Explanatory Statement
Accounting Standard AASB 2026-2
Amendments to Australian Accounting Standards –
Extending the Application of the Conceptual Framework and Limiting the Ability of Not-for-Profit Entities to Prepare Special Purpose Financial Statements
April 2026
EXPLANATORY STATEMENT
Standards Amended by AASB 2026-2
This Standard makes amendments to numerous Australian Accounting Standards, Interpretations and other pronouncements issued by the Australian Accounting Standards Board, including the Conceptual Framework for Financial Reporting (Conceptual Framework) and AASB 1057 Application of Australian Accounting Standards.
These amendments arise from the AASB’s policy of adopting IFRS Accounting Standards for both for-profit and not-for-profit entities and its review of the Australian financial reporting framework.
Main Features of AASB 2026-2
This Standard amends the Conceptual Framework and AASB 1057 to:
(a) extend the application of the Conceptual Framework and Australian Accounting Standards to not-for-profit entities (both private sector and public sector) that:
(i) are required by legislation to comply with either Australian Accounting Standards or accounting standards;
(ii) are required only by their constituting document or another document to prepare financial statements that comply with Australian Accounting Standards, subject to an exemption if the relevant document was created and last amended before 1 July 2029; or
(iii) elect to prepare general purpose financial statements; and
(b) introduce ‘Aus’ paragraphs to the Conceptual Framework to add Australian-specific guidance for not-for-profit entities.
This Standard also consequentially amends AASB 1054 Australian Additional Disclosures to revise the set of not-for-profit private sector entities required to provide specified disclosures in special purpose financial statements, where prepared, and to amend the extent of disclosure required.
When the amendments are applicable, some not-for-profit entities might need to prepare general purpose financial statements for the first time. This Standard amends AASB 1053 Application of Tiers of Australian Accounting Standards to make transitional relief available for those entities preparing general purpose financial statements complying with Tier 2 Australian Accounting Standards – Simplified Disclosures reporting requirements for the first time following these amendments.
In addition, this Standard also makes consequential amendments to various Australian Accounting Standards resulting from the amendments above, and to the Framework for the Preparation and Presentation of Financial Statements, Statement of Accounting Concepts SAC 1 Definition of the Reporting Entity and AASB Practice Statement 2 Making Materiality Judgements.
Application Date
This Standard applies to annual periods beginning on or after 1 July 2029, with earlier application permitted.
Marked-up Text
This Standard incorporates marked-up text to clearly identify the amendments to the Australian Accounting Standards, Interpretations and other pronouncements. All amendments are incorporated using clean text into the compilations of the pronouncements when they are prepared, based on the legal commencement date of the amendments.
Consultation Prior to Issuing this Standard
In October 2024, the AASB issued AASB Exposure Draft ED 334 Limiting the Ability of Not-for-Profit Entities to Prepare Special Purpose Financial Statements, which was open for public comment by 28 February 2025. To facilitate obtaining helpful feedback, ED 335 General Purpose Financial Statements – Not-for-Profit Private Sector Tier 3 Entities was also issued by the AASB for the same comment period, in recognition of the relationship between the two Exposure Drafts.
In developing ED 334, the Board had regard to the feedback received on AASB Discussion Paper Development of Simplified Accounting Requirements (Tier 3 Not-for-Profit Private Sector Entities), which preceded ED 334 and ED 335. In addition, the AASB sought the input of its Not-for-Profit Project Advisory Panel in forming its proposals.
The AASB conducted five outreach events on ED 334 and ED 335 during the exposure period, as well as developing a webcast and other materials and conducting targeted stakeholder outreach to support engagement on the proposals. Fifty-eight participants attended the virtual outreach sessions and 17 participants attended in-person roundtable sessions. The AASB received 17 formal written submissions and 25 survey responses regarding its ED 334 proposals, and a further five formal written submissions to ED 335 that included feedback relevant to the ED 334 proposals.
After considering the feedback received, the AASB decided to finalise the proposals in ED 334 largely as exposed. However, having regard to feedback that its objective in developing the proposed transitional relief might not be met and noting the opportunity for entities to structure their basis of reporting to access similar relief, the AASB decided not to continue its proposal to limit the availability of specified transitional provisions only to early adopters of the Standard. Accordingly, the amendments in this Standard make the optional transitional relief available to all entities that prepare Tier 2 general purpose financial statements for the first time as a result of applying this Standard, whether that is early or mandatory adoption of this Standard.
A Policy Impact Analysis has not been prepared in connection with the issue of AASB 2026-2 (and the related Standard AASB 1061 General Purpose Financial Statements – Not-for-Profit Private Sector Tier 3 Entities). The related Standard sets out the recognition, measurement, presentation and disclosure requirements for a new tier of reporting requirements (Tier 3) applicable to certain not-for-profit private sector entities. The related Standard is expected to alleviate the incremental financial reporting costs for not-for-profit private sector Tier 3 entities arising out of the amendments introduced by AASB 2026-2. The optional transitional relief would also reduce the costs for entities preparing Tier 2 general purpose financial statements for the first time. The Office of Impact Analysis considered a preliminary Impact Analysis prepared by the AASB and concluded that a formal Policy Impact Analysis was not required.
Legislative Features of 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.
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.
Copyright
This Standard, like all Accounting Standards promulgated by the AASB, 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.
Exemption from Sunsetting
Accounting Standards promulgated by the AASB that are legislative instruments are exempt from the sunsetting provisions of the Legislation Act 2003 through section 12 of the Legislation (Exemptions and Other Matters) Regulation 2015 (Item 18(a)).
The AASB’s Australian Accounting Standards incorporate Standards set by the International Accounting Standards Board in respect of publicly accountable for-profit entities. The AASB’s Accounting Standards are exempt from sunsetting because a more stringent review process than sunsetting applies to the Standards. This review process ensures Australia’s Accounting Standards regime remains consistent with international Standards. Typically, the AASB Standards are revised at least once within a ten-year period, with most of the Standards subject to much more frequent revisions. Each revision follows the stringent review process (which includes the opportunity for public comment) in order to remain consistent with international Standards. It is very unlikely that any AASB Standard would not have been amended (or else considered for amendment) within a ten-year period through these review processes. Therefore, if it applied, a ten-year sunsetting regime would have very limited practical application to AASB Standards. Parliamentary oversight is retained whenever a Standard is replaced or amended since the Standards are disallowable instruments and subject to the normal tabling and scrutiny process as required by the Legislation Act 2003.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the
Human Rights (Parliamentary Scrutiny) Act 2011
Accounting Standard AASB 2026-2
Amendments to Australian Accounting Standards – Extending the Application of the Conceptual Framework and Limiting the Ability of Not-for-Profit Entities to Prepare Special Purpose Financial Statements
Overview of the Accounting Standard
This Standard amends the Conceptual Framework for Financial Reporting (Conceptual Framework) and AASB 1057 Application of Australian Accounting Standards to:
(a) extend the application of the Conceptual Framework and Australian Accounting Standards to not-for-profit entities (both private sector and public sector) that:
(i) are required by legislation to comply with either Australian Accounting Standards or accounting standards;
(ii) are required only by their constituting document or another document to prepare financial statements that comply with Australian Accounting Standards, subject to an exemption if the relevant document was created and last amended before 1 July 2029; or
(iii) elect to prepare general purpose financial statements; and
(b) introduce ‘Aus’ paragraphs to the Conceptual Framework to add Australian-specific guidance for not-for-profit entities.
This Standard also consequentially amends AASB 1054 Australian Additional Disclosures to revise the set of not-for-profit private sector entities required to provide specified disclosures in special purpose financial statements, where prepared, and to amend the extent of disclosure required.
When the amendments are applicable, some not-for-profit entities might need to prepare general purpose financial statements for the first time. This Standard amends AASB 1053 Application of Tiers of Australian Accounting Standards to make transitional relief available for those entities preparing general purpose financial statements complying with Tier 2: Australian Accounting Standards – Simplified Disclosures reporting requirements for the first time following these amendments.
In addition, this Standard also makes consequential amendments to various Australian Accounting Standards resulting from the amendments above, and to the Framework for the Preparation and Presentation of Financial Statements, Statement of Accounting Concepts SAC 1 Definition of the Reporting Entity and AASB Practice Statement 2 Making Materiality Judgements.
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.