Explanatory Statement
Accounting Standard AASB 2020-1
Amendments to Australian Accounting Standards –Classification of Liabilities as Current or Non-current
March 2020
EXPLANATORY STATEMENT
Standards Amended by AASB 2020-1
This Standard makes amendments to Australian Accounting Standard AASB 101 Presentation of Financial Statements (July 2015). These amendments arise from the issuance of International Financial Reporting Standard Classification of Liabilities as Current or Non-current (Amendments to IAS 1) by the International Accounting Standards Board (IASB) in January 2020.
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 2020-1
This Standard amends AASB 101 to clarify requirements for the presentation of liabilities in the statement of financial position as current or non-current. For example, the amendments clarify that a liability is classified as non-current if an entity has the right at the end of the reporting period to defer settlement of the liability for at least 12 months after the reporting period. The meaning of settlement of a liability is also clarified.
Application Date
AASB 2020-1 is applicable to annual periods beginning on or after 1 January 2022. 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of other AASB Standards that are legislative instruments are to be construed as references to those other Standards as originally made and as amended from time to time and incorporate provisions of those Standards as in force from time to time.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 Exposure Draft ED 259 Classification of Liabilities in February 2015 for comment by 9 May 2015. ED 259 incorporated IASB Exposure Draft ED/2015/1 Classification of Liabilities. The AASB received six formal submissions in respect of the proposals in ED 259, which expressed general support for the proposed amendments while also raising some minor concerns. The AASB also obtained informal feedback via targeted outreach with stakeholders, including accounting firms and professional bodies. The AASB made a submission to the IASB on ED/2015/1, generally agreeing with the proposals and raising some of the minor concerns noted by respondents to ED 259. Six Australian stakeholders made submissions directly to the IASB on ED/2015/1, also broadly supporting the IASB’s proposed amendments.
The IASB analysed the feedback it received on the proposed amendments and decided to finalise the amendments, partially addressing the minor concerns raised by the AASB and Australian stakeholders. The IASB set an effective date of annual periods beginning on or after 1 January 2022, with earlier application permitted. The AASB considered the amendments made by the IASB to IAS 1 Presentation of Financial Statements in finalising AASB 2020-1 and the amendments to AASB 101.
A Regulation Impact Statement (RIS) has not been prepared in connection with the issue of AASB 2020-1 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 2020-1
Amendments to Australian Accounting Standards –
Classification of Liabilities as Current or Non-current
Overview of the Accounting Standard
This Standard makes amendments to Australian Accounting Standard AASB 101 Presentation of Financial Statements (July 2015).
This Standard amends AASB 101 to clarify requirements for the presentation of liabilities in the statement of financial position as current or non-current. For example, the amendments clarify that a liability is classified as non-current if an entity has the right at the end of the reporting period to defer settlement of the liability for at least 12 months after the reporting period. The meaning of settlement of a liability is also clarified.
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.