In December reporting season, given the current difficult economic climate that confronts all companies, ASIC will focus particularly on:

• asset values and going concern assessments, including adequate disclosure of material assumptions
• consolidation decisions and off balance sheet arrangements
• proper disclosure of segment information in a manner that enables useful assessment of the separate businesses.

More information are available in the ASIC press release (link to ASIC website).

At this meeting the Board, amongst other things:

• discussed aspects of accounting for Australia's carbon tax - the AASB is restricting its discussion of the accounting to the fixed-price period, expected to be the first 3 years of the scheme, in the hope that the International Accounting Standards Board will develop guidance on accounting for emissions trading schemes before the flexible period comes into effect. The AASB confirmed that it does not expect to issue an Interpretation on the topic but confirmed that it saw merit in the AASB staff publishing a paper that draws out the relevant accounting issues (for more information, see the staff paper, link to the AASB website)
• progressed its project on Service Performance Reporting
• continued to monitor and form views on the core IASB projects/consultation documents – financial instruments, revenue recognition, leases and insurance contracts
• received progress reports on four of its domestic projects – superannuation entities; control in the not-for-profit sector, not-for-profit entities within the general government sector (ED 212) and extending related party disclosures to the not-for-profit public sector (ED 214)
• received reports relating to a range of other topics and organisations – an IPSASB Report, IASB Agenda Consultation, IFRS Advisory Council, IFRS Interpretations Committee, Integrated Reporting, and AOSSG.

The next AASB meeting is due to be held on 7-8 December 2011. Click for AASB Action Alert (link to AASB website).

The meetings are as follows:

• Reducing Complexity Task Force meeting held on 22 July 2011. The minutes (link to FRC website) include:
  • introductory comments from members - including the possibility of 'quick wins' in respect of corporations law and other reporting requirements and the restrictions imposed by Australia's compliance with IFRS
  • the task force work program - the report on Phase 1 of the project and the task force's recommendations to the FRC are expected to be tabled at the FRC meeting scheduled for 9 March 2012
  • stakeholder feedback from accounting firms - no responses had been received
  • member views about complexity - topics discussed included issues with Australia's adoption of IFRSs, the complexity of global standard setting, the use of XBRL, assurance and other issues
  • a meeting with an academic, Prof Jayne Godfrey (Dean of the Australian National University College of Business and Economics) - it was noted one source of complexity is complex transactions, with sources of information about such reporting including: recognition, disclosures, intangibles, audit issues and taxation, and that literature tends to focus on sophisticated investors
• Integrated Reporting Task Force 26 August 2011. The minutes (link to FRC website) include a summary of a discussion on what an integrated report would entail and its the key desirable features (unified report, with assurance, globally comparable, applying to publicly listed entities), and recommendations including that the FRC should take a lead in presenting Australian stakeholders' views regarding integrated reporting.

The ED proposes to provide the same relief in relation to accounting for a government loan with a below-market rate of interest to first-time adopters of Australian Accounting Standards as is granted to existing preparers of financial statements when applying AASB 120 Accounting for Government Grants and Disclosure of Government Assistance.

More information about the proposals can be found in our IFRS in Focus Newsletter (PDF 58k) and our project page for the IFRS 1 amendment.

Comments on ED 221 are due to the AASB by 5 December 2011, with comments on ED/2011/5 due to the IASB by 5 January 2012. Click for AASB announcement (link to AASB website).

Of interest are the following observations:

• ASIC paper on 'non-conforming financial information'. Mr Michael Dwyer (ASIC Commissioner) provided the meeting with a report on its consideration of submissions on Consultation Paper 150 Disclosing financial information other than in accordance with accounting standards. He indicated that ASIC is still in consultation with stakeholder groups. However, ASIC hopes to issue its guidance by the end of November 2011.
• Water accounting and auditing. The Water Accounting Standards Board has issued an Exposure Draft of Australian Water Accounting Standard 1 Preparation and Presentation of General Purpose Water Accounting Reports (ED AWAS 1) and an agreement has been made between the Water Accounting Standards Board (WASB) and the AUASB to work jointly on the development of an assurance standard for water accounting
• Mr McGregor, who retired as an Australian-based member of the IASB at the end of June 2011, made the following observations about his time as a member of the IASB and the role Australia can play in international standards-setting, including:
  • Australia is regarded as a thought leader on reporting by private sector for-profit companies and can provide good feedback on matters such as IFRS implementation
  • AOSSG is viewed as providing a valuable balance on IFRS issues to the views of the US and Europe
  • as no IASB member is now resident in Australia, Australia needs to give consideration to how to maintain or achieve a greater IASB presence in Australia
  • there continues to be a misconception (especially in Europe) that Australia is not fully compliant with IFRS, at least partly as a result of the decision to use the designation Australian Accounting Standards for what are essentially IFRS. As a consequence, Australia is not getting full value out of our decision to adopt IFRS
  • in the area of public sector reporting, Australia and New Zealand are world leaders. It would be a logical extension to the standards-setting arrangement s for the IPSASB to come under the umbrella of the IFRS Foundation. The FRC and XRB need to press this issue with the Trustees of the IFRS Foundation.

The next meeting of the FRC will be held in Melbourne on Wednesday, 14 December 2011. Click for the full draft FRC minutes (link to FRC website).

The Australian Securities Exchange (ASX) has issued Update 07/11, covering the following topics (among others):

• Australian Council of Human Rights Agencies (ACHRA) Guidance on Diversity - discusses the diversity-related amendments made in July 2010 to the ASX Corporate Governance Principles and Recommendations and resources available to meet the new reporting obligations
• Proposed new Listing Rules - the ASX is proposing to amend the Listing Rules with effect from 1 January 2012 to introduce a 'good fame and character' requirement for directors of new listed entities.
• New ASIC Market Integrity Rules - impacts of new ASIC Market Integrity Rules which come into effect On 31 October 2011
• Company Announcements Office (CAO) matters - reminders regarding the start of daylight savings, and the lodgement of Chairperson's addresses and periodic reports
• Improving the capture of information - the ASX is in the early stages of developing a "straight through" electronic solution for distribution of information between listed entities and the information user.

Click for ASX Update 07/11 (link to ASX website).

The Australian Government has released proposals for the reform of the Australian superannuation system, which include a proposal for mandatory Standard Business Reporting (SBR) using eXtensible Business Reporting Language (XBRL)

The Australian Government's Super System Review recommended the development of standardised forms and common data standards to support electronic transactions for superannuation. It also recommended that these standards should be compatible with the existing Australian SBR framework and provide for linked personal and financial data transmission.

SBR will be used as the platform to develop the taxonomy and message structures for superannuation transactions, along with the use of eXtensible Business Reporting Language (XBRL) for exchanging information.

It is proposed that data standards will be published and available for use by funds (on a voluntary uptake basis) early in 2012. The data standards and use of e-commerce would then become mandatory for funds regulated by the Australian Prudential Regulation Authority (APRA) and self managed superannuation funds (SMSFs) for processing rollovers and accepting contributions from July 2013. Smaller funds and employers would adopt later, subject to consultation.

Click for press announcement (link to Australian Treasury website).

The Australian Accounting Standards Board (AASB) has announced the 2010/11 'Reduced Disclosure Requirements' (RDR) versions of Standards and Interpretations that apply to that financial year.

The revised Australian differential reporting system is scheduled to commence from 1 July 2013 and will allow eligible 'Tier 2' entities (in relation to for-profit entities, essentially those entities without public accountability) to avoid a number of presentation and disclosure, but not recognition and measurement, requirements of Australian Accounting Standards. The RDR versions of pronouncements illustrate the requirements that can be avoided through the use of shading.

Compiled Standards and Interpretations including RDR disclosure exemptions are prepared annually by the AASB for financial years ending 30 June. Entities applying the RDR before the mandatory application date can use the compiled pronouncements to apply the RDR using versions of pronouncements that clearly show the applicable requirements for the year.

Click for AASB announcement (link to AASB website). Deloitte Australia also publishes Reduced Disclosure Requirements - Model Financial Statements (PDF 914k).

RG 60 is a guide for companies and their advisers involved in, or affected by, schemes of arrangement between a company and its members under Pt 5.1 of the Corporations Act 2001.

In light of the submissions ASIC received, ASIC did not adopt the original proposal, but instead updated RG 60 to outline how ASIC will consider objectives to scheme proposals. The guide also notes ASIC will closely consider schemes that offer collateral benefits and/or unequal consideration and will examine schemes that result in a reverse takeover on a case-by-case basis.

Click for ASIC announcement (link to ASIC website).

The proposals outline criteria for identifying an 'investment entity' and how such an entity would measure its investments. More information about the proposals can be found in our IFRS in Focus Newsletter (PDF 88k).

The Exposure Draft notes the AASB has significant concerns with the proposals in IASB ED/2011/4. In particular, the AASB is concerned about the absence of a conceptual underpinning for the proposals and their rules-based nature. In addition, the AASB notes the proposals would, for example, be likely to prevent the application by insurers of fair value through profit or loss measurement to their investees under AASB 1023 General Insurance Contracts and AASB 1023 Life Insurance Contracts.

The Exposure Draft also notes the nature of the proposed disclosures in ED/2011/4 and the AASB believes, in the context of the overall project, that it would not be appropriate to reduce those disclosures in respect of general purpose financial statements of Tier 2 entities applying 'Reduced Disclosure Requirements' (RDR). The AASB is therefore not proposing any relief from the disclosure requirements outlined in IASB ED/2010/4.

Comments are due to the AASB by the 30 November 2011 and to the IASB by 5 January 2012.