Explanatory Statement

Accounting Standard AASB 2012-2
Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities

June 2012

EXPLANATORY STATEMENT

Reasons for Issuing AASB 2012-2

AASB 2012-2  makes amendments to Australian Accounting Standards AASB 7 Financial Instruments: Disclosures and AASB 132 Financial Instruments: Presentation.

These amendments arise from the issuance of Disclosures – Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7) by the International Accounting Standards Board in December 2011.

Main Features of AASB 2012-2

AASB 2012-2 amends the required disclosures in AASB 7 to include information that will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position.

This Standard also amends AASB 132 to refer to the additional disclosures added to AASB 7 by this Standard.

A subsequent Standard will establish reduced disclosure requirements for entities preparing general purpose financial statements under Australian Accounting Standards – Reduced Disclosure Requirements in relation to the disclosures added to AASB 7 by this Standard.

Application Date

This Standard applies to annual reporting periods beginning on or after 1 January 2013 and interim periods within those annual reporting periods.

Consultation Prior to Issuing this Standard

The AASB issued Exposure Draft ED 209 Offsetting Financial Assets and Financial Liabilities (proposed amendments to AASB 7 and AASB 132 and proposal relating to Tier 2 disclosure requirements). ED 209 reproduced the proposals included in the IASB’s Exposure Draft ED/2011/1 Offsetting Financial Assets and Financial Liabilities (January 2011) without amendment.

The AASB received six submissions from Australian constituents on ED 209. Submissions received were generally supportive of the proposals.  The AASB considered the comments it received in making its submissions to the IASB on ED/2011/1 and in finalising AASB 2012-2.

A Regulation Impact Statement (RIS) has not been prepared specifically in connection with the issuance of AASB 2012-2 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.

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.