Media Release
2009 / 01 – 4 December 2009
Government and the AASB reducing the reporting burden for Australian entities
The Chairman of Australia's Financial Reporting Council (FRC), Mr Jeffrey Lucy AM, has welcomed the release of separate proposals by the Australian Government and the Australian Accounting Standards Board (AASB) for reducing the reporting regulatory burden on Australian entities.
Both proposals – one involving wide ranging amendments to the Corporations Act 2001, the other involving changes to Australia's accounting standards – are measures designed to reduce the net time and cost spent by Australian entities in the preparation of financial reports.
The FRC, which has responsibility for providing broad oversight of the process for setting accounting and auditing standards, urges stakeholders to submit their views on the reforms and is keen to observe stakeholder feedback.
The FRC notes that this issue is not unique to Australia and similar issues are being considered in New Zealand as both jurisdictions face the same regulatory concerns.
The proposed corporate law changes
The Corporations Amendment (Corporate Reporting Reform) 2010 Bill proposes streamlined reporting requirements for unlisted public companies established as companies limited by guarantee. The proposal will introduce a three tiered sliding scale financial reporting regime for Australia's 11,000 companies limited by guarantee.
A 'company limited by guarantee' is predominantly used by not-for-profit entities, such as charities, and sporting and recreational bodies.
Other proposals in the Bill include reduced reporting obligations for companies that are parent entities of consolidated entities and a modified test for the payment of dividends.
Details of these proposals can be found at www.treasury.gov.au
The proposed changes to accounting standards
The AASB Consultation Paper, Differential Financial Reporting – Reducing Disclosure Requirements, proposes substantive changes to the accounting standards.
The Board's paper identifies two options for reducing the financial reporting burden currently imposed on small and medium-sized entities.
One option is to develop an Australian second tier of reporting requirements for these entities. This option maintains the full suite of measurement and recognition criteria in IFRS standards but allows for reduced disclosure requirements. The reduced disclosure requirements are modelled on those of the IFRS for SMEs standard.
The other option is the adoption of the International Financial Reporting Standard for Small and Medium-Sized Entities (IFRS for SMEs) issued by the IASB in mid-2009.
The Consultation Paper also proposes to clarify circumstances in which general purpose financial statements (GPFSs) will be required to be prepared. Under the reforms being proposed, financial statements prepared under a legal mandate in accordance with Accounting Standards and lodged on a public register (such as ASIC) would be regarded as GPFSs.
The Consultation Paper can be found at www.aasb.gov.au
Media Enquiries:
Ms Genevieve Watson, FRC Secretary
Email: frcsecretary@treasury.gov.au
Telephone: +61 2 6263 3144