minimal cost as this information is expected to be readily available to an entity. The Board further noted that in order to make the disclosure required by paragraph 9C(a) of AASB 1054 (ie “to disclose the basis on which the decision to prepare SPFS was made”), the information that is the subject of paragraphs 8 and 9 of AASB 1054 would need to be considered by the entity anyway.\n\nDisclosure regarding accounting policies for joint operations\n\nBC41 Some respondents to ED 302 expressed a view that joint operations within the scope of AASB 11 Joint Arrangements should be excluded from the requirement to disclose overall compliance with R&M requirements. They argued this by analogy with how ED 302 proposed dealing with disclosures about an entity’s accounting policies relating to subsidiaries, associates and joint ventures. The Board concluded that an exclusion for joint operations (in addition to the exclusion for subsidiaries, associates and joint ventures) is not required and would not be appropriate. This is because paragraph 20 of AASB 11 requires a joint operator, being the entity preparing the financial statements (whether consolidated or unconsolidated), to recognise its share of the assets, liabilities, revenue and expenses in a joint operation – and therefore it is clearly an R&M requirement. The Board also noted paragraph 21 of AASB 11 clarifies that the requirements relating to the entity’s share of those amounts are accounted for in accordance with the requirements (including R&M) of other relevant AAS. The definition of a joint operation also confirms this, on the basis that it refers to the entity’s rights and obligations to the assets and liabilities. Therefore, non-compliance with AASB 11 as it applies to joint operations would be a clear non-compliance with R&M requirements in AAS.\n\nBC42 Given the nature of joint operations, their accounting treatment is fundamentally different from that of subsidiaries, associates and joint ventures. As such, it would be inappropriate to also exclude them from the overall R&M disclosure required by this Standard, potentially implying they are not R&M requirements. The Board also noted that paragraphs 9C(e) and 9C(f) of this Standard are consistent with paragraph 9C(d), which also does not refer to AASB 11.\n\nDisclosure regarding subsidiaries, investments in associates or investments in joint ventures\n\nBC43 The Board considered whether an entity that has no subsidiaries, investments in associates or investments in joint ventures should be required to make an explicit statement to this effect. The Board had considered the same issue in the context of not-for-profit private sector entities in the development of AASB 2019-4. At that time the Board noted entities preparing either Tier 1 or Tier 2 GPFS are not required to make such a statement. Consistent with that, the Board decided an explicit statement would not be required in SPFS of not-for-profit private sector entities, as noted in paragraph BC30 of the Basis for Conclusions on AASB 2019-4. The Board also noted that, in any event, users of financial statements could reasonably be expected to be able to discern from the absence of the other disclosures (eg paragraph 9C(d) of AASB 1054, which results in disclosures only when the entity has interests in other entities) that the entity has no subsidiaries or interests in associates or joint ventures. Therefore, the Board concluded that an explicit statement for entities within the scope of this Standard should not be required.\n\nDisclosures regarding compliance with all the R&M requirements in AAS\n\nBC44 The Board noted the view that the disclosure requirement in paragraph 9C(f) of this Standard – overall compliance with R&M requirements in AAS – is redundant given the disclosure requirement in paragraph 9C(e) about each material accounting policy that does not comply with AAS R&M requirements. In response, the Board noted that, like AASB 2019-4, this Standard follows a two-step approach (first paragraph 9C(e) and then paragraph 9C(f)) to assessing and disclosing compliance or otherwise with the R&M requirements in AAS (other than AASB 10 and AASB 128). This approach is designed to minimise the burden associated with preparing the disclosures by having entities assess first whether or not their material accounting policies comply with AAS R&M requirements, and then whether the financial statements overall comply with AAS R&M requirements. If all material accounting policies comply with AAS R&M requirements, there is no disclosure to be made under paragraph 9C(e), which is why paragraph 9C(f) is useful as a way to make clear to users the financial statements do in fact comply with all R&M requirements. Although the Board noted AAS usually only require an entity to disclose where they have not complied with AAS requirements, in this case requiring an entity to disclose it has complied is useful for users and is not an onerous requirement. Furthermore, without paragraph 9C(f), if an entity has one or more instances of material non-compliance with R&M requirements, without disclosing overall non-compliance it may not be readily evident to users that this is the case.\n\nBC45 The Board reaffirmed its decision to not provide entities within the scope of this Standard an option to state they have not assessed compliance with certain AAS requirements. The Board noted the contrary view that allowing a ‘not assessed’ option might be a means of responding to cost/benefit concerns expressed by respondents to ED 302, whilst still providing useful information that would put users on notice that the financial statements might not comply with all the R&M requirements in AAS. However, consistent with the reasons in paragraph BC25 and the fact the Board had not identified any new arguments in the responses to ED 302, the Board did not accept that contrary view. The Board also noted deferral of the effective date as mentioned in paragraph BC51 would provide entities with sufficient time to consider any possible complexities or challenges in making the disclosures, and therefore the ‘not assessed’ option was not warranted.\n\nDisclosures regarding omitted AAS disclosures\n\nBC46 Some respondents to ED 302 expressed a view the disclosure requirements in this Standard should be expanded to require an entity’s SPFS to identify AAS where it has elected to omit material disclosures that would otherwise be included in GPFS in accordance with those AAS. For example, where the entity elects to not disclose related party transactions, it should be required to disclose its election not to make any disclosures under AASB 124 Related Party Disclosures. The Board considered that while disclosures regarding omitted AAS disclosures might be useful for users of SPFS, the scope of this Standard and the related amendments are aimed at increasing the transparency and comparability of SPFS in relation to compliance with the R&M requirements in AAS rather than AAS disclosure requirements. The Board also noted this matter was previously considered as part of the feedback received on ED 293 and the Board decided against requiring additional AAS disclosures as it was beyond the scope of the project that resulted in AASB 2019-4. Consistent with AASB 2019-4, the Board considered matters relating to omitted disclosures are beyond the scope of the project that resulted in this Standard.\n\nOther issues\n\nConsistency with the Standard-Setting Framework\n\nBC47 Some respondents to ED 302 expressed a view that a Standard based on the proposals would contradict The AASB’s For-Profit Entity Standard-Setting Framework (the Framework), and therefore this Standard should not be issued. This was on the basis that the Framework states “the AASB currently does not set recognition and measurement requirements for SPFS. This is because SPFS should only be prepared where users can tailor the SPFS to their own information needs and therefore do not need a standard-setter or regulator to specify the accounting policies or require disclosure of the information for them.”\n\nBC48 The Board considered this view in light of its decision relating to disclosures in SPFS of not-for-profit private sector entities as reflected in AASB 2019-4. The Board acknowledged that the appropriateness of the justifications noted in the Basis for Conclusions on AASB 2019-4 (in particular paragraph BC40) for rejecting these respondents’ views are less apparent for entities within the scope of this Standard, but nonetheless concluded this Standard is justifiable under the Framework. The Framework notes the Board does not set R&M requirements for SPFS. In this Standard, the Board is adding limited disclosure requirements for SPFS, in the same way as it did for not-for-profit private sector entities under AASB 2019-4. This Standard does not set R&M requirements for SPFS.\n\nOverall justification for this Standard\n\nBC49 In deciding to issue this Standard, the Board noted the anecdotal feedback it had received that this Standard is unreasonable because many references to AAS historically were included in the constituting documents of entities without those entities having a full appreciation of the implications of the reference being ambulatory rather than static. However, the Board concluded this Standard is justified for the reasons indicated in paragraphs BC3-BC12 and on the basis the Board’s acknowledgement of the history of AAS references in constituting documents is the main reason the Board decided on only contextual disclosures for SPFS rather than requiring a more onerous transition to GPFS by entities within the scope of the Standard. Furthermore, overall, the Board concluded the requirements in this Standard are commensurate with the evidence from the research outlined in paragraphs BC5-BC8. Additional research would unduly delay the project and would only be justified if the requirements were to be more onerous, such as mandating R&M requirements.\n\nBC50 Paragraph 18 of the AASB For-Profit Entity Standard-Setting Framework (July 2021) states: “Enforcement of the preparation of financial statements and compliance with Accounting Standards is the responsibility of other regulators ... It is not the responsibility of the AASB.” Consistent with that, the Board noted its role and expertise in relation to this Standard is to determine the appropriate accounting framework and accounting standards that should apply where financial statements are required by constituting or other documents to comply with AAS. Requiring additional disclosures in SPFS to provide greater transparency and comparability regarding compliance with the R&M requirements in AAS is consistent with this role.","sortOrder":13},{"sectionNumber":"Effective date","sectionType":"part","heading":"Effective date","content":"## Effective date\n\nBC51 The Board initially decided this Standard should be effective for annual reporting periods beginning on or after 1 July 2021, with earlier application permitted. This effectively deferred the proposed operative date by 12 months. In making this decision the Board acknowledged anecdotal feedback that some issues faced by small entities within the scope of this Standard might be more complex than originally thought. After the issuance of ED 302, the Board became aware that in some instances, for example when applying AASB 15 Revenue from Contracts with Customers or AASB 119 Employee Benefits, it may be difficult for smaller entities to determine whether they are complying with the R&M requirements in AAS, such as an entity calculating employee benefits (eg long service leave) when they have staff with long tenure.\n\nBC52 Consistent with the Board’s view in paragraph BC34, the Board concluded deferring the proposed operative date by 12 months (with early adoption allowed) would give entities within the scope of this Standard enough time to prepare for the implementation of the disclosures. It would also be a way for the Board to address the fact that the economic impact of COVID-19 has been significant, is ongoing, and could not have been predicted when issuing ED 302 and proposing an operative date.\n\nBC53 Given subsequent delays in finalising this Standard, the Board revised the operative date to periods ending on or after 30 June 2022, which in substance covers the same periods as periods beginning on or after 1 July 2021. Short periods beginning on or after 1 July 2021 and ending before 30 June 2022 would not be covered, but these would be very unusual and therefore of limited significance in aggregate. Earlier application is permitted.","sortOrder":14}],"analysis":{"kimi_summary":{"content_quality":"ok","complexity_score":6,"scope_assessment":{"changed":false,"description":"The legislation maintains a narrow, targeted scope focused specifically on for-profit private sector entities with pre-1 July 2021 constituting document requirements. The Board explicitly rejected expanding the scope to include entities voluntarily preparing SPFS or entities with 'true and fair view' or 'GAAP' requirements without explicit AAS references. The scope was actually narrowed from the original exposure draft (ED 302) by excluding entities with legislative requirements to comply with accounting standards, but this represents a refinement rather than scope creep — the fundamental purpose of increasing transparency for SPFS users remains unchanged."},"complexity_factors":["Multiple cross-references to other accounting standards (AASB 1054, AASB 1057, AASB 10, AASB 128, AASB 11, AASB 101, AASB 107, AASB 108, AASB 1048, AASB 2020-2, AASB 2019-4)","Complex scope criteria involving three conditions: (1) for-profit private sector, (2) required only by constituting document (not legislation), (3) document created before 1 July 2021 and not amended on or after that date","Nested conditional logic in disclosure requirements (e.g., paragraph 9C(d) requires disclosure of whether consolidation was consistent with standards, and if not, reasons why)","Distinction between 'recognition and measurement' requirements versus disclosure requirements, with specific exclusions for AASB 10 and AASB 128","Detailed table mapping entity types to specific paragraph requirements","Extensive Basis for Conclusions (BC paragraphs) explaining rationale for scope decisions, effective dates, and rejected alternatives","Interaction with previous standards (AASB 2020-2 and AASB 2019-4) creating a layered regulatory history","Specific effective date mechanics (annual periods ending on or after 30 June 2022 vs beginning on or after 1 July 2021)"],"plain_english_summary":"This accounting standard requires certain for‑profit private entities whose pre‑1 July 2021 constituting documents force them to prepare special purpose financial statements (SPFS) to disclose their basis of preparation, the accounting policies used and whether those policies meet Australian Accounting Standards’ recognition and measurement requirements, how subsidiaries/associates were accounted for, and any departures from the standards.\n\nIt closes a transparency gap so users can see if SPFS truly comply; entities already covered by other legislation or with constituting documents from 1 July 2021 onwards are excluded."},"flash_summary":{"complexity_score":6,"scope_assessment":{"changed":false,"description":"The Standard remains focused on adding disclosure requirements for special purpose financial statements of a specific subset of for‑profit private sector entities — i.e. those required only by a constituting or other document (created before 1 July 2021 and not amended on/after that date) to comply with AAS (see paragraph 1 and 9C). It did not grow beyond that original objective; rather, compared with the Exposure Draft and related work stream, the Board narrowed scope in key respects (notably excluding entities required by legislation to comply with AAS and deferring the effective date for practical relief — see BC34–BC39 and BC51–BC53). The final instrument therefore tightens and clarifies the subset of entities in scope, but does not expand the Standard’s fundamental purpose of requiring contextual disclosures for SPFS."},"complexity_factors":["Multiple cross‑references to other Standards (AASB 1054, AASB 1057, AASB 10, AASB 11, AASB 28) increasing interpretive complexity","Conditional scope language tied to dates and document status (constituting or other document created before 1 July 2021 and not amended on/after that date) — nested condition (paragraph 9C and paragraph 2 table)","New multi‑part disclosure obligations with nested requirements (paragraphs 9C(a)–(f); especially 9C(c) with four sub‑requirements including impracticability exception)","Amendments across multiple instruments (adds paragraphs to AASB 1054 and AASB 1057; adds new paragraph 18A)","Implementation guidance and illustrative examples attached (paragraph 9D and pages 9–14) that must be read with the Standard","Exclusions and exceptions (notably exclusion of AASB 10 and AASB 128 from certain R&M disclosure tests) create exception‑driven logic","Materiality judgements required (entities must identify ‘material’ accounting policies and assess compliance with recognition and measurement requirements)","Effective date and transitional timing changes noted in Basis for Conclusions (BC31–BC53) create timing complexity for affected entities and auditors","Drafting includes a detailed table linking entity types to disclosure paragraphs (added paragraph 2), which requires careful mapping of entity status to obligations","Practical application may require substantive technical work (assessing compliance with AASB 15, AASB 119 etc.), increasing operational complexity (BC51–BC52)"],"plain_english_summary":"**What this Standard does (simple):**\n\n- It adds rules about what must be disclosed in *special purpose financial statements* (SPFS) when those statements refer to Australian Accounting Standards (AAS), but are prepared only because a company’s constituting document or some other pre‑existing document requires them to do so. (See paragraphs 1 and 9C.)\n\n**Who it affects:**\n\n- For‑profit private sector entities that are required *only* by their constituting document or another document (that was created before 1 July 2021 and not amended on or after that date) to prepare financial statements that comply with AAS. (See paragraph 9C and the table added in paragraph 2.)\n\n**How it works mechanically (the new disclosure requirements):**\n\n- When such an entity issues SPFS that refer to AAS, the SPFS must disclose: (para references in brackets)\n - the basis for the entity’s decision to prepare SPFS rather than general purpose financial statements (GPFS) [9C(a)];\n - the material accounting policies used, including the measurement basis (for example, cost or fair value) and other policies needed to understand the statements [9C(b)(i)-(ii)];\n - if a material accounting policy changed and that change affects current or prior periods, the nature of the change, why the new policy is more reliable/relevant, the adjustment amounts (current period, each prior period presented, and aggregate for earlier periods), or an explanation if those amounts cannot practicably be determined [9C(c)];\n - where the entity has interests in other entities, whether subsidiaries/associates/joint ventures have been consolidated or equity accounted consistently with AASB 10 or AASB 128 and, if not, the reasons why not [9C(d)];\n - for each material accounting policy disclosed that does not comply with all recognition and measurement (R&M) requirements in AAS (except AASB 10 and AASB 128), an indication of how it does not comply [9C(e)]; and\n - whether the financial statements overall comply with all R&M requirements in AAS (except AASB 10 and AASB 128) [9C(f)].\n\n- The Standard also amends the application rules (AASB 1057) so that these disclosure obligations in AASB 1054 explicitly apply to the entities described above (see paragraph 7 and new paragraph 18A).\n\n- Implementation guidance and illustrative examples are attached to help apply paragraph 9C [9D and pages 9–14].\n\n**When it takes effect:**\n\n- Applies to annual periods ending on or after 30 June 2022; earlier application is allowed [paragraph 3].\n\n**Why the Board says this matters (stated rationale):**\n\n- The AASB’s stated aim is greater transparency for users of SPFS that continue to refer to AAS but are not subject to the full general purpose framework. The Board says users need to know whether SPFS comply with recognition and measurement requirements in AAS and to understand the accounting policies applied (see BC36–BC37, BC40–BC45).\n\n**Testing that rationale against costs, incentives and implementation trade‑offs (practical effects):**\n\n- Who pays: the preparers of SPFS (management/boards) and their auditors bear the direct compliance and assurance costs. Small entities in scope will typically face additional time and possibly professional fees to assess whether their accounting policies meet AAS recognition and measurement requirements and to prepare the new disclosures (see BC32–BC33, BC51–BC53).\n\n- Who decides: the entity’s management or governing body continues to decide whether to prepare SPFS; this Standard requires them to disclose the basis of that decision (9C(a)). That disclosure shifts some informational burden from preparers to users by making the preparer publicly explain the choice.\n\n- Behavioural incentives: the added disclosure requirement creates a transparency cost to staying with SPFS that refer to AAS. That may incentivise some entities to (a) move to GPFS prepared under AAS, (b) alter accounting policies to align more closely with AAS R&M requirements, or (c) amend constituting documents to remove the ambulatory (open) reference to AAS. The Standard does not mandate recognition and measurement changes; it only requires disclosure about compliance (see BC49 and 9C(e)–(f)).\n\n- Concentrated benefits and diffuse costs: benefits (clearer information for users of those SPFS) are diffuse across users; costs (preparation, assessment, audit) concentrate on the affected entities, particularly smaller ones that lack in‑house accounting expertise (BC32–BC33, BC51–BC53).\n\n- Compliance and implementation risk: entities must assess whether each *material* accounting policy complies with AAS R&M requirements (except AASB 10/128). That assessment can be technically difficult for certain standards (examples noted by the Board include AASB 15 revenue and AASB 119 employee benefits) and may require professional judgement or external assistance (BC51–BC52).\n\n- Administrative discretion: the Standard prescribes disclosures but relies on preparers’ judgements about materiality and compliance. Auditors and regulators (where relevant) will play the enforcement role (see BC50 on roles of regulators). The AASB itself does not enforce compliance.\n\n**Key exceptions and cross‑references to watch:**\n\n- Disclosures about non‑compliance exclude AASB 10 (consolidation) and AASB 128 (associates/joint ventures) from the R&M compliance disclosure requirement because those matters are handled specifically in 9C(d) [9C(d), 9C(e)–(f)].\n\n- Entities required by legislation to prepare statements that comply with AAS (for example, where law mandates AAS) were explicitly excluded from this Standard’s scope to reduce short‑term implementation burden and because other AASB work (AASB 2020‑2) addressed them; the Board explains this at BC34–BC39.\n\n**Net effect in plain terms:**\n\n- If your for‑profit private company prepares SPFS only because an old constituting or other document tells you to follow AAS (and that document was created before 1 July 2021 and hasn’t been amended on/after that date), you must now add specific disclosures explaining why you prepare SPFS, what accounting policies you used (and changes), how you treated subsidiaries/associates/joint ventures, and whether your policies and statements comply with AAS recognition and measurement rules (with some specified exceptions). The rule increases transparency but also imposes compliance and potential advisory costs on affected entities (see paragraphs 1, 9C and BC32–BC39)."},"flash_summary_failed":{"failed":true,"reason":"A positive credit balance is required for all requests, including BYOK, so fallback providers remain available. Add credits at https://vercel.com/d?to=%2F%5Bteam%5D%2F%7E%2Fai%3Fmodal%3Dtop-up to continue.","source":"analysis-cron"}},"importantCases":[],"_links":{"self":"/api/acts/accounting-standard-aasb-2022-4-amendments-to-australian-accounting-standards-disclosures-in-special","history":"/api/acts/accounting-standard-aasb-2022-4-amendments-to-australian-accounting-standards-disclosures-in-special/history","analysis":"/api/acts/accounting-standard-aasb-2022-4-amendments-to-australian-accounting-standards-disclosures-in-special/analysis","conflicts":"/api/acts/accounting-standard-aasb-2022-4-amendments-to-australian-accounting-standards-disclosures-in-special/conflicts","importantCases":"/api/acts/accounting-standard-aasb-2022-4-amendments-to-australian-accounting-standards-disclosures-in-special/important-cases","documents":"/api/acts/accounting-standard-aasb-2022-4-amendments-to-australian-accounting-standards-disclosures-in-special/documents"}}