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Accounting alert 2010/13 - December AASB meeting

New pronouncements on the horizon

Author: Frank Betkowski and Bruce Porter, Accounting Technical Group

At its meeting on 8-9 December 2010, the Australian Accounting Standards Board (AASB) closed out 2010 with agreement to finalise a number of pronouncements early in 2011 (some by out-of-session vote) – Trans-Tasman convergence standards, superannuation exposure draft, consolidation suite of standards and a revised Conceptual Framework.

The analysis below discusses the highlights from the meeting.

Trans-Tasman convergence

Discussions at the meeting

The AASB continued its discussion on the Trans-Tasman convergence project (more information about the project can be found in Accounting alert 2010/09 and Accounting alert 2010/12)

Key decisions made at this meeting include:

  • Separate standards. The AASB confirmed that all additional domestic disclosures would be included in a separate standard
  • Audit fees. The AASB clarified the disclosure of audit fees, deciding to incorporate the concept of a ‘network firm’ and requiring disclosure of amounts for (1) audit or review work and (2) all other services performed. The disclosure will be required for all auditors, e.g. fees paid to network firms of an auditor of a subsidiary for other services of an entity would be disclosed in the consolidated financial statements
  • Related party disclosures. The AASB is to inform the Corporations and Market Advisory Committee (CAMAC) that it has decided to remove the ‘Aus’ paragraphs requiring individual key management personnel disclosures from AASB 124 Related Party Disclosures
  • Reduced Disclosure Requirements (RDR). The existing RDR requirements in relation to the disclosures will be carried over into the new standard (an additional Amending Standard will be issued to implement this change)
  • Other. The AASB will clarify the basis for conclusions on the ‘true and fair override’.
Expected finalisation

The AASB expects to consider the various standards to implement its decision on these projects early in 2011. As the effect of these standards will be to reduce disclosure requirements, early adoption may be attractive for some entities.

The AASB also noted that New Zealand is to consider adopting the ‘Reduced Disclosure Requirements (RDR) to achieve Trans-Tasman convergence in differential reporting. The New Zealand Financial Reporting Standards Board (FRSB) is expected to issue a consultation paper in the first quarter of 2011 seeking comment on the proposal to converge with the Australian RDR. If adopted, this will be another significant step towards common financial reporting requirements across the Tasman.

Other topics

The following is a summary of the other matters discussed at the meeting:

Sector neutral matters
  • Consolidation – the AASB will issue Australian equivalents of the forthcoming suite of standards on consolidation (a standard to replace IAS 27 and SIC-12, a revised standard on joint arrangements and a disclosure standard on involvement with other entities). The AASB is undertaking a research project on control in the public sector and accordingly, not-for-profit entities will not be permitted to early adopt the standards until this project is completed
  • Conceptual Framework – a revised AASB Framework will be issued as soon as possible (by out-of-session vote), and will be identical to the revised IASB Framework for for-profit entities. The not-for-profit ‘Aus’ paragraphs in the existing AASB Framework will be carried over until new material can be developed, possibly based on the IPSASB’s imminent proposals (see IPSASB below). SAC 1 Definition of the Reporting Entity will also be retained
  • Effective dates – in response to the IASB’s Request for Views on Effective Dates and Transition Methods, the AASB tentatively decided to recommend a ‘big bang’ approach for all current IASB projects based on a common effective date of 1 January 2014. The AASB also supports early adoption on an individual IFRS basis, but recommends the IASB consider cross-cutting issues (e.g. projects on leases and revenue should be adopted together). The Request for Views is open for comment until 31 January 2011 (the AASB is accepting comment until 31 December 2011).
  • Board retirements – the Board noted thanks to retiring board members Bruce Porter and Frank Palmer
  • Other matters – comment letters on IFRS Foundation Trustee’s strategy review, the IFRS Interpretations Committee review questionnaire and an education session on the IASB hedge accounting proposals.
Not-for-profit matters
  • Superannuation – the AASB decided to issue a new exposure draft on superannuation plans and approved deposit funds. The exposure draft will be published early in 2011 and will have a four month exposure period. As the AASB is close to finalising these proposals, it will be important for affected entities to carefully consider and respond to the proposals, even if they have already responded to the earlier ED
  • Income from non-exchange transactions – agreed a liability should be recognised for ‘advanced receipts’ as the entity has an unconditional obligation to stand ready to return transferred assets if the expected taxable event does not occur or the transfer arrangement does not become binding, e.g. an NFP entity receiving an upfront grant for the construction of an asset or to fund particular government objectives
  • IPSASB – update on IPSASB activities, consideration of IPSASB Conceptual Framework (the IPSASB is expected to issue exposure drafts shortly)
  • Other topics – IMF review of GFS (limited opportunity to advance the cause of GAAP/GFS harmonisation)

More information on the outcomes of the AASB’s meeting can be obtained from the AASB Action alert (PDF 66kb) and Board papers for the meeting.

The next meeting of the AASB is scheduled for 9-10 February 2011 in Melbourne.


Related links

  • Monthly Roundup - May 2011
    Financial reporting developments during May 2011. Highlights include new batch of standards forming the 'next wave', new Accounting alerts and the first instalment in Trans-Tasman convergence.
  • Accounting alert 2010/13 - December AASB meeting
    The AASB closed out 2010 with agreement to finalise a number of pronouncements early in 2011 – Trans-Tasman convergence standards, superannuation exposure draft, consolidation suite of standards and a revised Conceptual Framework.
  • Accounting alert 2010/09 - Trans-Tasman convergence
    The Australian Accounting Standards Board (AASB) and New Zealand Financial Reporting Standards Board (FRSB) propose to harmonise Australian and New Zealand Standards in relation to entities applying IFRSs as adopted in Australia and New Zealand.
  • Accounting alert 2010/12 - October AASB meeting
    The two day meeting included a joint meeting with the New Zealand FRSB. Discussion included trans-Tasman convergence, various IASB proposals (including rejecting the stripping cost proposals).
  • Accounting alert 2010/11 - September AASB meeting
    This two day meeting largely consisted of the AASB considering its responses to numerous exposure drafts from various bodies. Also discussed were long service leave accounting, audit fee disclosures and superannuation.
  • Accounting alert 2010/10 - July AASB meeting
    Partially a joint meeting with the NZ FRSB, the meeting saw the AASB agree on exemptions from preparing consolidated financial statements and progress on the superannuation project.
  • Accounting alert 2010/03- March AASB meeting highlights
    Highlights include a forthcoming ED to align Australian and NZ standards and possible amendments to AASB 127 to allow more entities to gain exemption from consolidation.


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