Explanatory Statement
Amending Standard AASB 2010-9 Amendments to Australian Accounting Standards – Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters
December 2010
EXPLANATORY STATEMENT
Reasons for Issuing AASB 2010-9
In December 2010, the International Accounting Standards Board (IASB) issued Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (Amendments to IFRS 1). That Standard replaced references to a fixed date of ‘1 January 2004’ with ‘the date of transition to IFRSs’ and provided guidance on how an entity should resume presenting financial statements in accordance with IFRSs after a period when the entity was unable to comply with IFRSs as its functional currency was subject to severe hyperinflation.
AASB 2010-9 Amendments to Australian Accounting Standards – Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters, which incorporates relevant parts of the IASB’s Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (Amendments to IFRS 1), was made by the AASB in December 2010 to enable Australian reporting entities to continue to be compliant with International Financial Reporting Standards.
Main Features of AASB 2010-9
In respect of the removal of fixed dates, the amendments provide relief for first-time adopters of Australian Accounting Standards from having to reconstruct transactions that occurred before their date of transition to Australian Accounting Standards.
The amendments in respect of severe hyperinflation provide guidance for entities emerging from severe hyperinflation either to resume presenting Australian-Accounting-Standards financial statements or to present Australian-Accounting-Standards financial statements for the first time.
Application Date
The Amending Standard AASB 2010-9 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 203 Removal of Fixed Dates for First-time Adopters in September 2010. ED 203 reproduced the proposals included in the IASB’s Exposure Draft ED/2010/10 Removal of Fixed Dates for First-time Adopters (September 2010) without amendment.
The AASB received two submissions from Australian constituents on ED 203. The submissions received were generally supportive of the proposals in the ED.
The AASB also issued Exposure Draft ED 206 Severe Hyperinflation in September 2010. ED 206 reproduced the proposals included in the IASB’s Exposure Draft ED/2010/12 Severe Hyperinflation (September 2010) without amendment.
The AASB received one submission from an Australian constituent on ED 206. While acknowledging the need for the amendment, the submission favoured amending IAS 29 Financial Reporting in Hyperinflationary Economies rather than IFRS 1 First-time Adoption of International Financial Reporting Standards, and the AASB expressed similar concerns about the proposals in its submission to the IASB. However, the IASB has not taken this approach in finalising its proposals.
A Regulation Impact Statement has not been prepared in connection with the issuance of AASB 2010-9 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.