Skip to main content

Clarity in financial reporting - April 2022 monthly newsletter

Getting ready for Simplified Disclosures, financial reporting implications of recent events and the budget, sustainability reporting exposure drafts

Our monthly Clarity in financial reporting newsletter informs you of key focus areas in financial reporting for the month: actions, developments, and dates

Why does it matter? There is a significant change in reporting for June 2022 with the removal of special purpose financial statements for most private sector for-profit entities and first-time adoption of the new Tier 2 ‘Simplified Disclosures’ Standard (AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities). The transition process can be more complex and time consuming than expected.

Why now?

With mere months until 30 June 2022, entities impacted by the removal of special purpose financial statements need to ensure they can implement the new Simplified Disclosures requirements and meet reporting deadlines.

Tools and resources

We have the following tools and resources available to assist entities implement the new requirements:

Special edition ‘Client financial reporting update’ "NEW"

This special edition webcast:

Provides a summary of the Simplified Disclosure requirements

Outlines which entities are required to apply Simplified Disclosures

Explains the transition process including a worked example of AASB 1’s ‘short-cut consolidation’ method.

This on-demand recorded webcast runs for approximately 40 minutes and is available at

Tier 2 Simplified Disclosures model financial report "NEW"

Our Tier 2 model financial report illustrates the disclosures required under AASB 1060, including the transitional disclosures required when moving from unconsolidated special purpose financial statements to consolidated financial statements (an edition dealing with early adoption is also available).

Clarity publications "UPDATED"

The following publications have been updated to reflect amendments and developments since their original issue:

  • Clarity publication Removal of special purpose financial statements. This publication explains which entities are affected by the removal of special purpose financial statements and provides an overview of the transition process
  • Clarity publication Simplified Disclosures – Transition options and opportunities. This publication explains the process of transition in more detail, explains when each transition option applies and explores the practical issues arising on transition.

Other tools

We will also update our Tier 2 presentation and disclosure checklist once the AASB has finalised the amendments to AASB 1 First-time Adoption of Australian Accounting Standards and AASB 1053 Application of Tiers of Australian Accounting Standards agreed at its February 2022 meeting (as noted in our March 2022 newsletter). These amendments are expected to be finalised by the end of April 2022.

Why does it matter? Entities need to ensure they correctly reflect the accounting implications arising from a series of events on a global and national scale over recent months.

Significant events

The advent of the Russia-Ukraine war and floods and extreme rain events in Eastern Australia have come as the global community moves toward ‘living with’ the COVID-19 pandemic.

In responding to the COVID-19 pandemic, entities are familiar with volatility, uncertainty and risk management aspects of these types of events which result in similar financial reporting themes and issues for consideration.

A number of recent publications can assist entities with understanding their financial reporting responses to these types of events:

Why does it matter? Entities need to respond to a continuing global push for standardised environmental, social and governance (ESG) reporting and be aware of recent Australian developments exploring how global developments might be implemented in the Australian context.

What’s happened?

The Chair and Vice-Chair of the International Sustainability Standards Board (ISSB) have published two exposure drafts:

Exposure Draft IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information - this exposure draft proposes requiring the disclosure of information about significant sustainability-related risks and opportunities (including, but not limited to, climate change). The exposure draft includes proposals for definitions and requirements that are consistent with the IASB® Conceptual Framework for Financial Reporting, IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors pronouncements for financial reporting. Sustainability-related financial disclosures would be required to be published at the same time as the financial statements (IASB project page, IAS Plus summary)

Exposure Draft IFRS S2 Climate-related Disclosures - this exposure draft addresses climate change in more detail and incorporates the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and includes metrics tailored to industry classifications derived from the industry-based Sustainability Accounting Standards Board (SASB) (IASB project page, IAS Plus summary).

Given the urgency in global calls for sustainability reporting standards, the ISSB has published these exposure drafts before a full contingent of the ISSB board is in place. Over recent weeks, agreement was sought from the IFRS Foundation Due Process Oversight Committee (DPOC) to proceed with issue of exposure drafts with a view to finalising standards from the proposals by the end of calendar 2022.

Jurisdictional authorities would decide whether to require the application of IFRS Sustainability Disclosure Standards, just as they have decided whether to require the application of IFRS Accounting Standards. The ISSB does not have the right to mandate the application of its Standards. However, companies can choose to apply them.

Comments on the ISSB proposals close on 29 July 2022.

The AASB has also issued an equivalent Exposure Draft, ED 321 Request for Comment on ISSB [Draft] IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and [Draft] IFRS S2 Climate-related Disclosures, seeking feedback in the Australian context. ED 321 outlines the AASB’s preliminary decision to position Australian sustainability-related reporting requirements as a separate suite of standards, which leaves the decision to mandate sustainability-related financial reporting with the relevant Australian legislators. Comments on the AASB’s proposals close on 15 July 2022.

For more information, see the ISSB press release and iGAAP in Focus Sustainability reporting — ISSB proposes global baseline of sustainability disclosure standards for capital markets.

Why does it matter? The Federal Government’s 2022-23 budget was handed down on Tuesday 29 March 2022 and has financial reporting implications.


As in previous years, the 2022-23 Federal Budget can have a broad range of financial reporting implications, including:

Impairment and other models

  • Model forecasts and assumptions should be reviewed for consistency with the overall budget assumptions and forecasts and differences explained
  • New and extended wage subsidy schemes for apprenticeships will impact forecast cash flows and planning for eligible entities
  • Changes to petroleum excise will impact forecasts for many entities, including those eligible for a rebate
  • Changes to payment arrangements for government imposts should be taken into account in forecasts where significant impacts on cash outflows are expected.

Tax accounting

  • The expansion of the proposed ‘patent box’ regime to emission reduction technologies and agriculture from 1 July 2023 will impact current and deferred tax of eligible entities once substantively enacted
  • The immediate tax deduction for capital expenditure and tax loss carry-backs measures have not been extended and will impact deferred taxes in future periods.

Other considerations

  • Entities eligible for the apprenticeship subsidies will need to consider the recognition and measurement of the government grants
  • The immediately implemented change to petroleum excise may impact inventory costing or rebate accruals
  • Whilst arising from previous budgets, the temporary levy on offshore petroleum production to recover the Commonwealth’s costs of decommissioning the Laminaria and Corallina oil fields and associated infrastructure from 1 July 2021 was passed by Parliament on 30 March 2022 and its final provisions should also be taken into account in accounting.

For more information about the Federal Budget, see our 2022-23 Federal Budget analysis.

Why does it matter? Being aware of recent developments allows you respond to those affecting your clients in a timely and informed manner.

A summary of recent developments:

ASX Listing Rules proposals

The ASX has issued a Consultation Paper Proposed enhancements to the ASX Listing Rules: Continually improving the reputation and integrity of the ASX market, which proposes various amendments to the ASX Listing Rules across a broad range of topics, including:

  • The issuance of securities by listed entities - including in relation to share purchase plans, pro-rata issues and material placements (some of these proposals are largely consistent with measures the ASX put in place in response to the COVID-19 pandemic)
  • The financial reporting framework for listed entities - introducing new accounting requirements for quarterly cash flow reports, requiring Tier 1 financial reports (unless the ASX agrees otherwise), and dealing with the consequences of non-compliant reports
  • Other topics – including admission and quotation of securities, transactions by listed entities with persons in a position of influence, lodgement of documents by listed entities for release to the market and various other miscellaneous matters.

Submission on the proposals close on 27 May 2022 and the ASX intends the updated rules will take effect from 1 December 2022.

Published : April 2022

Did you find this useful?

Thanks for your feedback

If you would like to help improve further, please complete a 3-minute survey