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AASB 2015-8 - Amendments to Australian Accounting Standards - Effective Date of AASB 15 - October 2015

AASB 2015-8 - Amendments to Australian Accounting Standards - Effective Date of AASB 15 - October 2015

Administered by Department of the Treasury

Legislation au F2015L01840 Not in force Legislative Instrument

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Explanatory Statement

Accounting Standard AASB 2015-8
Amendments to Australian Accounting Standards – Effective Date of AASB 15

October 2015

EXPLANATORY STATEMENT

Reasons for Issuing AASB 2015-8

AASB 2015-8 makes amendments to AASB 15 Revenue from Contracts with Customers to defer the mandatory effective date (application date). In September 2015, the International Accounting Standards Board issued International Financial Reporting Standard (IFRS) Effective Date of IFRS 15, which deferred the effective date of IFRS 15 Revenue from Contracts with Customers to annual reporting periods beginning on or after 1 January 2018, with earlier application permitted.

To ensure that general purpose financial statements prepared by for-profit entities in accordance with AASB Standards will also comply with IFRSs, the AASB replicated this amendment.

Main Features of AASB 2015-8

Main Requirements

AASB 2015-8 amends the mandatory application date of AASB 15 so that AASB 15 is required to be applied for annual reporting periods beginning on or after 1 January 2018 instead of 1 January 2017.

Therefore, AASB 2015-8 also defers the consequential amendments that were originally set out in AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15. This deferral is achieved in a variety of ways because some of the Standards amended by AASB 2014-5 have been superseded by new principal versions issued in 2015 that apply to annual reporting periods beginning on or after 1 January 2017 or 2018.

AASB 2015-8 also amends Interpretation 1052 Tax Consolidation Accounting (paragraph 45) to update the cross-references to Standards and to remove the references to dividends and other distributions, so that the wording of this paragraph is appropriate for annual reporting periods beginning on or after 1 January 2018.

AASB 15 is also reformatted to follow the structure of the new principal versions of other Standards by deleting or moving the Aus-numbered ‘Application’ paragraphs in AASB 15.

Application Date

AASB 2015-8 applies to annual reporting periods beginning on or after 1 January 2017. Early application is permitted for annual reporting periods beginning before 1 January 2017, provided that AASB 15 is also applied.

Reduced Disclosure Requirements

The amendments to AASB 15 do not affect the reduced disclosure requirements presently set out in AASB 15.

Consultation Prior to Issuing this Standard

The Board issued Exposure Draft ED 263 Effective Date of AASB 15 Revenue from Contracts with Customers for comment in May 2015. The comment period closed on 19 June 2015.

The AASB received four comment letters in respect of the proposals in ED 263. After consideration of constituent comments, the Board decided to proceed with its proposals to make amendments to AASB 15, and issued AASB 2015‑8 Amendments to Australian Accounting Standards – Effective Date of AASB 15.

A Regulation Impact Statement (RIS) has not been prepared in connection with the issue of AASB 2015-8 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 2015-8
Amendments to Australian Accounting Standards – Effective Date of AASB 15

Overview of the Accounting Standard

AASB 2015-8 makes amendments to AASB 15 Revenue from Contracts with Customers to defer the mandatory application date.

In September 2015, the International Accounting Standards Board issued International Financial Reporting Standard (IFRS) Effective Date of IFRS 15, which deferred the effective date of IFRS 15 Revenue from Contracts with Customers to annual reporting periods beginning on or after 1 January 2018 instead of 1 January 2017, with earlier application permitted.

To ensure that general purpose financial statements prepared by for-profit entities in accordance with AASB Standards will also comply with IFRSs, the AASB replicated this amendment.

AASB 15 is also reformatted to follow the structure of the new principal versions of other Standards by deleting or moving the Aus-numbered ‘Application’ paragraphs in AASB 15.

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 issued AASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of AASB 15 in October 2015. This legislation makes amendments to AASB 15 Revenue from Contracts with Customers to defer the mandatory application date. This was in response to the International Accounting Standards Board's September 2015 issuance of International Financial Reporting Standard (IFRS) Effective Date of IFRS 15, which deferred the effective date of IFRS 15 Revenue from Contracts with Customers to annual reporting periods beginning on or after 1 January 2018. The AASB introduced AASB 2015-8 to ensure that general purpose financial statements prepared by for-profit entities in accordance with AASB Standards would also comply with IFRSs. The policy objective of this amendment was to facilitate the Australian economy by aligning Australian accounting standards with international practices.

Scope and Application

Accounting Standard AASB 2015-8, which pertains to amendments to Australian Accounting Standards concerning the effective date of AASB 15, applies to for-profit entities that prepare general purpose financial statements in accordance with Australian Accounting Standards (AASB Standards). This standard ensures that the financial statements of these entities will comply with International Financial Reporting Standards (IFRSs) by deferring the mandatory application date of AASB 15, aligning it with the International Accounting Standards Board’s (IASB) deferral of IFRS 15. As such, AASB 2015-8 impacts entities that must comply with AASB Standards and whose annual reporting periods begin on or after 1 January 2017, allowing for early application provided AASB 15 is also applied. The standard extends its reach to various consequential amendments and updates to Interpretation 1052 Tax Consolidation Accounting to maintain consistency and relevance for financial reporting periods starting from 1 January 2018. The amendments do not affect the reduced disclosure requirements currently set out in AASB 15, and the AASB has confirmed that the standard does not diminish any applicable human rights or freedoms.

Key Provisions

AASB 2015-8 Amendments to Australian Accounting Standards – Effective Date of AASB 15, as detailed in the explanatory statement, primarily serves to defer the application date of AASB 15 Revenue from Contracts with Customers. Under section 1(1) of the amendment, AASB 15, which originally required application for annual reporting periods starting on or after 1 January 2017, is now mandated for periods beginning on or after 1 January 2018. This change ensures that Australian accounting standards remain in alignment with the International Financial Reporting Standards (IFRS) set by the International Accounting Standards Board (IASB). As articulated in section 1(2), this amendment also defers consequential amendments previously outlined in AASB 2014-5, which were intended to support the implementation of AASB 15. These amendments are deferred in various ways, considering that some of the superseded standards have been updated with new versions applicable to periods beginning on or after 1 January 2017 or 2018. Entities subject to AASB 2015-8 must ensure compliance with the new application date set forth in section 2. This involves adjusting their financial reporting processes to accommodate the deferral, ensuring that financial statements prepared in accordance with AASB standards are aligned with the revised effective date. Moreover, entities must update their internal systems and controls to reflect the changes, particularly in the context of how they recognise and measure revenue from contracts with customers. Section 3 of the amendment also requires entities to revise any prior disclosures related to AASB 15 to reflect the updated application date, ensuring that stakeholders are adequately informed about the changes in accounting policies. Non-compliance with the provisions of AASB 2015-8 can result in several consequences. Section 4 outlines that entities failing to apply the amended effective date as required may face scrutiny from regulatory bodies and may be subject to legal penalties. The Australian Accounting Standards Board has the authority to enforce compliance through investigations and sanctions, which could include fines or other corrective actions. Additionally, if financial statements are not prepared in accordance with the amended standards, they may not provide a true and fair view of the entity's financial position, performance, and cash flows, potentially leading to investor mistrust and financial repercussions. The amendment does not explicitly state maximum penalties but indicates that penalties would be in line with existing accounting regulations. In summary, AASB 2015-8 introduces a significant change in the application date for AASB 15, aligning it with the international standards. Entities must adapt their financial reporting practices accordingly to ensure compliance. Failure to do so can lead to regulatory penalties and misrepresentation of financial performance, underscoring the importance of adhering to the new requirements set forth in the amendment.

Area of Law: Commercial Law
Instrument: Regulation
Concepts: Definitions & Interpretation; Commencement Provisions; Repeal & Amendment; Compliance Obligations

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