Accounting Standard AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities

Objective Objective

Objective

1. This Standard establishes disclosure requirements applicable to entities that are preparing general purpose financial statements and elect to apply the Tier 2 reporting requirements under AASB 1053 Application of Tiers of Australian Accounting Standards.
2. Except to the extent specifically addressed in this Standard, the definitions and presentation requirements of other Australian Accounting Standards continue to apply. Entities are permitted to refer to other Standards for guidance on the requirements in this Standard, including AASB 7 Financial Instruments: Disclosures, AASB 12 Disclosure of Interests in Other Entities, AASB 101 Presentation of Financial Statements, AASB 107 Statement of Cash Flows and AASB 124 Related Party Disclosures.

Scope Scope

Scope

1. This Standard applies to all entities that elect to apply Tier 2: Australian Accounting Standards – Simplified Disclosures under AASB 1053, including those that present consolidated financial statements in accordance with AASB 10 Consolidated Financial Statements and those that present separate financial statements in accordance with AASB 127 Separate Financial Statements. However, this Standard does not apply to the structure and content of condensed interim financial statements prepared in accordance with AASB 134 Interim Financial Reporting.

2. Entities applying this Standard are required to apply all the recognition and measurement requirements in Australian Accounting Standards[1] and apply this Standard in relation to disclosure requirements only.

3. This Standard uses terminology that is suitable for profit-oriented entities, including public sector business entities. If entities with not-for-profit activities in the private sector or the public sector apply this Standard, they may need to amend the descriptions used for particular line items in the financial statements and for the financial statements themselves.

4. Similarly, entities that do not have equity as defined in AASB 132 Financial Instruments: Presentation (eg some mutual funds) and entities whose share capital is not equity (eg some co-operative entities) may need to adapt the financial statement presentation of members’ or unitholders’ interests.

5. AusCF paragraphs and footnotes included in this Standard apply only to:

   not-for-profit entities; and for-profit entities that are not applying the Conceptual Framework for Financial Reporting (as identified in AASB 1048 Interpretation of Standards).

Such entities are referred to as ‘AusCF entities’. For AusCF entities, the term ‘reporting entity’ is defined in AASB 1057 Application of Australian Accounting Standards and Statement of Accounting Concepts SAC 1 Definition of the Reporting Entity also applies. For-profit entities applying the Conceptual Framework for Financial Reporting (as set out in paragraph Aus1.1 of the Conceptual Framework) shall not apply AusCF paragraphs or footnotes.

Tier 2 disclosures Tier 2 disclosures

Tier 2 disclosures

Financial Statement Presentation[2]

Scope

1. This section explains fair presentation of financial statements, what compliance with Australian Accounting Standards, including this Standard, requires and what a complete set of financial statements is. [IFRS for SMEs Standard paragraph 3.1]

Fair presentation

1. Financial statements shall present fairly the financial position, financial performance and cash flows of an entity. Fair presentation requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the Conceptual Framework for Financial Reporting:

   The application of the recognition and measurement requirements in Australian Accounting Standards and the disclosures in this Standard, with additional disclosure when necessary, is presumed to result in financial statements that achieve a fair presentation of the financial position, financial performance and cash flows of Tier 2 entities.

   As explained in paragraph 13 of AASB 1053, this Standard does not apply to an entity with public accountability.

The additional disclosures referred to in (a) are necessary when compliance with the specific requirements in this Standard is insufficient to enable users to understand the effect of particular transactions, other events and conditions on the entity’s financial position and financial performance. [Based on IFRS for SMEs Standard paragraph 3.2]

AusCF9 Notwithstanding paragraph 9, in respect of AusCF entities, financial statements shall present fairly the financial position, financial performance and cash flows of an entity. Fair presentation requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the Framework for the Preparation and Presentation of Financial Statements:

(a) The application of the recognition and measurement requirements in Australian Accounting Standards and the disclosures in this Standard, with additional disclosure when necessary, is presumed to result in financial statements that achieve a fair presentation of the financial position, financial performance and cash flows of Tier 2 entities.

(b) As explained in paragraph 13 of AASB 1053, this Standard does not apply to an entity with public accountability.

The additional disclosures referred to in (a) are necessary when compliance with the specific requirements in this Standard is insufficient to enable users to understand the effect of particular transactions, other events and conditions on the entity’s financial position and financial performance.

Compliance with Australian Accounting Standards – Simplified Disclosures

1. An entity whose financial statements comply with the recognition and measurement requirements in Australian Accounting Standards, the presentation requirements in those Standards as modified by this Standard, and the disclosure requirements in this Standard shall make an explicit and unreserved statement of such compliance in the notes. Financial statements shall not be described as complying with Australian Accounting Standards – Simplified Disclosures unless they comply with all of these requirements. [Based on IFRS for SMEs Standard paragraph 3.3]

2. An entity shall disclose in the notes:

   the statutory basis or other reporting framework, if any, under which the financial statements are prepared; and
   whether, for the purposes of preparing the financial statements, it is a for-profit or not-for-profit entity.
   

3. Entities applying Australian Accounting Standards – Simplified Disclosures shall not depart from a requirement in an Australian Accounting Standard, including this Standard.

4. In the extremely rare circumstances when management concludes that compliance with a recognition and measurement requirement in an Australian Accounting Standard, or a presentation and disclosure requirement in this Standard, would be so misleading that it would conflict with the objective of financial statements set out in the Conceptual Framework for Financial Reporting, but the relevant regulatory framework prohibits departure from the requirement, the entity shall, to the maximum extent possible, reduce the perceived misleading aspects of compliance by disclosing the following:

   the title of the Australian Accounting Standard in question, the nature of the requirement and the reason why management has concluded that complying with that requirement is so misleading in the circumstances that it conflicts with the objective of financial statements set out in the Conceptual Framework for Financial Reporting; and
   for each period presented, the adjustments to each item in the financial statements that management has concluded would be necessary to achieve a fair presentation.
   

[Based on IFRS for SMEs Standard paragraph 3.7]

AusCF13 Notwithstanding paragraph 13, in respect of AusCF entities, in the extremely rare circumstances when management concludes that compliance with a recognition and measurement requirement in an Australian Accounting Standard, or a presentation and disclosure requirement in this Standard, would be so misleading that it would conflict with the objective of financial statements set out in the Framework for the Preparation and Presentation of Financial Statements, but the relevant regulatory framework prohibits departure from the requirement, the entity shall, to the maximum extent possible, reduce the perceived misleading aspects of compliance by disclosing the following:

(a) the title of the Australian Accounting Standard in question, the nature of the requirement and the reason why management has concluded that complying with that requirement is so misleading in the circumstances that it conflicts with the objective of financial statements set out in the Framework for the Preparation and Presentation of Financial Statements; and

(b) for each period presented, the adjustments to each item in the financial statements that management has concluded would be necessary to achieve a fair presentation.

Going concern

1. When preparing financial statements, the management of an entity using Australian Accounting Standards – Simplified Disclosures shall make an assessment of the entity’s ability to continue as a going concern. An entity is a going concern unless management either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so. In assessing whether the going concern assumption is appropriate, management takes into account all available information about the future, which is at least, but is not limited to, twelve months from the reporting date. [IFRS for SMEs Standard paragraph 3.8]
2. When management is aware, in making its assessment, of material uncertainties related to events or conditions that cast significant doubt upon the entity’s ability to continue as a going concern, the entity shall disclose those uncertainties. When an entity does not prepare financial statements on a going concern basis, it shall disclose that fact, together with the basis on which it prepared the financial statements and the reason why the entity is not regarded as a going concern. [IFRS for SMEs Standard paragraph 3.9]

Frequency of reporting

1. An entity shall present a complete set of financial statements (including comparative information – see paragraph 20) at least annually. When the end of an entity’s reporting period changes and the annual financial statements are presented for a period longer or shorter than one year, the entity shall disclose the following:

   that fact; the reason for using a longer or shorter period; and the fact that comparative amounts presented in the financial statements (including the related notes) are not entirely comparable.

[IFRS for SMEs Standard paragraph 3.10]

Consistency of presentation

1. An entity shall retain the presentation and classification of items in the financial statements from one period to the next unless:

   it is apparent, following a significant change in the nature of the entity’s operations or a review of its financial statements, that another presentation or classification would be more appropriate having regard to the criteria for the selection and application of accounting policies in AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors; or Australian Accounting Standards – Simplified Disclosures require a change in presentation.

[IFRS for SMEs Standard paragraph 3.11]

1. When the presentation or classification of items in the financial statements is changed, an entity shall reclassify comparative amounts unless the reclassification is impracticable. When comparative amounts are reclassified, an entity shall disclose the following:

   the nature of the reclassification; the amount of each item or class of items that is reclassified; and the reason for the reclassification.

[IFRS for SMEs Standard paragraph 3.12]

1. If it is impracticable to reclassify comparative amounts, an entity shall disclose why reclassification was not practicable. [IFRS for SMEs Standard paragraph 3.13]

Comparative information

1. Except when this Standard permits or requires otherwise, an entity shall disclose comparative information in respect of the previous comparable period for all amounts presented in the current period’s financial statements. An entity shall include comparative information for narrative and descriptive information when it is relevant to an understanding of the current period’s financial statements. [IFRS for SMEs Standard paragraph 3.14]

Materiality and aggregation

1. An entity shall present separately each material class of similar items. An entity shall present separately items of a dissimilar nature or function unless they are immaterial. [IFRS for SMEs Standard paragraph 3.15]
2. Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity. [Based on IFRS for SMEs Standard paragraph 3.16]
3. This Standard specifies information that is required to be included in the financial statements, which include the notes. An entity need not provide a specific disclosure if the information resulting from that disclosure is not material. This is the case even if this Standard contains a list of specific requirements or describes them as minimum requirements.

Offsetting

1. An entity shall not offset assets and liabilities or income and expenses, unless required or permitted by an Australian Accounting Standard.

Complete set of financial statements

1. A complete set of financial statements of an entity shall include all of the following:

   a statement of financial position as at the reporting date; either:

2. a single statement of profit or loss and other comprehensive income for the reporting period displaying all items of income and expense recognised during the period including those items recognised in determining profit or loss (which is a subtotal in the statement of comprehensive income) and items of other comprehensive income; or

3. a separate statement of profit or loss and a separate statement of comprehensive income. If an entity chooses to present both a statement of profit or loss and a statement of comprehensive income, the statement of comprehensive income begins with profit or loss and then displays the items of other comprehensive income;

   a statement of changes in equity for the reporting period; a statement of cash flows for the reporting period; and notes, comprising material accounting policy information and other explanatory information.

[Based on IFRS for SMEs Standard paragraph 3.17]

1. If the only changes to equity during the periods for which financial statements are presented arise from profit or loss, payment of dividends, corrections of prior period errors, and changes in accounting policy, the entity may present a single statement of income and retained earnings in place of the statement of comprehensive income and statement of changes in equity (see paragraph 62). [IFRS for SMEs Standard paragraph 3.18]
2. If an entity has no items of other comprehensive income in any of the periods for which financial statements are presented, it may present only a statement of profit or loss or it may present a statement of comprehensive income in which the ‘bottom line’ is labelled ‘profit or loss’. [IFRS for SMEs Standard paragraph 3.19]
3. Because paragraph 2