Need for a Service Standard

Need for a Service Standard

In the Australian context, UIG Interpretations do not have the same legal status as Standards (delegated legislation) and are treated as ‘external documents’ by the Acts Interpretation Act 1901 (and also by the Legislative Instruments Act 2003). Although references in one Standard to a second Standard are ambulatory (automatically moving forward to refer to the most recently-issued version of the second Standard), references in a Standard to external documents are stationary (being fixed in time to refer to the contents of the external document when the Standard was issued). A reference to an UIG Interpretation in an AASB Standard issued earlier (for example, in July 2004) than the reporting date at the end of the first effective reporting period can only refer to the Interpretation that existed then (in July 2004). It cannot refer to any revised version of the UIG Interpretation that may exist at the nominated reporting date (for example, 30 June 2006). However, an AASB Standard can be issued in July 2004, referring to a second AASB Standard (existing in July 2004) and, when the first Standard is applied at 30 June 2006, the reference will be to the then-current version of the second Standard (even if it has been re-issued after July 2004).

After analysing the issues, the AASB decided the service Standard approach constitutes the most effective way to ensure that the compliance required in the Australian equivalent of IFRS 1, AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards, has the same meaning as intended in IFRS 1.

The service Standard approach involves issuing an AASB Standard listing the UIG Interpretations corresponding to each IASB Interpretation, and referring to that Standard in every other AASB Standard where necessary to refer to an UIG Interpretation. This enables references to UIG Interpretations in all other AASB Standards to be updated by re-issuing the service Standard.

This approach preserves the status of UIG Interpretations as ‘external documents’ referred to in a Standard, with the ‘contents’ fixed in time to that existing when the Standard takes effect. It does not treat the UIG Interpretations as delegated legislation or confer ambulatory status on the reference. In each AASB Standard where there is a need to refer to an Australian equivalent of an IASB Interpretation, the reference will be to this Standard, phrased as “UIG Interpretation (number) (title) identified in AASB 1048 as corresponding to IFRIC (or SIC) (number)”. This reference, being to another AASB Standard, is ambulatory and will refer to the Standard, AASB 1048, that is in force from time to time. AASB 1048 itself will contain the direct references to the external documents and it will be re-issued to keep all references to UIG Interpretations in the other Standards up to date.

Implementation of this approach to clarifying the status of UIG Interpretations ensures there is no difference between the status in the hierarchy accorded to Interpretations in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors compared to AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.

A further advantage of this approach, compared to alternative approaches, is that it is able to be combined with implementing the perceived need for an AASB Standard clarifying the status of all UIG Interpretations, irrespective of whether they correspond to an IASB Interpretation.