Explanatory Statement

Accounting Standard AASB 1048
Interpretation of Standards

December 2020

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 Standards), which comprise both Accounting Standards and Interpretations issued by the International Accounting Standards Board (IASB). The adoption of IFRS 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 (which are 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 AASB 1048 to list the Australian Interpretations, and referring to it 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 AASB 1048.

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 AASB 1048, 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 AASB 1048 that is in force from time to time. AASB 1048 itself will contain the direct references to the external documents and will be reissued periodically.

This approach to clarifying the status of Australian Interpretations ensures there is no difference between the status in the hierarchy of accounting pronouncements 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.

The Australian Accounting Standards themselves are also available free of charge on the AASB website.

Main Features of AASB 1048

AASB 1048 (December 2020) supersedes and repeals the previous version of AASB 1048, issued in December 2017 and amended to March 2020.

Application date

AASB 1048 is applicable to annual reporting periods ending on or after 31 December 2020. 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 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 Table 3 of AASB 1048) 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 up to date.

Changes from AASB 1048 (December 2017)

AASB 1048 issued in December 2020 supersedes the previous version of AASB 1048, issued in December 2017 and amended to March 2020.

The main differences between the previous version (as amended) and this version include:

(a)          the removal from Tables 1 and 2 of versions of Interpretations that do not apply to any of the reporting periods to which this Standard mandatorily applies (see paragraph 2);

(b)         the removal from Tables 1 and 2 of Interpretations that have been superseded by AASB 9 Financial Instruments, AASB 15 Revenue from Contracts with Customers or AASB 16 Leases;

(c)          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 deferral of AASB 17 Insurance Contracts and its consequential amendments, and consequential amendments arising from the issuance of AASB 2019-1 Amendments to Australian Accounting Standards – References to the Conceptual Framework and AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities; and

(d)         the addition of an amended version of the Framework for the Preparation and Presentation of Financial Statements in Table 3 as a result of the issuance of AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material.

Copyright

As for all Australian Accounting Standards promulgated by the AASB, this Standard 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.

Consultation Prior to Issuing this Standard

Public consultation was carried out in developing the various amending 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 amending Standards and outlined the consultation carried out in relation to the Standard.

A Regulation Impact Statement has not been prepared specifically in connection with the issue of AASB 1048 as the amendments made do not have a substantial direct or indirect impact on business or competition, are of a minor or machinery nature or clarify existing requirements.

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

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 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 Table 3 of AASB 1048) 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 them 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.