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Scope

BC17 In deciding who should be required to make the disclosures proposed in ED 293, the Board considered The AASB’s For-Profit Entity Standard-Setting Framework and The AASB’s Not-for-Profit Entity Standard-Setting Framework, and decided the proposals would be consistent with both frameworks and therefore ED 293 proposed that they should apply to for-profit and not-for-profit entities.

BC18 In making this decision, the Board had particular regard to the following factors:

(a) the uncertainty about whether or not the accounting policies applied in the financial statements comply with all the recognition and measurement requirements in Australian Accounting Standards described in paragraph BC6 above, coupled with the findings of AASB Research Report 12 Financial Reporting Practices of For-Profit Entities Lodging Special Purpose Financial Statements (August 2019)[\[10\]](#_ftn10) significantly adversely impacts financial statement users in both the for-profit and not-for-profit sectors;
(b) financial statement users have noted during AASB outreach to date[\[11\]](#_ftn11) the lack of, and need to improve, comparability, consistency, transparency and enforceability in special purpose financial statements;
(c) the evidence of diversity in the application of, and compliance with, the recognition and measurement requirements in Australian Accounting Standards in special purpose financial statements noted in Research Report 11 (refer to paragraph BC6 above) and Research Report 12;[\[12\]](#_ftn12)
(d) the significant number of charities preparing special purpose financial statements and the low levels of explicit statements of compliance with the recognition and measurement requirements in Australian Accounting Standards therein (refer paragraph BC6 above); and
(e) the requirements of Australian Auditing Standards as they relate to special purpose financial statements (refer to paragraph BC26 below).

BC19 When deciding which for-profit and not-for-profit entities should be required to make the disclosures proposed in ED 293, the Board considered whether the disclosures should be required by:

(a) all entities preparing special purpose financial statements (including those preparing financial statements voluntarily); or
(b) all entities preparing special purpose financial statements that are required by legislation or otherwise to comply with Australian Accounting Standards; or
(c) only those entities preparing special purpose financial statements that are directly subject to AASB 101 and AASB 1054 Australian Additional Disclosures[\[13\]](#_ftn13), as set out in paragraph 2 of AASB 1054 and paragraph 7 of AASB 1057 Application of Australian Accounting Standards, (and, indirectly, any entities required through legislation to comply with AASB 101 and AASB 1054, such as entities lodging special purpose financial statements with the ACNC as they are required by legislation to comply with AASB 101 and AASB 1054 (as noted in footnote 8 to paragraph BC12 above)).