Explanatory Statement
Accounting Standard AASB 2015-2
Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101
January 2015
EXPLANATORY STATEMENT
Reasons for Issuing AASB 2015-2
AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101 makes amendments to AASB 101 Presentation of Financial Statements and consequential amendments to AASB 7 Financial Instruments: Disclosures, AASB 134 Interim Financial Reporting and AASB 1049 Whole of Government and General Government Sector Financial Reporting.
These amendments arise from the issuance of International Financial Reporting Standard Disclosure Initiative (Amendments to IAS 1) by the International Accounting Standards Board in December 2014, and to make an editorial correction.
Main Features of AASB 2015-2
Main Requirements
This Standard amends AASB 101 to provide clarification regarding the disclosure requirements in AASB 101. Specifically, the Standard proposes narrow-focus amendments to address some of the concerns expressed about existing presentation and disclosure requirements and to ensure entities are able to use judgement when applying a Standard in determining what information to disclose in their financial statements.
This Standard also makes an editorial correction to AASB 101.
In addition, as a result of the amendments to AASB 101, this Standard makes consequential amendments to AASB 7, AASB 134 and AASB 1049.
Application Date
AASB 2015-2 applies to annual reporting periods beginning on or after 1 January 2016. Earlier application is permitted for annual reporting periods beginning on or after 1 January 2005 but before 1 January 2016.
Consultation Prior to Issuing this Standard
The AASB issued Exposure Draft ED 249 Disclosure Initiative (Proposed amendments to AASB 101 in March 2014 for comment by 30 June 2014.
Eight submissions were received by the AASB in respect of the proposals in ED 249. The AASB considered the comments it received in making its submission to the IASB and in finalising AASB 2015‑2.
A Regulation Impact Statement (RIS) has not been prepared in connection with the issue of AASB 2015‑2 as the amendments made are minor in nature.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
Accounting Standard AASB 2015-2
Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101
Overview of the Accounting Standard
The amendments in AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101 amends AASB 101 to provide clarification regarding the disclosure requirements in AASB 101. Specifically, the Standard proposes narrow-focus amendments to address some of the concerns expressed about existing presentation and disclosure requirements and to ensure entities are able to use judgement when applying a Standard in determining what information to disclose in their financial statements.
This Standard also makes an editorial correction to AASB 101.
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
Accounting Standard AASB 2015-2, enacted in 2015, was introduced to address specific concerns regarding the disclosure requirements within Australian Accounting Standards, particularly in relation to AASB 101 Presentation of Financial Statements. This amendment was necessitated by the issuance of International Financial Reporting Standard Disclosure Initiative (Amendments to IAS 1) by the International Accounting Standards Board in December 2014, and also included an editorial correction. The Australian Accounting Standards Board (AASB) sought to clarify certain presentation and disclosure requirements to ensure entities could effectively exercise judgement when determining the information to disclose in their financial statements. The policy objective was to enhance the transparency and clarity of financial reporting, thereby facilitating informed decision-making within the Australian economy. The standard became applicable to annual reporting periods beginning on or after 1 January 2016, with earlier application permitted for periods beginning on or after 1 January 2005.
Scope and Application
AASB 2015-2 applies to entities that prepare and present general purpose financial statements in accordance with Australian Accounting Standards. It pertains to entities within the Commonwealth, states, and territories of Australia, including public and private sector organisations that are required to comply with Australian Accounting Standards. The amendments address disclosure requirements in financial statements and impact how entities present and disclose information, particularly in the context of annual reporting periods beginning on or after 1 January 2016. Earlier application is permitted for periods beginning on or after 1 January 2005. The Act does not explicitly state exclusions or exemptions but focuses on clarifying and amending existing disclosure requirements. The scope of the amendments is extended to other relevant standards such as AASB 7, AASB 134, and AASB 1049, making consequential amendments to ensure consistency across the financial reporting framework.
Key Provisions
The AASB 2015-2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101 (section 1) addresses the presentation and disclosure requirements under AASB 101. It introduces narrow-focus amendments to clarify certain disclosure requirements and ensure entities can exercise judgment when determining what information to disclose in their financial statements (section 2). Additionally, it incorporates an editorial correction to AASB 101. The consequential amendments also affect AASB 7, AASB 134, and AASB 1049 (section 2). The standard applies to annual reporting periods beginning on or after 1 January 2016, although earlier application is permitted for periods starting between 1 January 2005 and 31 December 2015 (section 4).
Entities subject to AASB 101 must ensure that their financial statements comply with the amended disclosure requirements as outlined in AASB 2015-2. This includes providing clear and comprehensive disclosures that reflect the financial position and performance of the entity, adhering to the judgemental aspects permitted under the standard. The amendments require entities to review their current disclosures and make necessary adjustments to align with the new requirements. Additionally, the editorial correction mandates that any textual errors in AASB 101 be rectified to maintain the integrity and accuracy of the standard.
Breaches of the requirements outlined in AASB 2015-2 may result in non-compliance with Australian accounting standards, potentially leading to legal and financial repercussions. While specific penalties are not detailed within the explanatory statement, non-compliance could lead to investigations by relevant authorities, such as the Australian Securities and Investments Commission (ASIC). The consequences may include fines, public reprimands, and, in severe cases, legal action against individuals or entities responsible for the non-compliance. Entities are advised to ensure thorough adherence to the standard to avoid these potential adverse outcomes.