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FRC task force finalises report on complexity in financial reporting

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11 Oct 2012

The Australian Financial Reporting Council (FRC) has released the findings drawn from the submissions received in response to its 'Managing Complexity in Financial Reporting' report.

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).

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