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Australia adopts investment entities amendments

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14 Aug 2013

The Australian Accounting Standards Board (AASB) has issued an Amending Standard which implements the International Accounting Standards Board's 'Investment Entities' amendments in the Australian context. The issue of the Amending Standard follows a long debate about the investment entities amendments in Australia, with divergent views being expressed, including the possibility of not adopting the amendments at all. However, the final Amending Standard adopts the IASB's amendments without modification and represents a change from original proposals which may have required additional Australian disclosures requiring consolidated financial information to be included in Australian financial reports.

In developing the Amending Standard, the AASB decided they should reject "the approach of not adopting the IASB's amendments for Australian investment entities as this would result in Australian investment entities not being able to assert IFRS compliance".

The decision to adopt the IASB's amendments without additional disclosures responds to constituent feedback, the vast majority of which did not support the proposed disclosures. The AASB was persuaded by constituent arguments that fair value information was the most relevant to investors in investment entities and that the costs of preparing additional disclosure requirements proposed would disadvantage Australian entities by comparison to their international counterparts.

The AASB further concluded, again on the basis of constituent feedback, that the existing disclosure requirements in AASB 12 Disclosure of Interests in Other Entities (equivalent to IFRS 12) would be sufficient to meet the needs of users of financial statements of investment entities, but that it would undertake a post-implementation review at a later time to determine if additional disclosures are warranted.

As a result of the amendments, Australian investment entities are provided with an exception to consolidation, and they are required to measure unconsolidated subsidiaries at fair value through profit or loss.

The amendments are effective from 1 January 2014 and early adoption is permitted. Click for:

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.