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Australia

Financial reporting framework in Australia


The 'reporting entity' concept

Reporting entities must comply with Australian Accounting Standards and Interpretations, as issued by the Australian Accounting Standards Board (AASB), and, where applicable, with the requirements of Corporations Act 2001.

A reporting entity is 'an entity in respect of which it is reasonable to expect the existence of users who rely on the entity's general purpose financial statement for information that will be useful to them for making and evaluating decisions about the allocation of resources. A reporting entity can be a single entity or a group comprising a parent and all of its subsidiaries.'


Australian Accounting Standards Board (AASB)

The AASB is an agency of the Australian Government. AASB standards are known as Australian Accounting Standards and include Australian equivalents to International Financial Reporting Standards (IFRSs). When it first began adopting IFRSs as Australian Accounting Standards, the AASB made some modifications to IFRSs, including removing some options and adding some disclosures. In 2007, the AASB modified Australian Accounting Standards so that they are identical to IFRSs as issued by the IASB for for-profit entities. Some additional disclosures have been retained and some non-IFRS compliant requirements apply for not-for-profit and public sector entities.


Compliance with IFRSs

The basis of preparation note to the financial statements defines the reporting framework as 'Australian Accounting Standards'.  That note goes on to say that compliance with Australian Accounting Standards ensures the financial statements and notes of the entity comply with International Financial Reporting Standards (IFRS).

The auditor's opinion refers to compliance with Australian Accounting Standards. The auditor's report also notes that 'in note xx, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements and notes comply with International Financial Reporting Standards'. The audit opinion itself notes 'the financial report and notes also comply with International Financial Reporting Standards as disclosed in Note xx'.

From 30 June 2010, the directors declaration accompanying the financial statements of companies and other entities regulated by the Corporations Act 2001 is required to include an additional statement referring to the explicit and unreserved statement of compliance with International Financial Reporting Standards in the notes to the financial statements (where such a statement is made).


Reduced Disclosure Requirements (RDR)

Under a new differential reporting regime released by the Australian Accounting Standards Board (AASB) in July 2010, eligible entities can elect to adopt the 'Reduced Disclosure Requirements' (RDR). Entities with public accountability cannot adopt the RDR, but must comply with Australian Accounting Standards in full (and state compliance with IFRS).

The RDR requires entities to follow the recognition and measurement requirements of all Australian Accounting Standards (which are equivalent to IFRSs), but with reduced disclosure requirements.

The new requirements apply to annual reporting periods beginning on or after 1 July 2013, but may be early adopted for annual financial reporting periods beginning on or after 1 July 2009.

Related news

  • AASB to move away from 'reporting entity' differential reporting concept

  • Apr 12, 2013

  • The Australian Accounting Standards Board (AASB) has released an 'Action Alert' from its meeting held on 10 April 2013. A key development at the meeting was a tentative AASB decision to move towards a differential reporting regime that does not rely on the 'reporting entity concept' to differentiate between the levels of compliance with Australian Accounting Standards.

  • Updated AASB staff carbon accounting paper published

  • Apr 10, 2013

  • The Australian Accounting Standards Board (AASB) has published a updated staff paper on possible accounting treatments for the Australian carbon pricing mechanism under current Australian Accounting Standards.

  • ASIC finalises guidance on OFRs

  • Mar 28, 2013

  • The Australian Securities and Investments Commission (ASIC) has finalised its regulatory guide around operating and financial reviews (OFRs), which are included in the overall annual report for Australian listed entities. The purpose of the guide is to encourage better communication to shareholders and assist directors of listed entities to understand the OFR requirements.

  • ASAF membership announced

  • Mar 19, 2013

  • The IFRS Foundation has announced the membership of the newly founded Accounting Standards Advisory Forum (ASAF) that is designed to formalise and streamline the relationships between the IFRS Foundation and IASB with the global standard-setting community, in order to bring important regional perspectives to the IASB’s technical work and to offer feedback on the most important issues of the day.

  • Australian life insurance standard amended for regulatory requirements

  • Mar 19, 2013

  • The Australian Accounting Standards Board (AASB) has released amendments to AASB 1038 'Life Insurance Contracts' to align the terminology used with changes to the Australian Prudential Regulation Authority’s (APRA) reporting requirements relating to life insurers.

  • AASB announces research centre and standard-setting directorate

  • Mar 13, 2013

  • The Australian Accounting Standards Board (AASB) has announced the establishment of a dedicated research centre to "ensure Australia can continue to be at the forefront of thought leadership in financial reporting". In addition, the AASB has announced the establishment of a complimentary 'directorate for standard-setting' which aims to take over the direction of the standard-setting activities of the AASB and enhance engagement with domestic, regional and international parties.

  • ASX finalises continuous disclosure guidance

  • Mar 13, 2013

  • The Australian Securities Exchange (ASX) has released updated guidance to assist Australian listed entities to comply with their continuous disclosure obligations. The new guidance follows a public consultation process and was developed in consultation with the Australian Securities and Investments Commission (ASIC).

  • New Australian budgetary disclosure requirements

  • Mar 06, 2013

  • The Australian Accounting Standards Board (AASB) has issued two new standards in order to specify budgetary disclosure requirements for various government entities. In developing the standards, the AASB decided against using the equivalent International Public Sector Accounting Standard (IPSAS).

  • Australian analysis of the usefulness of IFRS financial statements

  • Feb 25, 2013

  • CPA Australia has posted to its website a paper by former IASB member Warren McGregor evaluating the criticisms that have been levelled at IFRS financial statements by CFOs and others in and outside of Australia and seeking to defend the usefulness of IFRS financial statements.

  • AASB February 2013 meeting outcomes

  • Feb 25, 2013

  • The Australian Accounting Standards Board (AASB) held its regular meeting on 20-21 February 2013. Highlights from the meeting include discussions around the possible elimination of the 'reporting entity' differential reporting concept, an expected exposure draft on how AASB 10 (equivalent to IFRS 10) should be applied in the not-for-profit sector, and the AASB expecting to nominate for a position on the IASB's Accounting Standard Advisory Forum (ASAF).

  • 10 years of IFRS: Reflections and expectations - Part two

  • Feb 15, 2013

  • The 'Australian Accounting Review' has recently published the second part of a special edition that marks the 10th anniversary of the International Accounting Standards Board (IASB) with research papers exploring the impact of IFRS on standard setting, financial reporting practice and accounting education from the perspectives of standard setters, practitioners and academics.

  • Report from recent IFASS meeting released

  • Jan 17, 2013

  • A report has been issued summarising the discussions at a meeting of the International Forum of Accounting Standard Setters (IFASS, formerly the NSS) held in Zurich on 22-23 October 2012. The meeting covered a broad range of topics, including the future relationships between the IASB and regional and national standard setters, topical issues in financial reporting, reports from regional groups and administrative matters.

  • Australian standard setter reveals split views on investment entities

  • Dec 21, 2012

  • The Australian Accounting Standards Board (AASB) has released an exposure draft outlining its proposals of how to implement the IASB's investment entities amendments in the Australian context. The exposure draft proposes the use of additional disclosure, but notes "AASB members were split between the... options when considering how best to proceed". The exposure draft outlines two alternate views, including one which could lead to the investment entities amendments not being adopted in Australia.

  • Australian government proposes changes to remuneration reports and dividend payments

  • Dec 18, 2012

  • The Australian Federal Government has released exposure draft legislation and explanatory material in relation to the disclosure of executive remuneration and for the payment of dividends under the Australian 'Corporations Act 2001'. The draft legislation is designed to improve corporate governance and respond to concerns about the operation of the dividends test as it is currently worded, including the interaction with accounting standards.

  • Highlights from the AASB December 2012 meeting

  • Dec 17, 2012

  • The Australian Accounting Standards Board (AASB) has released the Action Alert from its meeting held on 12-13 December 2012. Highlights include further discussion on the AASB's approach to the IASB's investment entities amendments, an agreement to withdraw an Australia-specific Interpretation on substantive enactment of tax bills, and consideration of research on differential reporting. The AASB also considered various IASB projects and public sector and not-for-profit matters.

  • Outcomes from the fourth AOSSG meeting

  • Dec 13, 2012

  • The Asian-Oceanian Standard-Setters Group (AOSSG) has released a communiqué from its meeting held in Kathmandu, Nepal on 28 and 29 November 2012. Highlights include plans for an ‘IFRS Centre of Excellence for a Developing Country’ (IFRS COEDC) in Nepal that would help Nepal to build its standard-setting capacity, the need for rapid finalisation of the IASB's project on 'bearer biological assets', and discussion on Islamic finance accounting issues.

  • New Zealand to adopt investment entities amendments

  • Dec 10, 2012

  • The New Zealand Accounting Standards Board (NZASB) has agreed, in principle, to approve for issue in New Zealand the 'Investment Entities' amendments for application by for-profit entities.

  • ASIC Commissioner comments on continuous disclosure

  • Dec 10, 2012

  • In a recent speech at the Chartered Secretaries Australia (CSA) 2012 Annual Conference, John Price, (Commissioner, Australian Securities and Investments Commission, ASIC) has spoken about continuous disclosure, including ASIC's priorities and the recent proposals from the Australian Securities Exchange (ASX) to rewrite its guidance note on the topic.

  • CPA Australia guide to assurance on sustainability reporting

  • Dec 06, 2012

  • CPA Australia has released a new guide, which introduces sustainability reporting and provides guidance on assurance engagements for sustainability reports performed in accordance with ASAE 3000 'Assurance Engagements Other Than Audits or Reviews of Historical Financial Information'.

  • Australia considers mandatory XBRL filing

  • Dec 06, 2012

  • The Australian Federal Government has released an options paper outlining alternatives for the use of eXtensible Business Reporting Language (XBRL) for financial reporting in Australia, and focuses on the possibility of introducing mandatory XBRL reporting.

  • ASX updates listing rules and guidance notes

  • Nov 29, 2012

  • The Australian Securities Exchange (ASX) has introduced new listing rules designed to enhance disclosure of reserves and resources by ASX-listed resources companies, and reminded companies of new listing rules applying from 1 November 2012 and new guidance notes applying from 31 October 2012.

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