Link to strategy (Impact)
What do we need to do? (Objectives)
(Measures of success outputs & outcomes)
PBS Outcome 11
Define appropriate reporting frameworks for each of the three sectors - for-profit (e.g., listed and large proprietary companies), not-for-profit (e.g. charities) and public sector
· For-profit private sector financial reporting framework defined and completed by 30/6/2020
· AASB issued in March 2020 AASB 2020-2 Amendments to Australian Accounting Standards – Removal of Special Purpose Financial Statements for Certain For-Profit Private Sector Entities & AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 effective from 1 July 2021 for both Standards.
· At the April 2020 Board meeting, the Board approved to issue an Exposure draft proposing that certain FP entities preparing SPFS will be required to make disclosures in their FS about their compliance with the R&M requirements in AAS.
Appropriate framework for not-for-profit private and public sector defined and other regulator (e.g. ACNC) sponsorship obtained by 30/6/2021
Delayed and/ or Major issues
Not for profit private sector (e.g. charities and other NFPs)
· NFP Framework project delayed due to resourcing issues.
· Board approved project plan for financial reporting framework for NFP private sector entities in November 2019.
· Targeted consultations currently planned for June/Jul 2020 (6 months delay to original project plan)
· Project plan for NFP Conceptual Framework provided to Board at June 2020 Board meeting.
Public sector framework
· Board approved project plans for public sector at November meeting 2019.
· Template and updated project plan endorsed by FRC at its March meeting.
Disclosure in SPFS on compliance with R&M for NFP
· Standard 2019-4Disclosure in Special Purpose Financial Statement of Compliance with Recognition and Measurement Requirements issued in November 2019 requiring disclosure on compliance with recognition and measurement requirements in SPFS of certain NFP entities.
· The Board decided to proceed with ED 291 Not-for-Profit Entity Definition and Guidance and replace the current definition of NFP entity. The Board will consider revised implementation guidance and illustrative examples at future Board meetings.
PBS Outcome 1
· Agree on 3-year program of work and deliver
· Maintain IFRS and New Zealand compliance for for-profit Private sector “publicly accountable” entities
· Tailor IFRS appropriately for other sectors, including developing Australian specific guidance
· Develop guidance on external reporting integral to financial reporting
· Develop guidance on emerging issues related to financial reporting
· Annual program of standards issued, delivered to plan agreed with the Board
· IASB equivalent Standards issued within two months of the release of the IFRS for for-profit entities
· IFRS and NZ compliance maintained for the for-profit private sector “publicly accountable” entities
· Feedback from NFP sector positive regarding the appropriateness of the IFRS tailoring
Tracking slowly but no major issues
Annual program of standards
· NFP Framework, management commentary and remuneration reporting projects planned hours for Q1 2020 not met and off track due to prioritising emerging issues.
· IPSASB Benchmarking and Insurance in public sector also off track due to prioritising emerging issues.
· All other projects/standards either tracking well or slowly but no major issues.
· AASB 2019-6 Amendments to Australian Accounting Standards Research Grants and Not-For-Profit Entities issued in December 2019 for NFP entities with December year-end reporting period provides option to defer for 6 months AASB 1058 for research grants received by an NFP entity.
· AASB 2019-7 issued in December 2019, amending AASB 1049 Whole of Government and General Government Sector Financial Reporting to enable optional rather than mandatory quantitative reconciliation of GAAP and GFS -responding to public sector issues with reconciling AASB 16 and GFS treatments of leases
· AASB 2019-8Amendments to Australian Accounting Standards – Class of Right-of-Use Assets arising under Concessionary Leases issued in December 2019 extending relief from concessionary lease recognition to public sector.
IFRS compliance maintained:
· AASB 2019-5Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards Not Yet Issued in Australia issued in November 2019 to ensure compliance with IFRS
Australia-equivalent IASB Standards issued within 2 months
The AASB issued the Australian-equivalent:
· Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest Rate Benchmark Reform in October 2019 (AASB 2019-3); and
· Classification of Liabilities as Current or Non-current (Amendments to IAS 1) in March 2020 (AASB 2020-1).
Maintain NZ compliance
· ED291 Not-for-Profit Entity Definition and Guidance proposing to replace the current definition of an NFP entity is based on the NZ definition and guidance for Public Benefit Entity (PBE).
· New simplified disclosures standard AASB 1060 issued in March 2020 results in a divergence from the New Zealand RDR Framework (Tier 2). However, the R&M requirements for entities applying the Tier 2 reporting frameworks remains consistent and with the many Australian entities not complying with full R&M requirements, the overall outcome is likely to be more consistent with NZ requirements than currently is. This does not affect publicly accountable entities.
· The AASB agreed to work with the NZ XRB on a joint project addressing issues regarding audit fee disclosures.
Feedback from NFP Sector – IFRS Tailoring
· ACNC provided feedback on ED 293 indicating that they are supportive of increased transparency of financial reporting in the NFP sector (2019-4).
PBS Outcome 1
Enhance profile domestically and internationally
· FRC approved the AASB International strategy in November 2019
· AASB & AUASB Climate change bulletin published in December 2018 has been replicated and issued by IASB
· Positive feedback received from domestic stakeholders onAASB-AUASB joint publication on Coronavirus (see below).
Maintain and enhance key international relationships with IASB, IPSASB, NZASB, AOSSG, International Financial Reporting for NPOs
· Be seen as experts as measured by stakeholder feedback, IASB and IPSASB feedback
· IASB climate-related disclosures “inspired” by AASB and AUASB bulletin mentioned above.
· AASB Technical Principal is the Technical advisor for IPSASB, AASB Deputy Chair Mike Blake currently Deputy Chair of the IPSASB.
· AASB Technical Director part of panel discussion on Extractive Activities in October 2019 at International Forum of Accounting Standard Setters in London.
· AASB Technical Director is a member of the Technical Advisory Group for developing international financial reporting standards for not-for-profit organizations (IFRS4NPO).
· AASB-AUASB joint publication on Coronavirus (see below) mentioned by IAASB and Europe, inspiring them to prepare own version.
· AASB Acting Technical Director invited on panel discussion on Coronavirus impact on reporting by CAANZ
· AASB Acting Technical Director provided feedback on IBOR Phase 2 proposals on behalf of AOSSG to ASAF at its April meeting.
Two thought leadership pieces completed per annum and presented internationally
· The AASB Chair and Staff presented to the IASB directly in a rarely offered opportunity on proposed ED 295 Simplified Disclosure Standard (now AASB 1060) at the December 2019 IASB Meeting in London which is related to IASB project Subsidiaries that are SMEs.
· The IASB Discussions Paper Business Combinations – Disclosures, Goodwill and
Impairmentdiscusses AASB Research Report 9 Perspectives on IAS 36, with the IASB holdingsimilar views to the recommendations of the report.
· The AASB Presented on financial instruments at 2019 AOSSG annual meeting as the financial instruments working group leader.
· Developed and presented proposed updated AOSSG strategy/vision statement, reflecting the AOSSG has an established international position and focusing on improving the standard-setting and financial reporting capacity of the region, as well as influencing the IASB and other stakeholders.
PBS Outcome 1
· Due process followed to ensure the quality of standard-setting:
· Evidence-informed approach to standard setting activities supports need for regulation and proposed solution
· appropriate consultation in accordance with the due process framework
· preparation of regulatory impact statement assessing costs and benefits
· Due process followed for all significant projects
Due Process Framework
· The AASB’s Due Process Frameworkfor Setting Standards approved by FRC at the November 2019 meeting.
· AASB approved standards in accordance with its due process:
o AASB 2019-4
o AASB 2019-5
o AASB 2019-6
o AASB 2019-7
o AASB 2019-8
o AASB 2020-1
o AASB 2020-2
o AASB 1060
Positive feedback from the FRC and the stakeholders
Financial Reporting Council
· FRC approved Due process, Corporate Plan 2019-2020, Education Strategy, Evidence-informed strategy and International Strategy in November 2019.
· No negative feedback in response to due process from FRC.
Feedback from stakeholders
· Feedback indicated that the proposed effective date for AASB 2020-2 and AASB 1060 would not provide adequate time to prepare for implementation. The AASB therefore extended the effective date by 1 year.
Australian Taxation Office
· The AASB received positive feedback from ATO and some users regarding the due process followed for replacing Tier 2 supporting the proposals.
Evidence-Informed Standard Setting Framework
· At the September 2019 AASB Board meeting, the board approved the AASB’s Evidence-Informed Standard-Setting Framework and is available on AASB’s website.
· Ensures the AASB takes an evidence-informed approach, as seen by using the below Research Reports to help inform the Board on decisions.
Research Reports providing evidence in the removal of SPFS
The following reports provided evidence for the AASB in determining the issues with SPFS and ultimately leading to the removal of SPFS for certain entities:
· Research Report 12 Financial Reporting Practices of For-Profit Entities Lodging Special Purpose Financial Statements (August 2019)
· Research Report 11 Review of Special Purpose Financial Statements: Large and Medium-Sized Australian Charities (August 2019).
· Research Report 10 Legislative and Regulatory Financial Reporting Requirements (Updated August 2019)
Other Research Reports
Research Report 14Literature Review: Service Performance Reporting for Not-for-Profits (February 2020)
· Reviews both the Australian and international literatures for service performance reporting NFPs to support the AASB’s Management Commentary and Service Performance Reporting project.
Research Report 13 Parent, Subsidiary and Group Financial Reporting (October 2019)
· Concludes current financial reporting requirements applicable to for-profit parent/subsidiary structures do not warrant change at this time, however additional disclosures are required and will be advised to the IASB as part of post implementation review of AASB 12 separately
Remuneration Reporting and Management Commentary
· Benchmarking reports planned to provide evidence in issues and solutions for respective projects, expecting to progress.
Regulatory Impact Statement
· RIS process to analyse the costs and benefits for AASB 2020-2 and AASB 1060 (see above) completed and approved by Treasury in Q1 2020.
PBS Outcome 1
· Post-implementation reviews conducted (PIR) for all significant projects to assess quality of standard-setting
· No significant changes needed
· PIR feedback is acted upon
· No evidence not contributing to the confidence in the economy.
· Feedback from ASIC, APRA, ACNC surveillance reviews does not indicate loss of confidence due to accounting standard issues
· No significant decline in relevance of financial statements in the capital market
· None as of yet for this period
Confidence in the economy
· No indication of non-contribution to confidence in the economy
· ASIC’s review of 30 June 2019 reports indicated 4% of material restatements. The report stated focus is needed on impairment of non-financial assets, AASB Research Report 9 discusses IAS 36 Impairment of Assets.
No significant decline in relevance of FS in capital markets
· The research report by Stephen Taylor How informative are Australian firms' earnings indicates that there was no shift in pricing of shares due to standards issued previously
PBS Outcome 1
· Improve consistency of implementation:
· Educate stakeholders on the AASB standards, support materials available, including why standards introduced
· Support and encourage high quality teaching of the Australian financial reporting framework and standards at Australian educational institution
· Education initiatives, such as webinars, providing appropriate educational materials to key stakeholders for all significant projects
· Education Strategyapproved by FRC at the November 2019 meeting.
All webinars are used as both a means to educate stakeholders, as well as a tool to receive feedback.
· ED 293 Amendments to AASB 1054 – 132 attendees in July 2019
· ED 291 NFP definition and guidance – 158 attendees in August 2019.
· ED 295 Simplified Disclosures for Tier 2 entities – 167 attendees in November 2019.
· ED 297 Removal of SPFS – 147 attendees in November 2019.
· Accounting for Research Grants – 174 attendees in December 2019.
· General Presentation and Disclosures (with IASB) – 133 attendees in March 2020.
· AASB hosted a series of roundtables across 5 cities for the for-profit and not-for-profit sectors regarding ED 297 and ED 295 in order to educate and receive feedback from stakeholders in October 2019.
· The sessions were also attended by representatives of Treasury, ATO, ASIC and ACNC.
Other educational initiatives
· ‘7-key facts’ was prepared and provided to the public by the AASB, highlighting the key points for ED’s 293, AASB 2020 and AASB 1060 to help stakeholders understand the ED and the standards.
· Education plan consisting of webinar, podcasts and targeted education materials (booklets) for AASB 1060 and AASB 2020-2 in progress.
· The Board decided at the April 2020 Board meeting to issue additional educational material addressing the impact of COVID-19 in certain areas.
· Staff paper updated reflecting the extent and rationale of modifications made to Australian Accounting Standards in the NFP and Public sector.
AASB Staff presented a general AASB Update at the CPA Congress at multiple locations in November 2019.
· FAQs, illustrative examples, staff publications developed on significant interpretive issues
In March 2020 the AASB and AUASB released a joint FAQ on the Impact of Coronavirus on Financial Reporting and the Auditor’s Consideration to provide guidance on some of the issues financial report preparers and auditors should consider
· FAQs on AASB 15 Revenue from Contracts with Customers, AASB 1058 Income of Not-for-Profit Entities and AASB 16 Leases was updated to clarify Chart 3 – Research Findings analysis of how paragraph 35(a) of AASB 15 applies, and by adding new examples to assess whether a transfer of goods or services occurs under research grants.
· FAQs further updated in February 2020, read here.
· AASB 2019-6 issued in December 2019 includes amendments to illustrative examples 4A and 4B accompanying AASB 15 Revenue from Contracts with Customers to clarify the analysis of how paragraph 35(a) of AASB 15 applies.
· Illustrative examples and implementation guidance included in AASB 2019-4
The AASB and AUASB released a joint publication in May 2020 on the Impact of COVID-19 on Going Concern and Related Assessments which provides and overview of directors’ and management’s duties in respect of assessing the solvency and going concern. The publication also provides an overview of an auditor’s obligations in relation to going concern and directors’ declarations of solvency.
· Feedback from ASIC, APRA, ACNC surveillance reviews indicate no significant interpretive issues impacting the consistency of implementation
· AASB addresses research grant issues through amendment to standard and FAQs
· ASIC Surveillance review mentioned above.
· Positive stakeholder feedback on 7education initiatives
· Positive feedback received from domestic stakeholders onAASB-AUASB joint FAQ on Coronavirus released in March 2020
After the October roundtables on ED 295 and ED 297, surveys were completed by participants:
· How valuable did you find this event?
o FP participants = 4.6/5
o NFP participants = 4.2/5
· How helpful was the presentation?
o FP participants = 4.3/5
o NFP participants = 4.4/5
· How did you find the length of the event?
o FP participants = 100% just right
o NFP participants = 90% just right, 5% too short and 5% too long
3 common questions were asked to participants for 4/5 of the webinars this financial year:
How was the quality?
o Excellent = 37%
o Good = 52%
o Average = 9
o Poor = 2%
How helpful was the content?
o Very helpful = 19
o Helpful = 75%
o Not helpful = 6%
Did the presenters meet your expectations?
o Yes = 93%; No = 7%