Explanatory Statement
Accounting Standard AASB 2009-12 Amendments to Australian Accounting Standards
December 2009
EXPLANATORY STATEMENT
Standards Amended by AASB 2009-12
This Standard makes amendments to the following Australian Accounting Standards and Interpretations:
- AASB 5 Non-current Assets Held for Sale and Discontinued Operations;
- AASB 8 Operating Segments;
- AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors;
- AASB 110 Events after the Reporting Period;
- AASB 112 Income Taxes;
- AASB 119 Employee Benefits;
- AASB 133 Earnings per Share;
- AASB 137 Provisions, Contingent Liabilities and Contingent Assets;
- AASB 139 Financial Instruments: Recognition and Measurement;
- AASB 1023 General Insurance Contracts;
- AASB 1031 Materiality;
- Interpretation 2 Members’ Shares in Co-operative Entities and Similar Instruments;
- Interpretation 4 Determining whether an Arrangement contains a Lease;
- Interpretation 16 Hedges of a Net Investment in a Foreign Operation;
- Interpretation 1039 Substantive Enactment of Major Tax Bills in Australia; and
- Interpretation 1052 Tax Consolidation Accounting.
AASB 8 Operating Segments is amended as a result of the issuance of IAS 24 Related Party Disclosures by the International Accounting Standards Board (IASB) in November 2009.
All the other amendments principally arise from editorial corrections made by the IASB to its Standards and Interpretations (IFRSs) and by the AASB to its pronouncements.
Main Features of this Standard
Application Date
This Standard is applicable to annual reporting periods beginning on or after 1 January 2011. Early adoption is permitted for annual reporting periods beginning on or after I January 2005 but before 1 January 2011.
In respect of AASB 8, this Standard amends paragraph 34 of AASB 8 for annual reporting periods beginning on or after 1 January 2011. If an entity applies the revised AASB 124 Related Party Disclosures for an earlier period, it shall apply the amendment to paragraph 34 of AASB 8 for that earlier period.
Main Requirements
The amendment to AASB 8 requires an entity to exercise judgement in assessing whether a government and entities known to be under the control of that government are considered a single customer for the purposes of certain operating segment disclosures.
This Standard also makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of IFRSs by the IASB.
These amendments have no major impact on the requirements of the amended pronouncements.
Consultation Prior to Issuing AASB 2009-12
The amendment to AASB 8 is the only substantive aspect of AASB 2009-12 and is a consequential amendment arising from the issuance of revised AASB 124 (December 2009). The AASB issued Exposure Draft ED 170 Relationships with the State in December 2008. ED 170 reproduced the proposals included in the IASB’s Exposure Draft Relationships with the State (December 2008) without amendment. The AASB received four submissions from Australian constituents on ED 170. Submissions received were generally supportive.
A Regulation Impact Statement has not been prepared in connection with the issue of AASB 2009-12 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 2009-12, enacted in December 2009, was introduced to address the need for alignment and clarification of Australian Accounting Standards with the International Financial Reporting Standards (IFRS). This Standard was issued by the Australian Accounting Standards Board (AASB), an entity responsible for developing and maintaining accounting standards in Australia. The primary objective of AASB 2009-12 was to ensure consistency and accuracy in financial reporting by making amendments to various Australian Accounting Standards and Interpretations, including AASB 5, AASB 8, and others. These amendments primarily resulted from editorial corrections made by the International Accounting Standards Board (IASB) and were intended to reflect changes in IFRSs while maintaining the integrity and applicability of Australian standards. The Standard applied to annual reporting periods beginning on or after 1 January 2011, with early adoption permitted for periods starting after 1 January 2005 but before 1 January 2011.
Scope and Application
The AASB 2009-12 amendments to Australian Accounting Standards primarily apply to entities that prepare financial reports under the Australian Accounting Standards. These standards, when amended, affect various aspects of accounting including non-current assets held for sale, operating segments, accounting policies, events after the reporting period, income taxes, employee benefits, earnings per share, provisions, financial instruments, general insurance contracts, materiality, and related party disclosures, among others. The geographic reach of these amendments is national, as they pertain to entities operating within Australia that adhere to Australian Accounting Standards. The amendments are effective for annual reporting periods beginning on or after 1 January 2011, with early adoption permitted for periods beginning after 1 January 2005 but before 1 January 2011. The amendments are intended to align Australian standards with the International Financial Reporting Standards as issued by the International Accounting Standards Board, ensuring consistency and clarity in financial reporting across jurisdictions.
Key Provisions
The legislation F2009L04669, titled "AASB 2009-12 Amendments to Australian Accounting Standards", pertains to various Australian Accounting Standards and Interpretations, making amendments primarily for editorial corrections and consequential changes due to updates in International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB). The main operative sections (paragraphs) involved in these amendments are AASB 5, AASB 8, AASB 108, AASB 110, AASB 112, AASB 119, AASB 133, AASB 137, AASB 139, AASB 1023, AASB 1031, Interpretation 2, Interpretation 4, Interpretation 16, Interpretation 1039, and Interpretation 1052. These amendments include changes to reflect the issuance of IAS 24 by the IASB and editorial corrections to various standards.
The amendments impose specific obligations on entities that prepare financial reports under Australian Accounting Standards. For instance, the amendment to AASB 8 requires entities to exercise judgement when determining whether a government and entities known to be under its control should be considered a single customer for certain operating segment disclosures. Additionally, entities must ensure that their financial reporting aligns with the editorial amendments made across various standards, ensuring consistency and accuracy in financial disclosures.
There are no explicit offences, penalties, or civil/criminal consequences outlined in the legislation for non-compliance with these amendments. However, entities that fail to comply with Australian Accounting Standards, including these amendments, may face scrutiny from regulators and potential reputational damage. The Australian Accounting Standards Board (AASB) and the Australian Securities and Investments Commission (ASIC) oversee compliance, and entities that do not adhere to the standards may be subject to investigations or corrective actions to ensure adherence to the prescribed accounting standards.