What's new in financial reporting for June 2007?

The analysis below provides a high level overview of new and revised financial reporting requirements that need to be considered for financial reporting periods ending on 30 June 2007. Entities can use this listing to perform a quick check that all the new financial reporting requirements have been fully considered as part of their June reporting close process. The information below was last updated on 6 September 2007 for developments to that date – we will update this page if any significant developments occur in the period to 30 September 2007.

The information below is organised as follows:

overview of the big picture issues for financial reporting at June 2007
tables of new and revised accounting pronouncements, categorised as follows:

In addition, we've provided answers to some of the commonly asked questions about the disclosures required in relation to new and revised accounting pronouncements. Read more.

You can also download a PDF version of this information at the bottom of the page.

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What are the big picture issues for June 2007?

The key considerations for June 2007 include:

the impact of the financial guarantee requirements which must be adopted for the first time for annual June reporters (already implemented by half-year reporters). Further information on this can be found in Accounting alert 2007/02
whether to early adopt AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments, to adopt the new accounting policy choices available or eliminate disclosures. Further information on this can be found in Accounting alert 2007/09
the impacts of the Corporations Act 2001 amendments (which has received Royal Assent prior to 30 June) on reporting requirements, particularly the revised small/large proprietary company test. Further information on this can be found in Accounting alert 2007/11 and Accounting alert 2007/13
for unlisted entities, the option of early adopting AASB 8 Operating Segments should be considered, so as to avoid segment reporting disclosures
whether piecemeal early adoption of the IFRS Mark II standards that are emerging should be considered, or left to a ‘big bang’ in 2009/10 – new standards on segment reporting, borrowing costs and financial statement presentation have been issued, and it is possible that revised Standards on business combinations, consolidations and share-based payments will be issued before the close of the June reporting season.

As occurs so often with changes to A-IFRS and financial reporting requirements, some of the other new or revised pronouncements listed in the tables below may have substantial impact on particular entities. Therefore, it is important that the pronouncements listed are carefully reviewed for any potential impacts or opportunities.

Where early adoption is being contemplated, it is important to address any necessary procedural requirements, e.g. for entities reporting under the Corporations Act 2001, appropriate director's resolutions for early adoption must be made under s.334(5).

In addition, the disclosure requirements discussed here need to be carefully considered.

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What are the new and revised accounting pronouncements for June 2007?

The tables below outline the new and revised pronouncements that either are to be applied for the first time at 30 June 2007, or which can be early adopted.

In the majority of cases, the disclosure requirements of the pronouncements listed in the tables below would not be applicable to half-year financial reports. However, where relevant, the recognition and measurement requirements of any relevant pronouncements would be applied where those pronouncements have been adopted by the entity.

New and revised IFRS-equivalent Standards

New or revised requirement	Effective for annual reporting periods beginning/ending on or after	Applicability at June 2007 to		More information
New or revised requirement		Annual reporting periods	Interim reporting periods	More information
*AASB 101 Presentation of Financial Statements* (revised)** Removes Australian specific requirements from AASB 101, but incorporates amendments made on the introduction of AASB 7 surrounding the disclosure of the entity’s objectives, policies and processes for managing capital. Accordingly, early adoption may only be attractive to entities that are also early adopting AASB 7.	(beginning) 1 January 2007	Optional	Mandatory	Accounting Alert 2006/11
AASB 119 Employee Benefits (revised), AASB 2004-3 Amendments to Australian Accounting Standards Implements the IASB amendments to IAS 19 Employee Benefits: Actuarial Gains and Losses, Group Plans and Disclosures in the Australian context, including the option to recognise actuarial gains/losses directly in equity and the naming of the ‘statement of recognised income and expense’ (SORIE). Also introduces the ‘corridor’ approach to the recognition of actuarial gains/losses which was excluded from the version of AASB 119 made by the AASB in July 2004. Many entities would have early adopted these requirements as part of their transition to A-IFRS.	(beginning) 1 January 2006	Mandatory	Already implemented	Accounting Alert 2005/01 IAS Plus project page
AASB 123 Borrowing Costs (revised), AASB 2007-6 Amendments to Australian Accounting Standards arising from AASB 123 Eliminates the option of expensing borrowing costs related to qualifying assets, instead requiring capitalisation. Transitional provisions require prospective application to borrowing costs relating to qualifying assets for which the commencement date for capitalisation is on or after the application date. However, an entity may designate any date before the application date and apply the Standard to borrowing costs relating to all qualifying assets for which the commencement date for capitalisation is on or after that date. The Amending Standard eliminates reference to the expensing option in various other pronouncements.	(beginning) 1 January 2009	Optional	Optional	IAS Plus Newsletter (April 2007, 99kb)
AASB 7 Financial Instruments: Disclosures, AASB 2005-10 Amendments to Australian Accounting Standards AASB 7 is equivalent to IFRS 7 of the same name and introduces new disclosure requirements in relation to financial instruments. AASB 2005-10 implements various amendments to other standards, most notably to implement the IASB Amendment to IAS 1 Presentation of Financial Statements - Capital Disclosures.	(beginning) 1 January 2007	Optional	Mandatory (for the annual reporting period, no specific disclosures required in interim financial reports)	IAS Plus Newsletter (October 2005, PDF 58kb)
AASB 8 Operating Segments, AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 AASB 8 replaces AASB 114 Segment Reporting and introduces a new ‘management approach’ to segment reporting to align IFRS with US-GAAP. Unlike AASB 114, AASB 8 only applies to entities which have on issue any debt or equity securities that are traded in a public market (or which are in the process of issuing any class of instruments in a public market). Therefore, reporting entities that are out of scope of AASB 8 may wish to early adopt this Standard to avoid segment reporting in their financial reports.	(beginning) 1 January 2009	Optional	Optional	IAS Plus Newsletter(December 2006, 113kb)
Revised Guidance on Implementing IFRS 4 Insurance Contracts	(beginning) 1 January 2007	Optional	Mandatory

New or revised domestic Standards

New or revised requirement	Effective for annual reporting periods beginning/ending on or after	Applicability at June 2007 to		More information
New or revised requirement		Annual reporting periods	Interim reporting periods	More information
*AASB 1048 Interpretation and Application of Standards* (March 2007)** Updated version of this ‘service standard’ to provide a mandatory requirement to comply with Interpretations in the Australian context.	(ending) 31 March 2007	Mandatory (refer to Interpretations below)	Mandatory (refer to Interpretations below)	See the related Interpretations below
AASB 1049 Financial Reporting of General Government Sectors by Governments This Standard applies to the Australian Government and each State and Territory Government and is therefore of limited relevance to other entities.	(beginning) 1 July 2008	Optional	Optional	Accounting Alert 2006/10

New Amending Standards

The table below lists the Amending Standards that do not relate to the pronouncements listed in other tables.

New or revised requirement	Effective for annual reporting periods beginning/ending on or after	Applicability at June 2007 to		More information
New or revised requirement		Annual reporting periods	Interim reporting periods	More information
AASB 2005-1 Amendments to Australian Accounting Standard Implements the IASB Amendment to IAS 39 Cash Flow Hedge Accounting of Forecast Intragroup Transactions in the Australian context.	(beginning) 1 January 2006	Mandatory	Already implemented	IAS Plus project page
AASB 2005-4 Amendments to Australian Accounting Standards Implements the IASB Amendment to IAS 39 The Fair Value Option in the Australian context, restricting the ability to designate financial instruments as ‘fair value through the profit and loss’.	(beginning) 1 January 2006	Mandatory	Already implemented	Accounting Alert 2005/06 IAS Plus Newsletter (July 2005, PDF 64KB)
AASB 2005-6 Amendments to Australian Accounting Standards Introduces a scope exemption in AASB 3 Business Combinations for business combinations involving entities or businesses under common control, bringing AASB 3 into line with IFRS 3. Many entities have early adopted this Standard.	(beginning) 1 January 2006	Mandatory	Already implemented	Deloitte IFRS 3 guide (PDF 1894kb) and Australian supplement
AASB 2005-9 Amendments to Australian Accounting Standards Implements the IASB Amendments to IAS 39 & IFRS 4 Financial Guarantee Contracts in the Australian context.	(beginning) 1 January 2006	Mandatory	Already implemented	Accounting Alert 2007/02 Accounting Alert 2005/13 IAS Plus Newsletter (December 2005, PDF 46KB)
AASB 2006-1 Amendments to Australian Accounting Standards Implements the IASB Amendments to IAS 21 Net Investment in a Foreign Operation in the Australian context.	(ending) 31 December 2006	Mandatory	Already implemented	IAS Plus project page
AASB 2006-3 Amendments to Australian Accounting Standards Extends the transitional expiry date in relation to land under roads for public sector entities for a further 12 months to 31 December 2007.	(ending) 31 December 2006	Mandatory	Already implemented	Accounting Alert 2006/11
AASB 2006-4 Amendments to Australian Accounting Standards Eliminates an inconsistency between AASB 134 and AASB 1049 for the General Government Sector.	(interim periods ending) 31 December 2006	n/a	Already implemented	Accounting Alert 2006/15
AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and Other Amendments and Erratum: Proportionate Consolidation Implements the proposals in ED 151 Australian Additions to, and Deletions from, IFRSs and makes various other editorial amendments. New accounting policy choices are introduced and many Australian-specific disclosures deleted. Early adoption of this Standard may be attractive to many entities. [NEW] Erratum: Proportionate Consolidation issued in July 2007 makes further revisions relating to proportionate consolidation.	(beginning) 1 July 2007	Optional	Optional	Accounting alert 2007/09
AASB 2007-5 Amendments to Australian Accounting Standard – Inventories Held for Distribution by Not-for-Profit Entities Amends AASB 102 Inventories to require inventories held for distribution by not-for-profit entities to be measured at cost, adjusted when applicable for any loss of service potential.	(beginning) 1 July 2007	Optional	Optional	Accounting alert 2007/10
[NEW] AASB 2007-7 Amendments to Australian Accounting Standards Makes editorial amendments to six Standards, removes the encouragement in AASB 107 Cash Flow Statements to adopt a particular format for the cash flow statement and deletes superseded implementation guidance accompanying AASB 4 Insurance Contracts.	(beginning) 1 July 2007	Optional	Optional	Accounting alert 2007/12

New and revised Interpretations

New or revised requirement	Effective for annual reporting periods beginning/ending on or after	Applicability at June 2007 to		More information
New or revised requirement		Annual reporting periods	Interim reporting periods	More information
Interpretation 4 Determining whether an Arrangement contains a Lease, AASB 2005-5 Amendments to Australian Accounting Standards Equivalent to IFRIC 4 of the same name. Concludes that whether an arrangement is, or contains, a lease, should be determined based on the substance of the arrangement. The amending standard implements consequential amendments to AASB 1.	(beginning) 1 January 2006	Mandatory	Already implemented	IAS Plus Newsletter (December 2004, PDF 104KB)
Interpretation 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds, AASB 2005-5 Amendments to Australian Accounting Standards Equivalent to IFRIC 5 of the same name. Requires a contributor to a fund to recognise its obligation to pay decommissioning costs as a liability and recognise its interest in the fund separately unless the contributor is not liable to pay decommissioning costs even if the fund fails to pay. The amending standard implements consequential amendments to AASB 139.	(beginning) 1 January 2006	Mandatory	Already implemented	IAS Plus Newsletter (December 2004, PDF 104KB)
Interpretation 6 Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment Equivalent to IFRIC 6 of the same name. Will only directly affect entities with operations affected by the European Union Directive on Waste Electrical and Electronic Equipment (WE&EE).	(beginning) 1 December 2005	Mandatory	Already implemented	IAS Plus Newsletter (September 2005, PDF 51kb)
Interpretation 7 Applying the Restatement Approach under AASB 129 ‘Financial Reporting in Hyperinflationary Economies’ Equivalent to IFRIC 7 Applying the Restatement Approach under IAS 29 ‘Financial Reporting in Hyperinflationary Economies’. Not expected to be of widespread importance in the Australian context, but may affect some entities with foreign operations in certain jurisdictions.	(beginning) 1 March 2006	Mandatory	Mandatory	IAS Plus Newsletter (December 2005, 51kb)
Interpretation 8 Scope of AASB 2 Equivalent to IFRIC 8 Scope of IFRS 2. May impact some entities with operations in certain countries, particularly those entities affected by Black Economic Empowerment (BEE) transactions in South Africa.	(beginning) 1 May 2006	Mandatory	Mandatory	IAS Plus Newsletter (January 2006, 53kb)
Interpretation 9 Reassessment of Embedded Derivatives Equivalent to IFRIC 9 of the same name. Prohibits an entity from reassessing whether an embedded derivative needs to be separated from the host contract after the initial hybrid contract is recognised unless there is a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract, in which case reassessment is required.	(beginning) 1 June 2006	Mandatory	Mandatory	Accounting Alert 2006/04 IAS Plus Newsletter (March 2006, 58kb)
Interpretation 10 Interim Financial Reporting and Impairment Equivalent to IFRIC 10 of the same name. Concludes that where an entity has recognised an impairment loss in an interim period in respect of goodwill or an investment in either an equity instrument or a financial asset carried at cost because fair value is not reliably determinable, that impairment should not be reversed in subsequent interim financial statements nor in annual financial statements.	(beginning) 1 November 2006	Optional	Mandatory	IAS Plus Newsletter (August 2006, 49KB)
Interpretation 11 AASB 2 - Group and Treasury Share Transactions, AASB 2007-1 Amendments to Australian Accounting Standards arising from AASB Interpretation 11 Equivalent to IFRIC 11 of the same name. Addresses whether certain types of share-based payment transactions with employees (or other suppliers of good and services) should be accounted for as equity-settled or as cash-settled transactions under AASB 2.	(beginning) 1 March 2007	Optional	Optional	Accounting alert 2007/08 IAS Plus Newsletter (December 2006, PDF 85kb)
Interpretation 12 Service Concession Arrangements, Interpretation 4 Determining whether an Arrangement contains a Lease (revised), Interpretation 129 Service Concession Arrangements: Disclosure (revised), AASB 2007-2 Amendments to Australian Accounting Standards arising from AASB Interpretation 12 Equivalent to IFRIC 12 of the same name. Addresses the appropriate accounting for service concession arrangements under which private sector entities participate in the development, financing, operation and maintenance of infrastructure for the provision of public services, such as transport, water and energy facilities.	(beginning) 1 January 2008	Optional	Optional	IAS Plus Newsletter (December 2006, PDF 128kb)
[NEW] Interpretation 13 Customer Loyalty Programmes Adopts a revenue allocation rather than cost accrual approach to accounting for customer loyalty programmes. In other words, loyalty awards are not seen as costs that directly relate to the goods or services already delivered, rather they are separate goods or services delivered at a later date.	(beginning) 1 July 2008	Optional	Optional	Accounting alert 2007/14 IAS Plus newsletter (June 2007, PDF 106kb) IAS Plus project page
[NEW] Interpretation 14 AASB 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction This Interpretation deals with the following issues: when refunds or reductions in future contributions should be regarded as available in accordance with paragraph 58 of AASB 119 Employee Benefits how a minimum funding requirement might affect the availability of reductions in future contributions when a minimum funding requirement might give rise to a liability.	(beginning) 1 January 2008	Optional	Optional	Accounting alert 2007/14 IAS Plus Newsletter (July 2007, 221kb) IAS Plus project page

Pronouncements approved by the IASB/IFRIC where an equivalent pronouncement has not been issued by the AASB

New or revised requirement	Effective for annual reporting periods beginning/ending on or after	Applicability at June 2007 to		More information
New or revised requirement		Annual reporting periods	Interim reporting periods	More information
IFRIC 13 Customer Loyalty Programmes Adopts a revenue allocation rather than cost accrual approach for customer loyalty programmes. In other words, loyalty awards are not seen as costs that directly relate to the goods or services already delivered, rather they are separate goods or services delivered at a later date. [Update] The AASB made an equivalent Australian Interpretation at its August 2007 meeting - refer to Interpretations above.	(beginning) 1 July 2008	Optional	Optional	IAS Plus newsletter (July 2007, PDF 106kb) IAS Plus project page
IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction This Interpretation deals with the following issues: when refunds or reductions in future contributions should be regarded as available in accordance with paragraph 58 of IAS 19 Employee Benefits how a minimum funding requirement might affect the availability of reductions in future contributions when a minimum funding requirement might give rise to a liability. [Update] The AASB made an equivalent Australian Interpretation at its August 2007 meeting - refer to Interpretations above.	(beginning) 1 January 2008	Optional	Optional	IAS Plus Newsletter (July 2007, 221kb) IAS Plus project page
[NEW] *IAS 1 Presentation of Financial Statements* (revised 2007)** The main changes from the previous version of IAS 1 (and AASB 101) are to require that an entity must: present all non-owner changes in equity ('comprehensive income') either in one statement of comprehensive income or in two statements (a separate income statement and a statement of comprehensive income) present a statement of financial position as at the beginning of the earliest comparative period in a complete set of financial statements when the entity applies an accounting policy retrospectively or makes a retrospective restatement disclose income tax relating to each component of other comprehensive income disclose reclassification adjustments relating to components of other comprehensive income. IAS 1 also changes the titles of financial statements as they will be used in IFRSs: 'balance sheet' will become 'statement of financial position' 'income statement' will become 'statement of comprehensive income' 'cash flow statement' will become 'statement of cash flows'.	(beginning) 1 January 2009	Optional	Optional	IAS Plus summary IAS Plus project page

Corporations Act 2001 developments

The following developments related to the Corporations Act 2001 during the last 12 months have direct or indirect impacts on financial reporting:

Development	When effective	More information
*Corporations Legislation Amendment (Simpler Regulatory System) Act 2007* Amends, among other matters: the thresholds around when proprietary companies must prepare and lodge financial statements, the electronic distribution of reports to members and the disclosure of executive remuneration. [Update] This Act received Royal Assent on 28 June 2007.	Revised financial reporting thresholds for small/large proprietary companies and electronic distribution of reports to members apply to financial years ending on or after 28 June 2007. The changes to executive remuneration disclosures apply to financial years beginning on or after 28 June 2007.	Accounting alert 2007/11 Accounting alert 2007/12 (possible changes to AASB 124 to eliminate Australian key management personnel disclosures)
[NEW] *Corporations Amendment Regulation 2007 (No. 2)* Amends Regulation 2M.3.03 containing the prescribed remuneration information to be included in the remuneration report to be more consistent with the requirements of AASB 124 Related Party Disclosures while retaining the additional disclosures already prescribed by the existing legislation. Also repeals Regulation 2M.6.04 and Schedule 5B, which permitted the transfer of AASB 124 compensation information to the remuneration report.	Applies to financial years beginning on or after 30 June 2007.
[NEW] ASIC Class Order [CO 07/505] Variation and revocation of financial reporting instruments Amends existing ASIC relief as a consequence of the Corporations Legislation Amendment (Simpler Regulatory System) Act 2007, including: amending the 'large group' test in ASIC Class Order [CO 98/0098] Small proprietary companies which are controlled by a foreign company but which are not part of a large group and ASIC Declaration [CO 02/1432] Registered foreign companies - financial reporting requirements to mirror the larger financial reporting thresholds for proprietary companies under the Corporations Act 2001 revoking ASIC Class Orders [CO 05/0083] Timing of auditor's declaration and [CO 05/0910] Auditor's independence declaration - exemption as the relief they provided has been incorporated into the Corporations Act 2001 consequential amendments to ASIC Class Order [98/0096] Synchronisation of financial year with foreign parent company.	Effective from 17 July 2007 (date the Class Order was gazetted).	Accounting alert 2007/13
[NEW] *Corporations Amendment Regulation 2007 (No. 3)* Repeals Regulation 2M.6.03 and Schedule 5A, which permitted bank and life insurance companies to rely on the financial reporting requirements in the Banking Act 1959 and the Life Insurance Act 1995 rather than the Corporations Act 2001.	Amendments apply from 30 June 2007.	-
[NEW] **Corporations (NZ Closer Economic Relations and Other Legislation Amendment Act 2007 and Corporations Amendment Regulation 2007 (No. 8)** Seeks to reduce the administrative burden of registration and the ongoing filing requirements of entities registered in prescribed countries (New Zealand) by decreasing the information of copies or documents required to be lodged with ASIC.	The amendments related to the lodgement of documents commence on a single day to be fixed by Proclamation. However, if any of the provision(s) do not commence within the period of 6 months beginning on the day on which this Act receives Royal Assent (being 21 June 2007), they commence on the first day after the end of that period.	-
*Financial Sector Legislation Amendment (Restructures) Act 2007* Deals with the introduction of ‘non-operating holding companies’ by financial institutions, providing these entities exemptions from certain provisions of the Corporations Act 2001 with approval of the Minister. [Update] This Act received Royal Assent on 28 June 2007.	The Act commences from the date on which it received Royal Assent (28 June 2007).	-

Other developments

The following are other developments that may have direct or indirect impacts on financial reporting:

[NEW] the ASX has released their revised Corporate Governance Principles and Recommendations (the Principles). The new Principles continue the non-prescriptive ‘if not, why not’ disclosure-based approach to Australian Corporate Governance. The new ASX Principles will apply for financial years beginning on or after 1 January 2008 (i.e. for a 30 June balance date company, 30 June 2009). More information on the revised Principles is available by clicking here.

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