Definition of Special Purpose Framework Definition of Special Purpose Framework (Ref: Para. 6‑Aus 6.1)

Definition of Special Purpose Framework (Ref: Para. 6‑Aus 6.1)

1. Examples of special purpose frameworks are:

• A tax basis of accounting for a financial report that accompanies an entity’s tax return;
• The cash receipts and disbursements basis of accounting for cash flow information that an entity may be requested to prepare for creditors;
• The financial reporting provisions established by a regulator to meet the requirements of that regulator; or
• The financial reporting provisions of a contract, such as a bond indenture, a loan agreement, or a project grant.

Aus A1.1 The Corporations Act 2001,[*] Australian Accounting Standards,[#] other applicable law or regulation, or specific users of the financial report, may determine if a financial report is required to be prepared. Australian Accounting Standards provide the applicable financial reporting framework for determining if the entity is a “reporting entity”[†] or a “non‑reporting entity” and consequently if the financial report is required to be general purpose or special purpose. For “reporting entities” preparing a financial report under the Corporations Act 2001, the applicable framework is general purpose. For “non‑reporting entities” preparing a financial report under the Corporations Act 2001, the applicable framework may be general purpose or special purpose.[§]

1. There may be circumstances where a special purpose framework is based on a financial reporting framework established by an authorised or recognised standards setting organisation or by law or regulation, but does not comply with all the requirements of that framework. An example is a contract that requires a financial report to be prepared in accordance with most, but not all, of the Australian Accounting Standards. When this is acceptable in the circumstances of the engagement, it is inappropriate for the description of the applicable financial reporting framework in the special purpose financial report to imply full compliance with the financial reporting framework established by the authorised or recognised standards setting organisation or by law or regulation. In the above example of the contract, the description of the applicable financial reporting framework may refer to the financial reporting provisions of the contract, rather than make any reference to the Australian Accounting Standards.
2. In the circumstances described in paragraph A2, the special purpose framework may not be a fair presentation framework even if the financial reporting framework on which it is based is a fair presentation framework. This is because the special purpose framework may not comply with all the requirements of the financial reporting framework established by the authorised or recognised standards setting organisation or by law or regulation that are necessary to achieve fair presentation of the financial report.