Explanatory Statement
ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2026/183
This is the Explanatory Statement for ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2026/183.
The Explanatory Statement is approved by the Australian Securities and Investments Commission (ASIC).
Summary
1. ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2026/183 (Instrument) contains exemptions from the financial reporting requirements in Parts 2M.3 and 7.8 of the Corporations Act 2001 (Corporations Act). These exemptions allow:
(a) entities to round amounts disclosed in a directors’ report, a financial report and in a profit and loss statement and balance sheet for a financial services licensee; and
(b) an item to be omitted from a financial report if the amount involved is nil.
Purpose of the instrument
2. The Instrument remakes relief previously provided in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 (ASIC Instrument 2016/191).
3. Part 2M.3 of the Corporations Act requires specified entities to prepare and lodge with ASIC a financial report, directors’ report and auditor’s report. These reports must also be circulated or made available to members. Section 989B of the Corporations Act requires financial services licensees to prepare and lodge an annual profit and loss statement and a balance sheet in respect of each financial year.
4. The Corporations Act and Corporations Regulations 2001 (Corporations Regulations) specify the information to be included in the financial report and directors’ report, and the profit and loss statement and balance sheet that financial services licensees must prepare. Financial reports must also be prepared in accordance with accounting standards.
5. The Corporations Act and accounting standards require or permit amounts to be disclosed in the reports required under Pt 2M.3 and section 989B.
6. Subsection 992B(1) of the Corporations Act provides that ASIC may declare that Part 7.8 of the Act, which includes section 989B, applies in relation to a person or a financial product, or a class of persons or financial products, as if specified provisions were omitted, modified or varied as specified in the declaration.
7. Subsection 341(1) provides that ASIC may make an order in writing in respect of a specified class of companies, registered schemes or disclosing entities, relieving any of the directors, the companies, registered schemes or disclosing entities themselves, or their auditors, from all or specified requirements of Parts 2M.2, 2M.3 and 2M.4 (other than Division 4) of the Corporations Act.
8. Section 342 of the Corporations Act provides that, to make an order under section 341, ASIC must be satisfied that complying with the relevant requirements of Parts 2M.2, 2M.3 and 2M.4 would make the financial report, sustainability report or other reports misleading, be inappropriate in the circumstances or impose unreasonable burdens.
9. ASIC is satisfied that the cost of disclosing exact amounts (e.g. in cents) and nil amounts in financial reports and directors’ reports, and profit and loss statements and balance sheets required under s989B, particularly for larger entities, would be inappropriate in the circumstances. This is because it would result in unnecessary clutter in the reports and detract from their usefulness to users as they become more difficult to read and important information may be obscured.
10. The Instrument generally allows entities to round amounts presented in financial reports, directors’ reports, profit and loss statements and balances sheets. The Instrument also allows entities to omit an item from a financial report if the amount that would be shown against that item is nil.
11.. The Instrument also repeals ASIC Instrument 2016/191.
Consultation
12. ASIC has consulted publicly on our proposal to remake the relief through CS 45 Proposed remake and sunset of financial reporting-related legislative instruments. We did not receive any submissions in response to CS 45.
Operation of the instrument
Part 1 – Preliminary
13. Section 1 of the Instrument specifies the title of the Instrument.
14. Section 2 of the Instrument specifies that the Instrument commences on the later of day after it is registered on the Federal Register of Legislation or 1 April 2026.
15. Section 3 of the Instrument specifies that it is made under subsections 341(1) and 992B(1) of the Corporations Act.
16. Section 4 of the Instrument provides that each instrument included in a Schedule to this Instrument is amended or repealed. Schedule 1 of the Instrument repeals ASIC Instrument 2016/181. A savings provision in Part 3 of the Instrument continues the relief under the repealed instrument for eligible reports for financial years or half years ending before 30 June 2026.
17. Section 5 of the Instrument provides a simplified outline for the Instrument. Its purpose is to assist readers in understanding the substantive provisions. However, the outline is not intended to be comprehensive. Readers should rely on the substantive provisions when considering the Instrument’s effect.
18. Section 6 of the Instrument specifies definitions to be relied upon in the Instrument.
Part 2 – Order and Exemption
19. Subsection 7(1) of the Instrument provides that a company, a registered scheme, a disclosing entity, a financial services licensee, a retail CCIV in relation to a sub-fund of the retail CCIV, and a registrable superannuation entity (an entity) does not have to comply with Part 2M.3 and Part 7.8 of the Corporations Act to the extent that those Parts require exact amounts to be set out in a financial report, a directors’ report or a profit and loss statement and balance sheet (eligible report) for a financial year or half-year.
20. Subsection 7(2) of the Instrument provides that the relief in subsection 7(1) may be relied on in the following circumstances:
(a) A rounded amount is substituted in the eligible report for the exact amount. The extent to which amounts may be rounded depends on the entity’s balance sheet assets and the nature of the item for which an amount is presented.
(b) Where an alternative rounding factor is applied instead of a rounding factor in relation to an amount, the alternative rounding factor must be applied to all other relevant amounts in the eligible report.
(c) Where an amount is rounded, the corresponding amount for the comparative financial year or half-year is also rounded.
(d) Where amounts are rounded to the nearest $100,000, those amounts are presented in the form of a whole number of millions of dollars and one place of decimals representing hundreds of thousands of dollars. This must be clearly indicated, for e.g. in column headings or by placing ‘millions’ after the amounts.
(e) The rounding of amounts does not have the potential to adversely affect decisions about the allocation of scarce resources by users of the financial report or the discharge of accountability by management or the directors of the relevant entity or in relation to the auditors.
(f) The eligible report discloses that the Instrument applies and that amounts have been rounded in accordance with the Instrument. The extent to which amounts have been rounded is disclosed on each page where rounding has occurred.
21. Section 8 provides that an entity does not have to include an item in a financial report where the amount that would be shown against the item (including any comparative amount) would be nil, including where the amount has been rounded down to nil in accordance with section 7 of the Instrument.
Part 3 – Savings and Transitional
22. Subsection 9(1) provides that the relief in Part 2 of the Instrument applies in relation to an eligible report for a financial year or half year ending on or after 30 June 2026. Subsection 9(2) provides that the relief under ASIC Instrument 2016/191 continues to apply, despite its repeal, in relation to an eligible report for a financial year or half year ending before 30 June 2026.
Incorporation by reference
23. The Instrument refers to and incorporates by reference certain Australian Accounting Standard Board (AASB) Accounting Standards into the definition of rounding factor in section 6 of the Instrument to clearly specify the rounding factor that applies to certain amounts required to be disclosed under those Standards. The relevant AASB Accounting Standards are:
(a) Accounting Standard AASB 2 Share-based Payment;
(b) Accounting Standard AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities;
(c) Accounting Standard AASB 1054 Australian Additional Disclosures;
(d) Accounting Standard AASB 124 Related Party Disclosures; and
(e) Accounting Standard AASB 133 Earnings per Share,
24. The AASB Accounting Standards can be obtained from the AASB Standards Portal at http://standards.aasb.gov.au/accounting-standards.
25. The Instrument complies with section 14 of the Legislation Act 2003.
Legislative instrument and primary legislation
26. The subject matter and policy implemented by the Instrument are more appropriate for a legislative instrument rather than primary legislation. If the matters in the Instrument were to be inserted into the primary legislation, they would insert, into an already complex statutory framework, a set of provisions that are highly specific in nature and may become redundant over time.
27. It will be a matter for the Government and for Parliament as to whether the Corporations Act or Corporations Regulations 2001 (Corporations Regulations) may be amended in future to include the relief in the Instrument.
Duration of the instrument
28. The Instrument self-repeals at the start of 1 April 2031. This allows sufficient time for the Government and for Parliament to determine whether to amend the Corporations Act or Corporations Regulations to include the relief in the Instrument.
Legislative authority
29. The Instrument is made under subsections 341(1) and 992B(1) of the Corporations Act.
30. The Instrument is a disallowable legislative instrument.
Statement of Compatibility with Human Rights
31. The Explanatory Statement for a disallowable legislative instrument must contain a Statement of Compatibility with Human Rights under subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011. A Statement of Compatibility with Human Rights is in the Attachment.
Attachment
Statement of Compatibility with Human Rights
This Statement of Compatibility with Human Rights is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2026/183.
Overview
- ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2026/183 contains exemptions from Parts 2M.3 and 7.8 of the Corporations Act 2001, which allow entities to:
(a) round amounts disclosed in a directors’ report and a financial report, and in a profit and loss statement and balance sheet that a financial services licensee prepares; and
(b) omit an item from a financial report if the amount involved is nil.
Assessment of human rights implications
2. This instrument does not engage any of the applicable rights or freedoms.
Conclusion
3. This instrument 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.