Explanatory Statement
Accounting Standard AASB 2015-10
Amendments to Australian Accounting Standards –
Effective Date of Amendments to AASB 10 and AASB 128
December 2015
EXPLANATORY STATEMENT
Standards Amended by AASB 2015-10
This Standard makes amendments to Accounting Standards AASB 10 Consolidated Financial Statements and AASB 128 Investments in Associates and Joint Ventures. These amendments arise from the issuance of International Financial Reporting Standard Effective Date of Amendments to IFRS 10 and IAS 28 by the International Accounting Standards Board in December 2015.
Power to Make Amendments
Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument. Accordingly, the AASB has the power to amend the Accounting Standards that are made by the AASB as legislative instruments under the Corporations Act 2001.
Main Features of AASB 2015-10
This Standard defers the mandatory effective date (application date) of amendments to AASB 10 and AASB 128 that were originally made in AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (December 2014) so that the amendments are required to be applied for annual reporting periods beginning on or after 1 January 2018 instead of 1 January 2016.
Application Date
AASB 2015-10 is applicable to annual periods beginning on or after 1 January 2016. Early application is permitted.
References to Other AASB Standards
References in this Standard to the titles of other AASB Standards that are legislative instruments are to be construed as references to those other Standards as originally made and as amended from time to time and incorporate provisions of those Standards as in force from time to time.
Consultation Prior to Issuing this Standard
The AASB issued Exposure Draft ED 268 Effective Date of Amendments to AASB 10 and AASB 128 in August 2015 for comment by 9 September 2015. Four submissions were received by the AASB in respect of the proposals in ED 268. There was general support from constituents for adopting the proposals, which would ensure that general purpose financial statements prepared by for-profit entities in accordance with AASB Standards would also comply with International Financial Reporting Standards. The AASB considered the comments it received in finalising
AASB 2015-10.
A Regulation Impact Statement (RIS) has not been prepared in connection with the issue of AASB 2015-10 as the amendments made do not have a substantial direct or indirect impact on business or competition, or are of a minor or machinery nature.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
Accounting Standard AASB 2015-10
Amendments to Australian Accounting Standards –
Effective Date of Amendments to AASB 10 and AASB 128
Overview of the Accounting Standard
This Standard defers the mandatory effective date (application date) of amendments to AASB 10 and AASB 128 that were originally made in AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture so that the amendments are required to be applied for annual reporting periods beginning on or after 1 January 2018 instead of 1 January 2016.
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 Standard AASB 2015-10, titled "Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128," was enacted in 2015 by the Australian Accounting Standards Board (AASB) under the authority conferred by the Corporations Act 2001. This standard was introduced to address the need to align Australian accounting standards with International Financial Reporting Standards (IFRS), specifically to defer the effective date of certain amendments related to consolidated financial statements and investments in associates and joint ventures. The AASB, empowered by the Acts Interpretation Act 1901, has the authority to amend existing accounting standards, ensuring they remain current and effective for stakeholders. The amendments were originally set to be effective from 1 January 2016 but were later deferred to 1 January 2018, as stated in the AASB 2015-10, to provide additional time for entities to implement the changes. The standard was developed following consultation with stakeholders, receiving general support for aligning Australian standards with international practices.
Scope and Application
Accounting Standard AASB 2015-10 applies to entities that are required to prepare general purpose financial statements in accordance with Australian Accounting Standards. This includes for-profit entities, both public and private, as well as not-for-profit entities that are required to prepare such financial statements. The amendments made by AASB 2015-10 relate to Accounting Standards AASB 10 Consolidated Financial Statements and AASB 128 Investments in Associates and Joint Ventures, which in turn were amended in AASB 2014-10. The Standard is applicable to annual periods beginning on or after 1 January 2016, with early application permitted. The amendments are intended to align Australian Accounting Standards with International Financial Reporting Standards, ensuring that financial statements prepared in accordance with AASB Standards are also compliant with IFRS. There are no stated exclusions, exemptions, or thresholds in the Standard, and its application is not extended or restricted through subordinate instruments.
Key Provisions
The AASB 2015-10 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 defers the mandatory effective date of the amendments made to AASB 10 Consolidated Financial Statements and AASB 128 Investments in Associates and Joint Ventures, originally detailed in AASB 2014-10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture. This means that the amendments to AASB 10 and AASB 128 are now required to be applied for annual reporting periods beginning on or after 1 January 2018, rather than the initially scheduled date of 1 January 2016. The amendments were made to align Australian accounting standards with International Financial Reporting Standards (IFRS), ensuring that general purpose financial statements prepared by for-profit entities in accordance with AASB Standards comply with IFRS.
The AASB 2015-10 imposes specific obligations on entities required to prepare financial statements. These entities must ensure that their financial statements comply with the deferred amendments to AASB 10 and AASB 128, which govern consolidated financial statements and investments in associates and joint ventures respectively. Entities must apply these amendments for their financial years beginning on or after 1 January 2018. Early application is permitted, but if an entity chooses to do so, it must disclose this in its financial statements. Additionally, entities must ensure that their financial statements reflect the changes resulting from the amendments, which include adjustments to the consolidation process and the accounting for joint arrangements and associates.
Failure to comply with the provisions of AASB 2015-10 can result in significant legal and financial consequences. While the explanatory statement does not detail specific offences or penalties for non-compliance, it is important to note that financial reporting obligations under the Corporations Act 2001 are stringent. Non-compliance can lead to penalties, including fines and, in severe cases, criminal charges for directors or officers of the entity. The exact penalties depend on the specific circumstances and the severity of the non-compliance, but they can be substantial. Entities are also required to ensure that their financial statements are accurate and comply with all relevant accounting standards, and failure to do so can result in regulatory scrutiny, reputational damage, and potential financial losses.