Accounting Standard AASB 2018-5 Amendments to Australian Accounting Standards – Deferral of AASB 1059

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Legislation au F2018L01620 Not in force Legislative Instrument

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Explanatory Statement

Accounting Standard AASB 2018-5
Amendments to Australian Accounting Standards –
Deferral of AASB 1059

 

October 2018

EXPLANATORY STATEMENT

Standards Amended by AASB 2018-5

This Standard makes amendments to AASB 1059 Service Concession Arrangements: Grantors (July 2017).

AASB 1059 applies to public sector entities that are grantors of service concession arrangements. The AASB considered comments from stakeholders preparing for the implementation of AASB 1059, some of whom requested a deferral of the mandatory effective date. The AASB noted the issues raised and decided to defer the effective date to assist stakeholders with their implementation efforts.

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 2018-5

Main Requirements

AASB 2018-5 amends the mandatory effective date (application date) of AASB 1059 so that AASB 1059 is required to be applied for annual reporting periods beginning on or after 1 January 2020 instead of 1 January 2019. It also defers the consequential amendments to other pronouncements set out in Appendix D of AASB 1059.

AASB 1059 can still be applied from the original effective date, or earlier, because earlier application of AASB 1059 is still permitted.

Application Date

AASB 2018-5 applies to annual reporting periods beginning on or after 1 January 2019, which was the original mandatory effective date of AASB 1059.

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of other AASB Standards that are legislative instruments are to be construed as references to those other Standards as originally made and as amended from time to time and incorporate provisions of those Standards as in force from time to time.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 Board issued a Fatal-Flaw Review version of the proposed amending Standard in September 2018 for public comment by 10 October 2018. The Board received three submissions, from public sector stakeholders, including the Heads of Treasuries Accounting and Reporting Advisory Committee and the Australasian Council of Auditors General. All three respondents supported the deferral of the mandatory date of AASB 1059 by one year to annual reporting periods beginning on or after 1 January 2020.

A Regulation Impact Statement (RIS) has not been prepared in connection with the issue of AASB 2018-5 as the amendments made do not have a substantial direct or indirect impact on business or competition.


Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011

Accounting Standard AASB 2018-5
Amendments to Australian Accounting Standards –
Deferral of AASB 1059

Overview of the Accounting Standard

This Standard amends the mandatory effective date (application date) of AASB 1059 Service Concession Arrangements: Grantors (July 2017) so that AASB 1059 is required to be applied for annual reporting periods beginning on or after 1 January 2020 instead of 1 January 2019. It also defers the consequential amendments to other pronouncements set out in Appendix D of AASB 1059.

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 2018-5, enacted in 2018, addresses the need for a deferral of the mandatory effective date of AASB 1059 Service Concession Arrangements: Grantors. The Australian Accounting Standards Board (AASB), established under the Corporations Act 2001, issued this amendment to provide additional time for public sector entities to implement the new accounting standard. The policy objective was to alleviate the concerns raised by stakeholders who requested more time to adapt to the changes introduced by AASB 1059. This amendment effectively postpones the application of AASB 1059 from 1 January 2019 to 1 January 2020, thereby allowing entities additional time for compliance without diminishing any human rights or freedoms.

Scope and Application

The Accounting Standard AASB 2018-5 pertains to entities in the public sector that act as grantors of service concession arrangements, as outlined in AASB 1059. The scope of this legislation is confined to these entities, and it is specifically tailored to address accounting standards within the Australian public sector. The amendment affects annual reporting periods beginning on or after 1 January 2019, the original effective date of AASB 1059, and extends to the deferral of the application date to annual reporting periods beginning on or after 1 January 2020. The AASB has the authority to make these amendments under the Corporations Act 2001, with the power to repeal, rescind, revoke, amend, or vary legislative instruments, including accounting standards. There are no stated exclusions or exemptions, and the standard applies across the Commonwealth of Australia, ensuring uniformity in financial reporting practices among public sector entities involved in service concession arrangements.

Key Provisions

The main operative sections of AASB 2018-5 include the amendment of the mandatory effective date of AASB 1059, which now requires application for annual reporting periods beginning on or after 1 January 2020 (section 1). This amendment also defers the consequential amendments to other pronouncements that were set out in Appendix D of AASB 1059 (section 2). Public sector entities that are grantors of service concession arrangements must now comply with the updated effective date of AASB 1059, while still having the option to apply the standard from the original effective date or earlier (section 3). The standard applies to annual reporting periods beginning on or after 1 January 2019, which was the original mandatory effective date of AASB 1059 (section 4). The obligations imposed by AASB 2018-5 require public sector entities to align their financial reporting practices with the updated requirements of AASB 1059, ensuring that annual reporting periods starting from 1 January 2020 incorporate the amended standards. Entities must also ensure that any references to other AASB standards within AASB 1059 are interpreted as referring to those standards as amended over time (section 5). The standard encourages consultation and feedback from stakeholders, as demonstrated by the Board's issuance of a Fatal-Flaw Review version for public comment prior to finalisation (section 6). There are no specific offences or penalties outlined within AASB 2018-5 for non-compliance with the amended effective date of AASB 1059. However, failure to comply with the requirements of AASB 1059 could potentially result in misstated financial reports, which might attract scrutiny or legal consequences under other applicable financial reporting and corporate laws. The consequences of non-compliance would depend on the specific circumstances and the applicable laws in force at the time of non-compliance (section 7).

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