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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 their requirements are identical to IFRSs as issued by the IASB for for-profit entities. Some additional disclosures were 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.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.