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

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

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Legislation au F2019L01585 Not in force Legislative Instrument

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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.

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 Standard AASB 2019-5, Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards Not Yet Issued in Australia, was enacted in 2019. This legislation aims to address the gap in ensuring that for-profit publicly accountable entities can maintain compliance with International Financial Reporting Standards (IFRS) when adhering to Australian Accounting Standards. The Australian Accounting Standards Board (AASB) introduced this amendment to AASB 1054 Australian Additional Disclosures to require entities to disclose the potential impact of IFRS standards not yet issued by the AASB on their financial statements. The AASB, exercising its power under the Corporations Act 2001, has mandated these amendments to uphold IFRS compliance seamlessly within Australian financial reporting frameworks. The policy objective is to enhance transparency and ensure that entities can assert IFRS compliance while following Australian standards.

Scope and Application

The AASB 2019-5 Accounting Standard pertains to amendments of Australian Accounting Standards specifically regarding the disclosure of the potential effects of new International Financial Reporting Standards (IFRS) that have not yet been issued in Australia. This Standard is an amendment to AASB 1054 Australian Additional Disclosures, primarily affecting for-profit publicly accountable entities that aim to comply with IFRS Standards. By mandating additional disclosures about the potential impacts of forthcoming IFRS Standards, the Standard ensures that entities complying with Australian Accounting Standards can also assert compliance with IFRS Standards. The amendments apply to annual reporting periods beginning on or after 1 January 2020, although earlier application is permitted. The AASB has the authority to make these amendments under the Corporations Act 2001, which allows for the amendment of accounting standards as legislative instruments. This Standard does not extend or restrict its application through subordinate instruments, and there are no exclusions, exemptions, or thresholds specified within the explanatory statement.

Key Provisions

The main operative sections of AASB 2019-5 involve the amendment of AASB 1054 Australian Additional Disclosures to include a new disclosure requirement for entities intending to comply with IFRS Standards. Specifically, AASB 2019-5 (paragraph 30) mandates that entities disclose the potential effect on their financial statements of any IFRS Standards that have been issued but not yet adopted by the AASB. This amendment is designed to ensure that for-profit publicly accountable entities can maintain compliance with IFRS Standards while also adhering to Australian Accounting Standards. The new requirement, as outlined in paragraphs 30 and 31 of AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, applies to annual reporting periods commencing on or after 1 January 2020, although earlier application is permitted. The AASB 2019-5 imposes specific obligations on entities covered by the standard. These entities must now include detailed disclosures regarding the potential effects of new IFRS Standards that have been issued but are not yet adopted by the AASB. This involves disclosing the anticipated impact of these standards on their financial statements. The purpose of this requirement is to maintain transparency and consistency in financial reporting, ensuring that stakeholders are adequately informed about the potential future effects of international accounting standards on the entity's financial health and reporting practices. In terms of consequences for non-compliance, AASB 2019-5 does not explicitly outline specific penalties or legal consequences for failing to meet the disclosure requirements. However, the non-compliance with Australian Accounting Standards generally can lead to various civil and criminal penalties under the Corporations Act 2001. These may include fines, disqualification from managing corporations, and other legal actions against individuals or entities found to have breached the standards. The precise nature and severity of these penalties depend on the specific circumstances of non-compliance and the discretion of the courts or relevant regulatory bodies.

Area of Law: Accounting Law
Instrument: Regulation
Concepts: Definitions & Interpretation; Reporting & Disclosure Obligations; Regulatory Standards

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.

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