Explanatory Statement

Accounting Standard AASB 2012-3
Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities

June 2012

EXPLANATORY STATEMENT

Reasons for Issuing AASB 2012-3

AASB 2012-3 makes amendments to Australian Accounting Standard AASB 132 Financial Instruments: Presentation.  These amendments arise from the issuance of Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32) by the International Accounting Standards Board in December 2011.

Main Features of AASB 2012-3

AASB 2012-3 adds application guidance to AASB 132 to address inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of “currently has a legally enforceable right of set-off” and that some gross settlement systems may be considered equivalent to net settlement.

Application Date

This Standard applies to annual reporting periods beginning on or after 1 January 2014.  Earlier application is permitted for annual reporting periods beginning on or after 1 January 2005 but before 1 January 2014, provided that AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities is also applied.

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 submission to the IASB on ED/2011/1 and in finalising AASB 2012-3.

A Regulation Impact Statement (RIS) has not been prepared specifically in connection with the issuance of AASB 2012-3 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.