Explanatory Statement

Amending Standard AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets

November 2010

EXPLANATORY STATEMENT

Reasons for Issuing AASB 2010-6

The International Accounting Standards Board (IASB) has issued Disclosures – Transfers of Financial Assets (Amendments to IFRS 7) relating to  disclosures on transfers of financial assets, which supersedes paragraph 13 of IFRS 7 and requires additional disclosures on transfers of financial assets for annual reporting periods beginning on or after 1 July 2011. 

AASB 2010-6 Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets, which incorporates the IASB’s Amendments to IFRS 7, was made by the AASB in November 2010 to enable Australian reporting entities to continue to be compliant with International Financial Reporting Standards in relation to disclosures on transfers of financial assets.

Main Features of AASB 2010-6

The main outcome of the Amending Standard is to add new disclosure requirements about financial assets that have been transferred to another entity, or derecognised.  The main reasons for the Amending Standard are:

(i) to help users of financial statements evaluate the risk exposures relating to transferred financial assets and the effect of those risks on an entity’s financial position; and

(ii) to promote transparency in the reporting of transfer transactions, particularly those that involve securitisation of financial assets.

Application Date

The Amending Standard AASB 2010-6 is applicable to annual reporting periods beginning on or after 1 July 2011 with early adoption permitted for annual reporting periods beginning on or after 1 January 2005 but before 1 July 2011.

Consultation Prior to Issuing this Standard

The AASB issued Exposure Draft ED 177 Derecognition in April 2009.  ED 177 reproduced the proposals included in the IASB’s Exposure Draft ED/2009/3 Derecognition (April 2009) without amendment. 

The AASB received six submissions from Australian constituents on ED 177.  Submissions received were generally supportive.

A Regulation Impact Statement has not been prepared in connection with the issuance of AASB 2010-6 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.