AASB 1057 - Application of Australian Accounting Standards - July 2015

This Standard has become increasingly important because of changes made in 2020-2021 that removed the ability of many for-profit companies to prepare special purpose financial statements. Previously, companies could self-assess whether they were "reporting entities" and choose to prepare simpler SPFS. Now, most companies required by law to prepare financial statements must prepare full GPFS — though they can use a simplified disclosure framework (Tier 2) rather than full Tier 1 requirements.

Key changes in this version

• Extends the Conceptual Framework (the underlying principles of accounting) to more for-profit entities
• Removes the "reporting entity" self-assessment for many companies
• Provides transitional relief for companies moving from special purpose to general purpose reporting
• Maintains simplified disclosure options for eligible entities

The bottom line: If you're running a company or organisation that must prepare financial statements under Australian law, this Standard tells you exactly which accounting rules you must follow — and you generally can't opt for the simpler special purpose reporting anymore.