The Australian Accounting Standards Board (AASB) makes Australian Accounting Standards, including Interpretations, to be applied by:
(a) entities required by the Corporations Act 2001 to prepare financial reports;
(b) governments in preparing financial statements for the whole of government and the General Government Sector (GGS); and
(c) entities in the private or public for-profit or not-for-profit sectors that are reporting entities or that prepare general purpose financial statements.
AASB 1053 Application of Tiers of Australian Accounting Standards establishes a differential reporting framework consisting of two tiers of reporting requirements for preparing general purpose financial statements:
(a) Tier 1: Australian Accounting Standards; and
(b) Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.
Tier 1 requirements incorporate International Financial Reporting Standards (IFRSs), including Interpretations, issued by the International Accounting Standards Board (IASB), with the addition of paragraphs on the applicability of each Standard in the Australian environment.
Publicly accountable for-profit private sector entities are required to adopt Tier 1 requirements, and therefore are required to comply with IFRSs. Furthermore, other for-profit private sector entities complying with Tier 1 requirements will simultaneously comply with IFRSs. Some other entities complying with Tier 1 requirements will also simultaneously comply with IFRSs.
Tier 2 requirements comprise the recognition, measurement and presentation requirements of Tier 1 but substantially reduced disclosure requirements in comparison with Tier 1.
Australian Accounting Standards also include requirements that are specific to Australian entities. These requirements may be located in Australian Accounting Standards that incorporate IFRSs or in other Australian Accounting Standards. In most instances, these requirements are either restricted to the not-for-profit or public sectors or include additional disclosures that address domestic, regulatory or other issues. These requirements do not prevent publicly accountable for-profit private sector entities from complying with IFRSs. In developing requirements for public sector entities, the AASB considers the requirements of International Public Sector Accounting Standards (IPSASs), as issued by the International Public Sector Accounting Standards Board (IPSASB) of the International Federation of Accountants.
Reasons for Issuing AASB 1048
Australian Accounting Standards that apply to annual reporting periods beginning on or after 1 January 2005 incorporate IFRSs, which comprise Accounting Standards and Interpretations. The adoption of IFRSs in Australia is in accordance with a strategic direction made by the Financial Reporting Council (FRC).
This Standard clarifies that all Australian Interpretations have the same authoritative status. Those that incorporate the IASB Interpretations must be applied to achieve compliance with IFRSs. Australian Interpretations issued by the AASB comprise both AASB and UIG Interpretations. UIG Interpretations were developed by the Urgent Issues Group, a former committee of the AASB.
This Standard also updates references in other Standards to the Framework for the Preparation and Presentation of Financial Statements (July 2004) to subsequent versions.
Need for a Service Standard
Australian Interpretations
In the Australian context, Australian 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 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 simple reference to an Australian Interpretation in a Standard can refer only to the Interpretation that existed when the Standard was issued. It cannot refer to any revised version of the Interpretation that may exist at a later reporting date. However, a Standard can refer to a second Standard and, when the first Standard is applied at a later reporting date, the reference will be to the then-current version of the second Standard, even if it has been reissued since the first Standard was issued.
The service Standard approach, as applied to Australian Interpretations, involves issuing this Standard to list the Australian Interpretations, and referring to this Standard in every other Standard where necessary to refer to an Interpretation. This enables references to the Interpretations in all other Standards to be updated by reissuing the service Standard.
This approach preserves the status of Australian Interpretations as ‘external documents’ referred to in a Standard. It does not treat the Interpretations as delegated legislation or confer ambulatory status on the reference. In each Standard where there is a need to refer to an Australian Interpretation, the reference will be to this Standard, phrased as “Interpretation [number] [title] as identified in AASB 1048” (or similar). This reference, being to another Standard, is ambulatory and will refer to the version of this Standard that is in force from time to time. AASB 1048 itself will contain the direct references to the external documents and will be reissued periodically.
This approach to clarifying the status of Australian 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 with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
Australian Conceptual Framework
In the Australian context, an Australian conceptual framework pronouncement, such as the Framework for the Preparation and Presentation of Financial Statements (Framework), also does not have the same legal status as a Standard (delegated legislation) and, like Interpretations, is treated as an ‘external document’ by the Acts Interpretation Act 1901 and the Legislative Instruments Act 2003.
The service Standard approach, as applied to the Australian conceptual framework, involves issuing this Standard to update references to the Framework in other Standards. This approach preserves the status of the Framework as an ‘external document’ referred to in a Standard. It does not treat the Framework as delegated legislation or confer ambulatory status on the reference.
Main Features of this Standard
This Standard (issued in December 2013) supersedes the previous version of AASB 1048, issued in June 2012 (as amended).
Application Date
This Standard is applicable to annual reporting periods ending on or after 20 December 2013 (see paragraph 3). To be consistent with the position for IFRSs as adopted in Australia, early adoption of this Standard is not permitted for annual reporting periods beginning before 1 January 2005. However, early adoption is otherwise permitted as specified in paragraph 4, subject to paragraphs 9, 11 and 13 of this Standard.
Main Requirements
This Standard identifies the Australian Interpretations and classifies them into two groups: those that correspond to an IASB Interpretation and those that do not. Entities are required to apply each relevant Australian Interpretation in preparing financial statements that are within the scope of the Standard.
In respect of the first group (Table 1), it is necessary for those Australian Interpretations, where relevant, to be applied in order for an entity to be able to make an explicit and unreserved statement of compliance with IFRSs. The IASB defines IFRSs to include the IFRIC and the SIC Interpretations.
In the second group (Table 2), this Standard lists the other Australian Interpretations, which do not correspond to the IASB Interpretations, to assist financial statement preparers and users to identify the other authoritative pronouncements necessary for compliance in the Australian context.
This Standard (see Table 3) also updates references to the Framework for the Preparation and Presentation of Financial Statements (July 2004) in other Standards to refer to an amended version of the Framework, as identified in this Standard.
The Standard will be reissued when necessary to keep the Tables up to date.
Changes from AASB 1048 (June 2012, as amended)
The main differences between the previous version of AASB 1048 and this version include:
(a) the removal from Tables 1 and 2 of the versions of Interpretations that do not apply to any of the reporting periods to which this Standard mandatorily applies (see paragraph 3). This includes the removal of Interpretation 121 Income Taxes – Recovery of Revalued Non-Depreciable Assets, which was superseded by AASB 112 Income Taxes for annual reporting periods beginning on or after 1 January 2012;
(b) the addition of one Interpretation incorporating an IFRIC Interpretation to Table 1, as set out in the following table:
(c) the addition of amended versions of Interpretations to Table 1 and Table 2, where applicable to any reporting period to which this Standard mandatorily applies. This reflects amended versions of Interpretations arising in relation to amendments to AASB 9 Financial Instruments and the Framework, the deferral of the consequential amendments for not-for-profit entities of AASB 10 Consolidated Financial Statements and related Standards, and the revised AASB 1031 Materiality issued in December 2013; and
(d) the addition of a section to update references to the Framework in other Standards to an amended version of the Framework.