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AASB research into financial reporting by non-corporate or small entities

  • AASB (Australian Accounting Standards Board) (lt blue) Image

29 Apr 2021

The Australian Accounting Standards Board (AASB) has published its Research Report No. 16 'Financial Reporting by Non-Corporate or Small Entities' that presents an overview of the academic literature on financial reporting by non-corporate and small entities.

The report’s overall objective is to answer key questions about the coverage of non-corporate and small entities’ reports, their user and stakeholder needs, and their compliance and regulatory oversight. 

The report shows that there is some consensus in the academic literature about the mismatch between the needs of users and the information that is reported and about difficulties applying a conceptual framework targeted at for-profit entities to the reporting of not-for-profit entities. Some studies raise concerns regarding the compliance burden that detailed reporting requirements places on small entities. 

The authors of the more than 400 articles surveyed for the report highlight the importance of both financial and non-financial information, of mandatory reporting requirements, and of oversight by large donors, auditors and government authorities. While large donors are normally able to obtain the information required, other users are restricted to financial reports — and the academic literature highlights breaches in compliance and misrepresentation in the financial reporting in this sector. Examples cited are late filing of financial statements, poor coverage of environmental issues, and diversity in reporting of art and heritage assets. The articles also notes that, similar to the for-profit sector sector, there are financial and reputational incentives for non-corporate and small entities to misreport. 

Please click to access the research report on the AASB website.

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