Explanatory Statement

Accounting Standard AASB 2019-5
Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards Not Yet Issued in Australia
 

November 2019

EXPLANATORY STATEMENT

Standards Amended by AASB 2019-5

This Standard makes amendments to AASB 1054 Australian Additional Disclosures (May 2011).

The Australian Accounting Standards Board (AASB) decided to add an additional disclosure requirement to AASB 1054 on the potential effect on an entity’s financial statements of issued IFRS Standards that have not yet been issued by the AASB. This is to ensure that IFRS compliance can be maintained automatically when for-profit publicly accountable entities comply with Australian 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.

Main Features of AASB 2019-5

Main Requirements

This Standard makes amendments to AASB 1054 by adding a disclosure requirement for an entity intending to comply with IFRS Standards to disclose the information specified in paragraphs 30 and 31 of AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors on the potential effect of an IFRS Standard that has not yet been issued by the AASB. This will ensure that for-profit publicly accountable entities complying with Australian Accounting Standards can assert compliance with IFRS Standards.

Application Date

This Standard applies to annual reporting periods beginning on or after 1 January 2020.  Earlier application is permitted.

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of other AASB Standards that are legislative instruments are to be construed as references to those other Standards as originally made and as amended from time to time and incorporate provisions of those Standards as in force from time to time.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 AASB issued a Fatal-Flaw Review Draft of an amending Standard that would be titled Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards Not Yet Issued in Australia in October 2019 for comment by 31 October 2019. The AASB provided a short comment period as it considered the proposed amendment was straightforward and not controversial. One submission was received by the AASB in respect of the proposals in the Fatal-Flaw Review Draft, generally disagreeing with the proposed amendments.

The AASB considered the feedback received and decided that the proposed amending Standard did not require amendment and that further due process was not needed. Accordingly, the AASB finalised the amending Standard to add the disclosure requirement to AASB 1054.

A Regulation Impact Statement (RIS) has not been prepared in connection with the issue of AASB 2019-5 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 2019-5
Amendments to Australian Accounting Standards –
Disclosure of the Effect of New IFRS Standards Not Yet Issued in Australia

Overview of the Accounting Standard

This Standard makes amendments to AASB 1054 Australian Additional Disclosures (May 2011).

The AASB decided to add an additional disclosure requirement to AASB 1054 on the potential effect on an entity’s financial statements of issued IFRS Standards that have not yet been issued by the AASB. This is to ensure that IFRS compliance can be maintained automatically when for-profit publicly accountable entities comply with Australian Accounting Standards.

This Standard makes amendments to AASB 1054 by adding a disclosure requirement for an entity intending to comply with IFRS Standards to disclose the information specified in paragraphs 30 and 31 of AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors on the potential effect of an IFRS Standard that has not yet been issued by the AASB. This will ensure that for-profit publicly accountable entities complying with Australian Accounting Standards can assert compliance with IFRS Standards.

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.