Explanatory Statement

Accounting Standard AASB 2012-4
Amendments to Australian Accounting Standards – Government Loans

June 2012

EXPLANATORY STATEMENT

Reasons for Issuing AASB 2012-4

AASB 2012-4 makes amendments to Australian Accounting Standard AASB 1 First-time Adoption of Australian Accounting Standards.

These amendments arise primarily from the issuance of Government Loans (Amendments to IFRS 1) by the International Accounting Standards Board in March 2012.

Main Features of AASB 2012-4

AASB 2012-4 adds an exception to the retrospective application of Australian Accounting Standards to require that first-time adopters apply the requirements in AASB 139 Financial Instruments: Recognition and Measurement (or AASB 9 Financial Instruments) and AASB 120 Accounting for Government Grants and Disclosure of Government Assistance prospectively to government loans existing at the date of transition to Australian Accounting Standards. This means that first-time adopters would not recognise the corresponding benefit of the government loan received at a below-market rate of interest as a government grant. However, entities may choose to apply the requirements of AASB 139 (or AASB 9) and AASB 120 to government loans retrospectively if the information needed to do so had been obtained at the time of initially accounting for that loan. These amendments give first-time adopters the same relief as existing preparers of Australian-Accounting-Standards financial statements.

Application Date

This Standard applies to annual reporting periods beginning on or after 1 January 2013.  Earlier application is permitted for annual reporting periods beginning on or after 1 January 2005 but before 1 January 2013.

Consultation Prior to Issuing this Standard

The AASB issued Exposure Draft ED 221 Government Loans (proposed amendments to AASB 1).  ED 221 reproduced the proposals included in the IASB’s Exposure Draft ED/2011/5 Government Loans (proposed amendments to IFRS 1) (October 2011) without amendment.  The AASB considered the comments it received in making its submission to the IASB on ED/2011/5 and in finalising AASB 2012-4.

A Regulation Impact Statement (RIS) has not been prepared specifically in connection with the issuance of AASB 2012-4 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.