The pronouncements are as follows (links in the first column are to the AASB website):

* In addition, the AASB has issued Australian exposure drafts that incorporate many of the recent IASB exposure drafts.  The comment periods for these exposure drafts are generally shorter than the IASB equivalents to allow the AASB time to consider comments received in formulating its own response to the IASB.

Remuneration report

The draft Bill contains measures designed to enhance the disclosure of executive remuneration in Australia, implementing many of the recommendations made by the Corporations and Markets Advisory Committee (CAMAC) in its 2011 inquiry into executive remuneration in Australia.

The proposed legislation would, among other things:

• require listed disclosing companies to include in the remuneration report a general description of their remuneration governance framework
• require listed companies who become aware in the financial year that their financial statements in any of their three previous financial years have been materially misstated, to disclose in the remuneration report, whether any overpaid remuneration has been 'clawed back', and if not, an explanation of why
• improve disclosures contained in remuneration reports, by requiring more transparent disclosure of termination payments or 'golden handshake' payments and removing other disclosures considered unnecessary (e.g. the value of lapsed options).

Dividend changes

The proposed legislation would amend the Corporations Act test for the payment of dividends (contained in s.254T) to:

• allow companies to either declare or pay a dividend, to address confusion about when the test should apply and reflect company practice
• link the dividends test to company solvency, replacing the existing 'material prejudice' and 'fair and reasonable' requirements
• allow non-reporting entities to calculate assets and liabilities with reference to financial records when applying the dividends test, rather than requiring the use of accounting standards.

The Explanatory Memorandum accompanying the proposed legislation provides a comparison of the existing and proposed requirements. The following table is based on this comparison:

Click for press release (link to Australian government website).

Investment entities

Following on from its discussions at its previous meeting, the AASB continued its deliberations on whether, and if so, how to implement the IASB's investment entities amendments in the Australian context.

The AASB decided to adopt the amendments but require additional disclosures in the financial statements to "compensate for the loss of information that would arise".  The draft Exposure Draft considered by the board would effectively require a full set of consolidated financial statements for investment entities that would otherwise avoid consolidation under the IASB's amendments.

The Action Alert also notes that the views of various board members are split, with three broad camps of members supporting various views.  Accordingly, in addition to the proposals to be put forward in the AASB ED (i.e. include the investment entities amendments but require extensive additional disclosure), two alternative views will be included in the exposure draft:

• Alternative View 1 - put forward by board members who do not support non-consolidation and do not see the proposed disclosures as a remedy.  Not adopting the amendments would result in affected investment entities reporting under Australian Accounting Standards being unable to assert compliance with IFRSs
• Alternative View 2 - supported by board members who would prefer the investment entity amendments to be issued without amendment or additional disclosures, but who accept the disclosures as a compromise to maintain Australia's IFRS compliance.

The broader issue of the adoption of IFRS 10 Consolidated Financial Statements in the Australian context has also given rise to other issues.  These include whether the Australian-specific standard, AASB 1038 Life Insurance Contracts, is compliant with IFRS 10, and how to adopt the suite of standards including IFRS 10 in the not-for-profit and public sectors.  These issues, and related exposure drafts and draft amending standards, were also considered at this meeting.

Other matters of interest

Other discussions at the meeting include:

• Agreement to withdraw Australian Interpretation 1039 Substantive Enactment of Major Tax Bills in Australia, which provides guidance on when tax legislation is considered substantively enacted under AASB 112 Income Taxes (equivalent to IAS 12 Income Taxes). The withdrawal is consistent with the AASB's policy of adopting IFRS without amendment in respect of for-profit entities
• The receipt of a report on differential reporting in the Australian context, including those entities considering themselves to be "non-reporting entities" (and so exempt at least from applying the presentation and disclosure requirements of many Australian standards, or in their entirety).  The AASB is considering whether to remove the 'reporting entity' concept as it applies to differential reporting in Australia and the report will be a crucial document in the AASB's deliberations on this matter
• Finalisation of draft standards on budgetary reporting by not-for-profit public sector entities, which are to be exposed on the AASB's website for 45 days for fatal flaw review
• Finalisation of an amending standard to provide extended transitional relief in relation to defence weapons platforms.

Full details of all matters discussed at the meeting can be found in the AASB Action Alert (link to AASB website).

Noting that "ASIC sees continuous disclosure by listed companies as a bedrock of market integrity", Mr Price went on to comment on the "misconception that continuous disclosure is something done on a purely reactive basis and in an hour or so" before exploring ASX's proposed Guidance Note GN 8 Continuous disclosure: Listing Rules 3.1–3.1B (GN 8) in more detail.

Mr Price outlined the following key messages about continuous disclosure:

• Companies need to be prepared to act quickly to respond to continuous disclosure issues, by having established policies and practices.
• If the company can’t act quickly (e.g. if board approval of an announcement is required), you should consider whether to request a trading halt.
• It is important for companies to know what information about them the market is trading on. This may require monitoring of major sources of news and information, which in some cases will include significant social media sites. They should also be aware of how their company’s shares are trading.
• Good practice when making an announcement is not to assume the reader is sophisticated or leave readers to read between the lines. Companies need to highlight key information and tell it as it is – for instance, don’t describe a scheme of arrangement proposal using takeover bid language.
• Be careful in the headings for the announcement – try to encapsulate the tenor of message there. Headings are often the things that will get reported in the media.
• Apply the listing rule requirements consistently, whether it is good or bad news required to be disclosed.
• If an announcement proves to have been wrong, it may be necessary to update the market to ensure the market is fully informed of material information.

Mr Price then when on to outline the two issues that should be focused upon in designing a continuous disclosure compliance system:

• the importance of having adequate systems in place, especially in the age of social media
• the need for companies to know what, how and when to disclose.

Click for full text of the speech (link to ASIC website).

The Australian government's existing 'Standard Business Reporting' (SBR) programme already makes use of XBRL for the lodgement of information with various government departments.

Approximately 27,000 public and proprietary companies and registered investment schemes are required to lodge their financial reports with the Australian Securities and Investments Commission (ASIC) directly or, in the case of listed public companies and registered schemes, indirectly through the Australian Securities Exchange (ASX), which forwards them to ASIC.

Currently, financial reports must be lodged either as a paper copy, or electronically using the portable document format (PDF).  Entities lodging their reports electronically are also permitted, on a voluntary basis, to lodge financial reports in XBRL format (in addition to mandatory PDF report lodgement).  Few if any entities have elected to lodge using XBRL.

The options paper explores various options in the context of both XBRL and 'inline XBRL' (iXBRL).  iXBRL is a way of embedding and displaying tagged XBRL financial information in an XHTML document, the universal language for web browsers. It allows data to be presented in a form that is possible to read and understand, either on screen or in printed output.

The options considered in the paper are:

• Option 1 - Mandatory lodgement of financial reports using either XBRL (together with PDF lodgement) or iXBRL (removing the requirement to lodge in PDF or paper format)
• Option 2 - Voluntary lodgement of financial reporting in iXBRL format, replacing the need for PDF or paper format for entities lodging in this manner.  Entities not electing to lodge using iXBRL would be required to lodge in PDF or paper format
• Option 3 - Status quo, resulting in no change to existing requirements, i.e. entities could elect to lodge using XBRL but would also be required to lodge in PDF or paper format if they chose to do so.

The options paper seeks feedback on various options without making a recommendation, but notes the particular benefits of mandatory XBRL/iXBRL reporting, including:

• opportunities for businesses and capital markets to share information in a much more meaningful and comparable way, building on the increased harmonisation of global financial reporting and the use of XBRL internationally
• iXBRL being designed for use by both machines and humans, allowing financial reports to be readily understandable to humans and maintaining the basic structure of the report
• allowing Australia to possibly benefit from advancements made during the introduction of XBRL-related technology overseas.

The paper also acknowledges the costs associated with implementation of an XBRL/iXBRL reporting regime, queries which categories of entities should have a mandatory requirement, and debates whether a phased implementation may be preferable.

The options paper is open for comment until 15 March 2013.  Click for:

• Press release (link to Australian government website)
• Access to the options paper (link to Australian Treasury website)

Summary of the new ASX Listing Rules for resources companies:

• For mining companies – a requirement to report in accordance with the 2012 JORC Code (which is expected to be released by JORC in mid-December 2012) and for the disclosure of additional information when exploration results, estimates of mineral resources and ore reserves, and production targets are disclosed for material projects. The new rules also streamline the requirement for prior written consent of the competent person for public reports, and provide the ability for companies to report historical or foreign estimates of mineralisation for material projects subject to certain conditions being satisfied
• For oil and gas companies – a requirement to report in accordance with the Society of Petroleum Engineers - Petroleum Resources Management System (SPE-PRMS) and for the disclosure of additional information when estimates of reserves, contingent resources and prospective resources are disclosed for material projects
• For both mining and oil and gas companies – a requirement to include an annual mineral resources and ore reserves statement or an annual petroleum reserves statement (as the case may be) in the annual report.

ASX-listed mining and oil and gas companies will be provided with a 12-month transition period, with the new rules coming into effect on 1 December 2013.

In addition:

• amendments to the admission listing rules in Chapter 1 (link to ASX website) of the Listing Rules became effective on 1 November 2012
• two Guidance Notes have been substantially rewritten and were reissued on 31 October 2012: Guidance Note 14 'ASX Market Announcements Platform' and Guidance Note 21 'Appeals'.

Click for ASX Companies Update (link to ASX website).

ASIC reviewed the June 2012 financial reports of 320 listed and unlisted entities, with the emphasis of the latter on those entities with larger numbers of users. ASIC's review found financial reporting in Australia is generally of a high standard, with some deficiencies in key areas, and a number of material adjustments have been made.

ASIC announced that its surveillance of December 2012 financial reports of listed entities and other entities with larger numbers of users will include entities with shadow banking activities such as unlisted debenture issuers and selected larger proprietary companies.

Set out below are ASIC's focus areas for the December 2012 review:

• Revenue recognition - including the recognition of rights to future income, and ensuring revenue recognition policies result in revenue being recognised in accordance with the substance of the underlying transaction
• Expenses - ensuring that deferral of expenditure occurs only where the definition of an asset is met, and meeting the requirements of AASB 138 Intangible Assets (equivalent to IAS 38), including expensing start-up, training, relocation and research costs
• Asset values - responding to concerns regarding carrying values of assets, including goodwill, other intangibles and property, plant and equipment.  Also relevant is the disclosure of the key assumptions and associated sensitivity analysis in impairment calculations, the impacts of Australia's carbon tax on impairment, and the need to appropriate account for deferred taxes associated with Australia's Mineral Resource Rent Tax (MRRT)
• Off-balance sheet arrangements - focusing on the non-consolidation of special purpose entities that appear to have been established for the entity’s benefit and investments that have been equity accounted where the investor holds a majority interest
• Going concern - including adequate disclosure of where significant uncertainty exists and why the directors consider the entity to be a going concern
• Non-IFRS financial information disclosures - reviewing non-IFRS financial information disclosures in light of ASIC Regulatory Guide RG 230 Disclosing non-IFRS financial information
• Current - non-current classification - the classification of the entity’s assets and liabilities between current and non-current, focusing on a right of deferral for liabilities and the entity's operating cycle for assets
• Estimates and accounting policy judgements - making material disclosures of sources of estimation uncertainty and significant judgements in applying accounting policies
• Financial instruments - particularly disclosing the methods and significant assumptions used to value financial assets for which there is no observable market data
• New standards - ASIC expects entities to be well advanced in determining the impact of AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements and AASB 12 Disclosure of Interests in Other Entities (equivalent to IFRS 10, IFRS 11 and IFRS 12 respectively) and are required to disclose these impacts in their 31 December 2012 financial reports in accordance with AASB 101 Presentation of Financial Statements (equivalent to IAS 1).

Click for ASIC press release (link to ASIC website).

Under the ASX Listing Rules (specifically Listing Rules 3.1-3.1B), entities are obliged to immediately make disclosure to the ASX of market-sensitive information.  The Australian Parliament has given the rule statutory force in section 674 of the Corporations Act 2001. The ASX has also published Guidance Note 8: Continuous Disclosure: Listing Rules 3.1 - 3.1B,  providing guidance on how the rule should be applied.

The changes clarify a number of matters around the operation of the rules, such as when information is material, the meaning of the term "immediately", the process and content of announcements under the rule, and related matters.  The revised Guidance Note also gives substantially more guidance on how to deal with so-called “earnings surprises”.

Submissions on the consultation materials are due by 30 November 2012 and the ASX expects to finalise the amendments in the first quarter of 2013.

Click for ASX press release (link to ASX website).

The three key challenges for IOSCO as suggested by Mr Medcraft are:

1. The migration of savings from the banking regulatory perimeter to the securities perimeter and with it the increased significance of securities regulation, driven by banking regulation and the search for yield
2. The pace of financial innovation and the ongoing risk that it will outpace regulation, which historically has been shown to lead to crises
3. Continuing globalisation of financial markets and products, requiring a global approach to regulation.

In response, Mr Medcraft suggests the following strategies:

• Engagement with regulators, industry and policy makers - including inviting industry leaders to IOSCO’s board meeting later in 2012 to discuss industry’s views of emerging risks and issues in securities markets
• Co-operation in enforcement and investigations, and providing technical assistance to regulators in emerging markets - and also co-operating with industry
• Evolving from setting best practice principles to setting standards for member organisations, by moving to a majority rather than consensus decision making approach and greater mutual recognition.

In concluding his speech, Mr Medcraft noted:

So, in summary, my vision is for IOSCO to develop into an effective, forward-looking and proactive organisation which is the key authoritative body for securities regulation. I aim to meet this challenge with a strategy based on each of the elements I’ve outlined: engagement, cooperation and standard setting.

Mr Medcraft appointment as chairman-elect of IOSCO was announced in May 2012, with his term commencing in March 2013.

Click for access to the full text of the speech (link to the ASIC website)

The FRC's Managing Complexity Task Force considered the submissions received in response to its consultation process and has recommended that the FRC:

• examine how the current financial reporting regime for the various types of reporting entities in Australia can be best explained and understood, and if needed, seek rationalisation of the regime (for example, through further deregulation of who needs to report)
• support the Australian Accounting Standards Board's ongoing review and consideration of further enhancements to the reduced disclosure regime, including ongoing monitoring of developments in the International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs)
• encourage a more coordinated approach between different agencies of government when considering accounting disclosure requirements
• encourage preparers to make better use of developments in information technology such as XBRL in the delivery of financial reports
• encourage the Australian Securities and Investments Commission to emphasise that, under accounting standards, only material disclosures are required (especially in communications such as the regular commentary about their areas of focus when reviewing financial reports)
• support the Australian Securities and Investments Commission's proposal to foster more meaningful Operating and Financial Reviews (sometimes referred to as Management Discussion and Analysis) in annual reports
• note those submissions which suggest the use of the 'business judgement rule', or a safe harbour for decisions made by directors, to address the issue of over-disclosure in financial reports
• support the Government's proposals to simplify the remuneration report
• reinforce the need for board education on financial reporting
• continue to monitor integrated reporting
• continue to influence the International Accounting Standards Board to undertake reforms including rationalisation of disclosures
• continue to monitor the work of other jurisdictions in addressing the issue of complexity in financial reporting.

The FRC has agreed to progress the recommendations noted in the report.  The Parliamentary Secretary to the Australian Treasurer and the Austalian Minister responsible for the FRC, the Hon Bernie Ripoll MP, has also welcomed the report.

Click for press release and full findings report (links to FRC website).