Relevance of the amendments to AASB 1060Relevance of the amendments to AASB 1060

Relevance of the amendments to AASB 1060

1. The AASB For-Profit Entity Standard-Setting Framework and the AASB Not-For-Profit Entity Standard-Setting Framework outline the approach adopted by the Board for considering whether to add to or amend disclosure requirements in AASB 1060 when the IASB makes amendments to full IFRS Standards. The Board also considers whether to add disclosure requirements to AASB 1060 when additional disclosures are added to other Australian Accounting Standards.
2. The standard-setting frameworks first consider whether the amendments introduce a significant recognition and measurement difference between full IFRS Standards and the IFRS for SMEs Accounting Standard. If they do not, the standard-setting frameworks state that no further action is required unless the disclosure is of particular relevance in the Australian environment or addresses a matter of public policy, or the amendments clarify or reduce existing disclosure requirements in full IFRS Standards.
3. The Board noted that the amendments to AASB 9 both clarify the application of existing recognition and measurement requirements and make narrow-scope changes to how some requirements are applied. However, the Board considered that the amendments did not significantly affect or introduce any new significant recognition and measurement differences between full IFRS Standards and the IFRS for SMEs Accounting Standard.
4. The Board also noted that the disclosure requirements in AASB 7 were amended for several reasons:
   1. contracts referencing nature-dependent electricity (‘eligible contracts’) that are recognised as procurement contracts – disclosures would be useful to financial statement users as the disclosures would provide information about the entity’s short-term cash flow commitments, liquidity and measurement uncertainties;
   2. eligible contracts that are designated in a cash flow hedging relationship – to clarify the application of the existing disclosure requirements for all hedge transactions; and
   3. the requirement to cross-reference between financial statement notes – cross-referencing is useful for entities holding multiple contracts referencing nature-dependent electricity that are recognised in an entity’s financial statements in different ways, in accordance with the Standards.

The feedback from Australian users (predominantly representing Tier 1 entities) supported the need for these disclosures.

1. Although the Board had not received any feedback on whether these disclosures are of similar importance to users of Tier 2 financial statements, the Board considered the principles it used when developing AASB 1060 and subsequently when considering whether to add to or amend the disclosure requirements. When developing and considering amendments to AASB 1060, the Board considers that information about short-term cash flows and obligations, commitments or contingencies, liquidity and solvency, measurement uncertainties, accounting policy choices and disaggregation of amounts presented in the financial statements would be particularly important to the users of Tier 2 financial statements.