Scope and application to not-for-profit Scope and application to not-for-profit and public sector entities

Scope and application to not-for-profit and public sector entities

1. While the disclosures in the IFRS for SMEs Standard are developed specifically for for-profit private sector entities, the Board agreed that AASB 1060 should also be made applicable to not-for-profit private sector entities and public sector entities, other than the Australian Government and State, Territory and Local Governments. Making AASB 1060 applicable to all Tier 2 entities, whether for-profit or NFP, will result in an immediate reduction in disclosures compared to the current RDR framework, and NFP private sector entities will be able to benefit from this reduction in disclosures while waiting for legislative action on the ACNC legislative review recommendations and for a revised NFP Financial Reporting Framework to be developed[54]. Similarly, public sector entities will also benefit while consideration is being given to improving public sector financial reporting[55]. The Tier 2 disclosure framework may still be relevant to NFP entities as one of the tiers of reporting for that sector even after a revised NFP Financial Reporting Framework is developed.
2. While respondents to ED 295 had suggested deferring the mandatory date of AASB 1060 for NFP entities possibly until the NFP private and public sector financial reporting frameworks have been finalised, the Board decided against different application dates to avoid the confusion for users that would come from having two Tier 2 reporting frameworks in operation at the same time.
3. In determining whether disclosures would need to be added to address any R&M differences that are specific to NFP private sector and public sector entities, the Board has applied paragraph 28 of the AASB’s Not-for-Profit Entity Standard-Setting Framework and the principles listed in paragraphs BC41 and BC42 above. While those principles have been developed with a specific focus on the users of the financial statements of private sector entities, the Board considers that they are also relevant to the users of the financial statements of NFP entities. However, the Board also acknowledged that certain transactions or items in the financial statements are unique to NFP entities and may require additional information, as set out in the AASB’s Not-for-Profit Entity Standard Setting Framework. A limited number of disclosures have been added to AASB 1060 for that reason. Further details about the decisions made in relation to specific disclosures are set out in paragraphs BC91–BC93.