Explanatory Statement
Accounting Standard AASB 2008-13 Amendments to Australian Accounting Standards arising from AASB Interpretation 17 – Distributions of
Non-cash Assets to Owners
December 2008
EXPLANATORY STATEMENT
Standards Amended by AASB 2008-13
This Standard makes amendments to the following Australian Accounting Standards:
- AASB 5 Non-current Assets Held for Sale and Discontinued Operations; and
- AASB 110 Events after the Balance Sheet Date.
These amendments arise from the issuance of AASB Interpretation 17 Distributions of Non-cash Assets to Owners.
Main Features of this Standard
Application Date
This Standard is applicable prospectively to annual reporting periods beginning on or after 1 July 2009. Retrospective application is not permitted. This Standard shall be applied when AASB Interpretation 17 is applied. Earlier application is permitted. If an entity applies this Standard for a period beginning before 1 July 2009, it shall disclose that fact and also apply AASB 3 Business Combinations (March 2008, as amended), AASB 127 Consolidated and Separate Financial Statements (as amended in May 2008) and AASB Interpretation 17 for the same period.
Main Requirements
The issuance of AASB Interpretation 17 necessitates consequential amendments to AASB 5 and AASB 110. The amendments are in respect of the classification, presentation and measurement of non-current assets held for distribution to owners in their capacity as owners and the disclosure requirements for dividends that are declared after the reporting period but before the financial statements are authorised for issue, respectively.
Consultation Prior to Issuing AASB 2008-13
The AASB issued AASB Interpretation 17 Distributions of Non-cash Assets to Owners in December 2008, which is equivalent to IFRIC Interpretation 17 Distributions of Non-cash Assets to Owners.
Prior to issuing AASB 2008-13, the AASB invited comments from Australian constituents on the proposals regarding distributions of non-cash assets to owners and the consequential amendments to other Australian Accounting Standards resulting from IFRIC’s Draft Interpretation D23 Distributions of Non-cash Assets to Owners. The AASB received four submissions from Australian constituents. Submissions received were generally supportive, however, some of the conclusions arrived at in D23 were questioned by constituents. The AASB included comments in its submission to the IASB that stronger rationales were considered necessary to support the conclusions reached by the IASB.
A Regulation Impact Statement has not been prepared in connection with the issue of AASB 2008-13 as the amendments made do not have a substantial direct or indirect impact on business or competition, are of a minor or machinery nature or clarify existing requirements.
Overview
The Accounting Standard AASB 2008-13, enacted in 2008, addresses the need to amend existing Australian Accounting Standards to align with AASB Interpretation 17, which concerns the distribution of non-cash assets to owners. This Standard amends AASB 5 Non-current Assets Held for Sale and Discontinued Operations and AASB 110 Events after the Balance Sheet Date to reflect the new requirements for classifying, presenting, and measuring non-current assets held for distribution to owners and the related disclosure obligations. The Australian Accounting Standards Board (AASB) introduced these amendments to ensure consistency and clarity in financial reporting practices. Prospective application of the Standard is mandatory for annual reporting periods beginning on or after 1 July 2009, with earlier application permitted if the entity discloses this and applies other relevant standards concurrently. The AASB sought and considered feedback from Australian constituents before issuing the amendments, ensuring that the changes were well-received and adequately justified.
Scope and Application
The AASB 2008-13 Amendments to Australian Accounting Standards arising from AASB Interpretation 17 – Distributions of Non-cash Assets to Owners applies to entities that prepare and present financial statements in accordance with Australian Accounting Standards. Specifically, it amends AASB 5 Non-current Assets Held for Sale and Discontinued Operations, and AASB 110 Events after the Balance Sheet Date. This Standard is applicable prospectively to annual reporting periods beginning on or after 1 July 2009, with earlier application permitted if entities also apply AASB 3, AASB 127, and AASB Interpretation 17 for the same period. The amendments clarify the classification, presentation and measurement of non-current assets held for distribution to owners in their capacity as owners and address disclosure requirements for dividends declared after the reporting period but before the financial statements are authorised for issue. The Act operates nationally within Australia, aligning Australian Accounting Standards with international practices as interpreted by the International Accounting Standards Board. There are no exclusions or exemptions specified within the text, and the application of the Standard is not extended or restricted through subordinate instruments.
Key Provisions
AASB 2009-110, resulting from AASB Interpretation 17, primarily amends two existing Australian Accounting Standards: AASB 5 Non-current Assets Held for Sale and Discontinued Operations, and AASB 110 Events after the Balance Sheet Date. These amendments are necessary to address the classification, presentation, and measurement of non-current assets held for distribution to owners in their capacity as owners, as well as the disclosure requirements for dividends declared after the reporting period but before the financial statements are authorised for issue. The amendments respond to AASB Interpretation 17, which deals specifically with distributions of non-cash assets to owners.
Entities governed by this legislation must ensure that they apply the new provisions prospectively from annual reporting periods beginning on or after 1 July 2009. Retrospective application is explicitly prohibited. If an entity chooses to apply the amendments for a period beginning before 1 July 2009, it must disclose this fact and also apply AASB 3 Business Combinations (March 2008, as amended), AASB 127 Consolidated and Separate Financial Statements (as amended in May 2008), and AASB Interpretation 17 for the same period. This ensures consistency and comparability in financial reporting.
Failure to comply with the requirements of AASB 2009-110 may result in financial statements that do not accurately reflect the true financial position and performance of the entity. This could lead to misinterpretation by stakeholders, including investors, creditors, and regulators. While the legislation does not explicitly outline criminal or civil penalties for non-compliance, entities may face scrutiny and potential reputational damage. Regulatory bodies may also impose corrective measures or require restatement of financial reports to ensure compliance. It is crucial for entities to adhere to these standards to maintain transparency and integrity in financial reporting.