Explanatory Statement
Accounting Standard AASB 2012-1
Amendments to Australian Accounting Standards – Fair Value Measurement – Reduced Disclosure Requirements
March 2012
EXPLANATORY STATEMENT
Reasons for Issuing AASB 2012-1
AASB 2012-1 makes amendments to Australian Accounting Standards, to incorporate and amend reduced disclosure requirements in preparing general purpose financial statements. These amendments arise from the issuance of AASB 13 Fair Value Measurement in September 2011.
Main Features of AASB 2012-1
AASB 2012-1 sets out the disclosure requirements of AASB 13 from which entities applying the second Tier of reporting requirements are exempt and adds paragraphs to AASB 13 that state those exemptions. It also amends reduced disclosure requirements of other Australian Accounting Standards that were amended as a consequence of the issuance of AASB 13.
Application Date
This Standard applies to annual reporting periods beginning on or after 1 July 2013. Earlier application is permitted for annual reporting periods beginning on or after 1 July 2009 but before 1 July 2013, provided that the following are also adopted for the same period:
(a) AASB 1053 Application of Tiers of Australian Accounting Standards;
(b) AASB 13 Fair Value Measurement; and
(c) AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13
Consultation Prior to Issuing this Standard
The AASB issued Exposure Draft ED 219 AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13: Tier 2 Proposals in September 2011. The submissions received on ED 219 were generally supportive of the proposals. The AASB considered the comments it received in finalising AASB 2012-1.
A Regulation Impact Statement (RIS) has not been prepared specifically in connection with the issuance of AASB 2012-1. A relevant analysis is contained in the RIS prepared in connection with the issue of AASB 1053 Application of Tiers of Australian Accounting Standards.
Statement of Compatibility with Human Rights
This Standard is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
This Standard is issued by the AASB in furtherance of the objective of facilitating the Australian economy. It does not diminish or limit any of the applicable human rights or freedoms, and thus does not raise any human rights issues.
Overview
The Accounting Standards Board (AASB) issued AASB 2012-1 in March 2012 to amend Australian Accounting Standards to incorporate reduced disclosure requirements in preparing general purpose financial statements. These amendments were necessary due to the introduction of AASB 13 Fair Value Measurement, issued in September 2011, and were aimed at reducing the burden on entities, particularly those applying the second Tier of reporting requirements. This standard is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 and was developed in furtherance of the objective of facilitating the Australian economy. The AASB considered feedback from stakeholders during the development of the standard, as evidenced by the generally supportive submissions received on Exposure Draft ED 219 AASB 13 Fair Value Measurement. The application date for AASB 2012-1 is annual reporting periods beginning on or after 1 July 2013, with earlier application permitted under certain conditions.
Scope and Application
The AASB 2012-1 applies to entities preparing general purpose financial statements in Australia, specifically those that adopt Australian Accounting Standards. It is pertinent to both Tier 1 and Tier 2 entities, with a focus on modifying the disclosure requirements as per AASB 13 Fair Value Measurement. The Standard is applicable to annual reporting periods beginning on or after 1 July 2013, though earlier adoption is permissible for periods starting from 1 July 2009. The Standard's application is contingent upon the simultaneous adoption of AASB 1053, AASB 13, and AASB 2011-8. The AASB 2012-1 serves to streamline the disclosure obligations for entities applying the second tier of reporting requirements, aligning them with the reduced disclosure stipulations of AASB 13. This amendment is intended to facilitate a more efficient and standardised approach to financial reporting in Australia.
Key Provisions
The main operative sections of AASB 2012-1 are sections that detail the amendments to the existing Australian Accounting Standards, particularly in relation to fair value measurement and disclosure requirements. Section 1 explains the reason for issuing AASB 2012-1, which is to incorporate reduced disclosure requirements in preparing general purpose financial statements, arising from AASB 13 Fair Value Measurement. Section 2 outlines the main features of AASB 2012-1, which include the disclosure requirements of AASB 13 for entities applying the second Tier of reporting requirements, and amendments to other Australian Accounting Standards as a consequence of AASB 13. Section 3 provides details on the application date, stating that the standard applies to annual reporting periods beginning on or after 1 July 2013, with the option for earlier application under certain conditions.
The obligations and requirements imposed by AASB 2012-1 on the parties it governs include ensuring compliance with the reduced disclosure requirements when preparing financial statements. Entities must adhere to the exemptions and amendments specified in AASB 2012-1, particularly those applying the second Tier of reporting requirements, as well as those making amendments to other Australian Accounting Standards. This involves careful consideration and application of the provisions to ensure that financial statements accurately reflect the requirements set forth in the standard. Additionally, entities must ensure that any earlier application of the standard is done in conjunction with the adoption of AASB 1053, AASB 13, and AASB 2011-8, as outlined in the explanatory statement.
Regarding the consequences of non-compliance, AASB 2012-1 does not explicitly outline specific civil or criminal penalties for breach. However, the Australian Accounting Standards Board (AASB) relies on the broader regulatory framework provided by the Corporations Act 2001 and other relevant legislation to enforce compliance with accounting standards. Non-compliance with these standards could potentially lead to legal repercussions under the Corporations Act, which includes penalties for providing misleading or deceptive financial reports. The maximum penalties for such offences can be significant, including fines and imprisonment for directors and officers found guilty of breaches.