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AASB 2014-2 - Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2 Disclosure Requirements - June 2014

AASB 2014-2 - Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2 Disclosure Requirements - June 2014

Administered by Department of the Treasury

Legislation au F2014L00937 Not in force Legislative Instrument

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Explanatory Statement

Accounting Standard AASB 2014-2
Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2 Disclosure Requirements

June 2014

EXPLANATORY STATEMENT

Reasons for Issuing AASB 2014-2

Main Features of AASB 2014-2

AASB 2014-2 amends AASB 1053 to:

(a) clarify that AASB 1053 only applies to general purpose financial statements;

(b) make AASB 1053 consistent with the availability of the option under AASB 1 First-time Adoption of Australian Accounting Standards to apply Australian Accounting Standards retrospectively in accordance with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors;

(c) clarify certain circumstances in which entities resuming Tier 2 reporting requirements can apply the AASB 108 option in AASB 1;

(d) permit an entity applying Tier 2 reporting requirements for the first time to do so directly using the requirements in AASB 108 (rather than applying AASB 1) when, and only when, the entity had not applied, or only selectively applied, applicable recognition and measurement requirements in its most recent previous annual special purpose financial statements;

(e) require an entity that resumes the application of Tier 2 reporting requirements through AASB 1 (whether or not it uses the AASB 108 option in AASB 1) because it had not continued to apply all applicable recognition and measurement requirements (i.e. the circumstances addressed in paragraph 19B(d) of AASB 1053 – introduced by AASB 2014-2) to disclose, in accordance with the requirements of AASB 1 paragraphs 23A and 23B:

(i) the reason it stopped applying Tier 2 reporting requirements;

(ii) the reason it is resuming the application of Tier 2 reporting requirements; and

(iii) when the AASB 108 option in AASB 1 is used, the reasons for electing to resume the application of Tier 2 reporting requirements as if it had never stopped applying them; and

(f) require an entity that resumes the application of Tier 2 reporting requirements without applying AASB 1 or the AASB 108 option in AASB 1 because it had continued to apply all applicable recognition and measurement requirements (i.e. the circumstances addressed in paragraph 19B(e) of AASB 1053 – introduced by AASB 2014-2) to disclose:

(i) the reason it stopped applying Tier 2 reporting requirements; and

(ii) the reason it is resuming the application of Tier 2 reporting requirements.

Application Date

AASB 2014-2 applies to annual reporting periods beginning on or after 1 July 2014. Earlier application is permitted for annual reporting periods beginning on or after 1 July 2009 but before 1 July 2014.

Consultation Prior to Issuing this Standard

The AASB issued Exposure Draft ED 248 Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2 Disclosure Requirements in May 2014.

Three submissions were received by the AASB in respect of the proposals in ED 248. The AASB considered those submissions at its May 2014 meeting, and explains the reasons for its decisions in the Basis for Conclusions accompanying AASB 2014-2.

A Regulation Impact Statement (RIS) has not been prepared specifically in connection with the issuance of AASB 2014-2 as the amendments made do not have a more than minor regulatory impact on business, community organisations or individuals.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011

Accounting Standard AASB 2014-2
Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2 Disclosure Requirements

Overview of the Accounting Standard

AASB 2014-2 Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2 Disclosure Requirements makes amendments to AASB 1053 Application of Tiers of Australian Accounting Standards to clarify that AASB 1053 relates only to general purpose financial statements, to make it consistent with the availability of an option in AASB 1 First-time Adoption of Australian Accounting Standards and to clarify certain circumstances in which an entity applying Tier 2 reporting requirements can avail itself of that option. AASB 2014-2 also amends AASB 1053 to:

(a) permit an entity applying Tier 2 reporting requirements for the first time to do so directly using the requirements in AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors (rather that applying AASB 1) when, and only when, the entity had not applied, or only selectively applied, applicable recognition and measurement requirements in its most recent previous annual special purpose financial statements; and

(b) specify certain disclosure requirements when an entity resumes the application of Tier 2 reporting requirements.

Human Rights Implications

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.

Conclusion

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.

Overview

The Accounting Standards Board (AASB) issued AASB 2014-2 Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2 Disclosure Requirements in June 2014. This legislation amends AASB 1053 Application of Tiers of Australian Accounting Standards to address specific issues related to the transition between different tiers of Australian Accounting Standards and the disclosure requirements associated with these transitions. The AASB sought to clarify the applicability of AASB 1053 to general purpose financial statements, to ensure consistency with the option under AASB 1 First-time Adoption of Australian Accounting Standards to apply Australian Accounting Standards retrospectively, and to specify the circumstances under which entities can apply the AASB 108 option. Additionally, the amendments provide clarity on the conditions under which entities can apply Tier 2 reporting requirements for the first time and detail the disclosure requirements when an entity resumes the application of Tier 2 reporting requirements. These amendments were made in response to submissions received during the consultation process and aim to enhance the clarity and consistency of accounting standards in Australia.

Scope and Application

The AASB 2014-2 Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2 Disclosure Requirements pertains to entities preparing general purpose financial statements, as defined under AASB 1053 Application of Tiers of Australian Accounting Standards. The Act applies to these entities irrespective of their size or industry, including for-profit and not-for-profit organisations, as well as public sector entities, provided they are preparing general purpose financial statements. The scope of AASB 2014-2 extends to annual reporting periods beginning on or after 1 July 2014, with an allowance for earlier application in periods starting between 1 July 2009 and 30 June 2014. The Act does not explicitly exclude any specific entities or transactions, but it is limited to the context of financial reporting and the application of Australian Accounting Standards. The Act can be extended or modified through subordinate instruments, which may provide further clarifications or specific applications, though such instruments are not mentioned in the explanatory statement provided.

Key Provisions

The AASB 2014-2 Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2 Disclosure Requirements (paragraph 1) amends AASB 1053 Application of Tiers of Australian Accounting Standards. The primary changes introduced by AASB 2014-2 include clarifying that AASB 1053 only applies to general purpose financial statements (paragraph 2(a)), ensuring consistency with the option in AASB 1 First-time Adoption of Australian Accounting Standards to apply Australian Accounting Standards retrospectively (paragraph 2(b)), and providing guidance on when entities resuming Tier 2 reporting requirements can use the AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors option (paragraph 2(c)). Additionally, AASB 2014-2 allows entities applying Tier 2 reporting requirements for the first time to directly use AASB 108 requirements if they had not applied, or only selectively applied, applicable recognition and measurement requirements in their most recent previous annual special purpose financial statements (paragraph 2(d)). The Standard also mandates specific disclosures for entities resuming Tier 2 reporting requirements (paragraphs 2(e) and 2(f)). Entities subject to AASB 1053 must ensure that their financial reporting complies with the clarified requirements of AASB 2014-2. This involves confirming that any transition to or between reporting tiers adheres to the specified conditions and that appropriate disclosures are made when resuming Tier 2 reporting requirements. For instance, entities resuming Tier 2 reporting requirements must detail the reasons for ceasing and resuming these requirements and, if applicable, explain the reasons for electing to resume as if the cessation had never occurred (paragraph 2(e)(iii)). Failure to comply with the requirements of AASB 2014-2 may result in non-compliance with Australian Accounting Standards, potentially leading to misleading or inaccurate financial statements. While the Standard does not explicitly outline specific offences, penalties, or civil/criminal consequences for non-compliance, such failures could result in regulatory scrutiny, reputational damage, or other indirect consequences for the entity. It is important for entities to ensure adherence to these requirements to maintain the integrity of their financial reporting.

Area of Law: Commercial Law
Instrument: Regulation
Concepts: Definitions & Interpretation; Reporting & Disclosure Obligations; Compliance Obligations

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.

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