Explanatory Statement
Accounting Standard AASB 1048
Interpretation of Standards (November 2024)
November 2024
EXPLANATORY STATEMENT
Reasons for issuing AASB 1048
Australian Accounting Standards that apply to annual periods beginning on or after 1 January 2005 incorporate International Financial Reporting Standards (IFRS Accounting Standards), which comprise both Accounting Standards and Interpretations issued by the International Accounting Standards Board (IASB). The adoption of IFRS Accounting Standards in Australia is in accordance with a strategic direction made by the Financial Reporting Council (FRC).
AASB 1048 clarifies that all Australian Interpretations have the same authoritative status. Those that incorporate the IASB Interpretations must be applied to achieve compliance with IFRS Standards. Australian Interpretations issued by the AASB comprise both AASB and UIG Interpretations. UIG Interpretations were developed by the Urgent Issues Group, a former committee of the AASB.
AASB 1048 also updates references in other Standards to the Conceptual Framework for Financial Reporting and the Framework for the Preparation and Presentation of Financial Statements to subsequent versions.
Need for a service Standard
Australian Interpretations
In the Australian context, Australian Interpretations do not have the same legal status as Standards (delegated legislation) and are treated as ‘external documents’ by the Acts Interpretation Act 1901 and the Legislation Act 2003. Although references in one Standard to a second Standard are ambulatory (automatically moving forward to refer to the most recently-issued version of the second Standard), references in a Standard to external documents are stationary (being fixed in time to refer to the contents of the external document when the Standard was issued). A simple reference to an Australian Interpretation in a Standard can refer only to the Interpretation that existed when the Standard was issued. It cannot refer to any revised version of the Interpretation that may exist at a later reporting date. However, a Standard can refer to a second Standard and, when the first Standard is applied at a later reporting date, the reference will be to the then-current version of the second Standard, even if it has been reissued since the first Standard was issued.
The service Standard approach, as applied to Australian Interpretations, involves issuing this Standard to list the versions of Australian Interpretations, and referring to this Standard in every other Standard where necessary to refer to an Interpretation. This enables references to the Interpretations in all other Standards to be updated by reissuing this service Standard.
This approach preserves the status of Australian Interpretations as ‘external documents’ referred to in a Standard. It does not treat the Interpretations as delegated legislation or confer ambulatory status on the reference. In each Standard where there is a need to refer to an Australian Interpretation, the reference will be to this Standard, phrased as “Interpretation [number] [title] as identified in AASB 1048” (or similar). This reference, being to another Standard, is ambulatory and will refer to the version of this Standard that is in force from time to time. AASB 1048 itself will contain the direct references to the external documents and will be reissued when required.
This approach to clarifying the status of Australian Interpretations ensures there is no difference between the status in the hierarchy accorded to Interpretations in IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors compared with AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors.
Australian conceptual framework
In the Australian context, an Australian conceptual framework pronouncement, such as the Conceptual Framework for Financial Reporting and the Framework for the Preparation and Presentation of Financial Statements, also does not have the same legal status as a Standard (delegated legislation) and, like Interpretations, is treated as an ‘external document’ by the Acts Interpretation Act 1901 and the Legislation Act 2003.
The service Standard approach, as applied to the Australian conceptual framework, involves issuing this Standard to update references to conceptual framework pronouncements in other Standards. This approach preserves the status of such pronouncements as ‘external documents’ referred to in a Standard. It does not treat the pronouncements as delegated legislation or confer ambulatory status on the reference.
Obtaining the Interpretations and Framework pronouncements
The Australian Interpretations and the conceptual framework pronouncements, as external documents, are available free of charge for printing or download on the Australian Accounting Standards Board’s website at www.aasb.gov.au, including the AASB’s digital standards portal (standards.aasb.gov.au).
The Australian Accounting Standards themselves are also available free of charge on the AASB website and portal.
Main Features of AASB 1048
AASB 1048 (November 2024) supersedes and repeals the previous version of AASB 1048, issued in December 2020.
Application date
AASB 1048 is applicable to annual reporting periods ending on or after 31 December 2024. Earlier adoption is permitted. This means that an entity may elect to apply an individual Interpretation prior to its mandatory application, subject to any early application requirements of the Interpretation.
Main requirements
AASB 1048 identifies the Australian Interpretations and classifies them into two groups: those that correspond to an IASB Interpretation and those that do not. Entities are required to apply each relevant Australian Interpretation in preparing financial statements that are subject to the Standard. (See AASB 1057 Application of Australian Accounting Standards.)
In respect of the first group of Interpretations (listed in Table 1 of AASB 1048), it is necessary for those Australian Interpretations, where relevant, to be applied in order for an entity to be able to make an explicit and unreserved statement of compliance with IFRS Accounting Standards. The IASB defines IFRS Standards to include the IFRIC and the SIC Interpretations.
The second group (listed in Table 2 of AASB 1048) comprises the other Australian Interpretations, which do not correspond to the IASB Interpretations, to assist financial statement preparers and users to identify the other authoritative pronouncements necessary for compliance in the Australian context.
AASB 1048 (refer Tables 3 and AusCF3) also updates references to the Conceptual Framework for Financial Reporting and the Framework for the Preparation and Presentation of Financial Statements to subsequent versions.
AASB 1048 is reissued (or amended) when necessary to keep the Tables of external documents (and the cross-references to the documents in other Standards) up to date.
Changes from AASB 1048 (December 2020)
AASB 1048 issued in November 2024 supersedes the previous version of AASB 1048, issued in December 2020.
The main differences between the previous version and this version include:
- the removal from the tables of versions of Interpretations and conceptual framework pronouncements that do not apply to any of the reporting periods to which this Standard mandatorily applies, including Interpretation 1047 Professional Indemnity Claims Liabilities in Medical Defence Organisations, which has been superseded by AASB 17 Insurance Contracts;
- the addition of amended versions of Interpretations in Tables 1 and 2, where applicable to any reporting period to which this Standard mandatorily applies. This reflects amended versions of Interpretations arising as a result of the consequential amendments in Appendix D of AASB 18 Presentation and Disclosure in Financial Statements and the editorial corrections set out in AASB 2021-7 Amendments to Australian Accounting Standards – Effective Date of Amendments to AASB 10 and AASB 128 and Editorial Corrections; and
- the addition of an amended version of the Conceptual Framework for Financial Reporting in Table 3 as a result of an editorial correction set out in AASB 2021-7.
Consultation Prior to Issuing this Standard
Public consultation was carried out in developing the Standards that resulted in the amended versions of Interpretations that have been added to this version of AASB 1048. An Explanatory Statement accompanied each of those Standards and outlined the consultation carried out in relation to the Standard.
An Impact Analysis has not been prepared specifically in connection with the issue of AASB 1048 as the amendments reflected in the new principal version are of a minor or machinery nature and do not have a substantial direct or indirect impact on business or competition.
Legislative Features of Accounting Standards
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.
References to Other AASB Standards
References in this Standard to 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.
Copyright
This Standard, like all Accounting Standards promulgated by the AASB, is published with Commonwealth of Australia copyright. Educational, commercial and other publishers are able to request the AASB for permission to reprint all or parts of this Standard, which is given without charge.
Exemption from Sunsetting
Accounting Standards promulgated by the AASB that are legislative instruments are exempt from the sunsetting provisions of the Legislation Act 2003 through section 12 of the Legislation (Exemptions and Other Matters) Regulation 2015 (Item 18(a)).
The AASB’s Australian Accounting Standards incorporate Standards set by the International Accounting Standards Board in respect of publicly accountable for-profit entities. The AASB’s Accounting Standards are exempt from sunsetting because a more stringent review process than sunsetting applies to the Standards. This review process ensures Australia’s Accounting Standards regime remains consistent with international Standards. Typically, the AASB Standards are revised at least once within a ten-year period, with most of the Standards subject to much more frequent revisions. Each revision follows the stringent review process (which includes the opportunity for public comment) in order to remain consistent with international Standards. It is very unlikely that any AASB Standard would not have been amended (or else considered for amendment) within a ten-year period through these review processes. Therefore, if it applied, a ten-year sunsetting regime would have very limited practical application to AASB Standards. Parliamentary oversight is retained whenever a Standard is replaced or amended since the Standards are disallowable instruments and subject to the normal tabling and scrutiny process as required by the Legislation Act 2003.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
Accounting Standard AASB 1048 Interpretation of Standards (November 2024)
Overview of the Accounting Standard
Australian Interpretations and conceptual framework pronouncements are ‘external documents’. A simple reference to them in Australian Accounting Standards is therefore a stationary reference. AASB 1048 enables references to the Interpretations and conceptual framework pronouncements in other Standards to be updated by reissuing (or amending) AASB 1048 and its lists of the external documents, when those cross-references in other Standards refer to the external documents “as identified in AASB 1048”.
AASB 1048 identifies the Australian Interpretations and classifies them into two groups: those that correspond to an IASB Interpretation and those that do not. Entities are required to apply each relevant Australian Interpretation in preparing financial statements that are subject to the Standard. (See AASB 1057 Application of Australian Accounting Standards.)
In respect of the first group of Interpretations (listed in Table 1 of AASB 1048), it is necessary for those Australian Interpretations, where relevant, to be applied in order for an entity to be able to make an explicit and unreserved statement of compliance with IFRS Accounting Standards. The IASB defines IFRS Standards to include the IFRIC and the SIC Interpretations.
The second group (listed in Table 2 of AASB 1048) comprises the other Australian Interpretations, which do not correspond to the IASB Interpretations, to assist financial statement preparers and users to identify the other authoritative pronouncements necessary for compliance in the Australian context.
AASB 1048 (refer Tables 3 and AusCF3) also updates references to the Conceptual Framework for Financial Reporting and the Framework for the Preparation and Presentation of Financial Statements to subsequent versions.
AASB 1048 is reissued (or amended) when necessary to keep the Tables of external documents (and the cross-references to the documents in other Standards) up to date.
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.
Note: The name of this instrument was amended on registration as the instrument as lodged did not have a unique name (see subsection 10(2), Legislation Rule 2016).