Our monthly Clarity in financial reporting newsletter informs you of key focus areas in financial reporting for the month: actions, developments, and dates.
In this issue
Action: Consider each of these questions during the December 2020 reporting season.
Continuing uncertainty, economic developments and evolving government responses mean that a high level of judgement continues to be required in financial reporting in response to COVID-19 and broader developments.
It is important the financial report and Operating and Financial Review (OFR) “tell the story” of how the business is impacted by COVID-19 (positively or negatively), or for half-year financial reports, how the impacts have changed.
Furthermore, entities must ensure that COVID-19 impacts are not inappropriately adjusted in financial results, e.g. presenting sub-totals pre and post COVID-19 and ensuring non-IFRS information is not misleading, adequately explained and reconciled to statutory information.
Set out below are questions where disclosure is important. Our Tier 1 model financial statements also provide specific guidance.
Additional considerations for half-year financial reports
The guiding principle in presenting half-year financial reports is that the interim disclosures are those that are useful in understanding the changes in the financial position and performance of the entity since the last annual reporting period. In addition, AASB 134 Interim Financial Reporting requires certain mandatory disclosures and the level of detail required may be greater in volatile times.
It is important that the half-year is a continuation of the last full year report. Therefore, it is necessary to consider any changes or developments and provide clear disclosures that explain items such as those listed below:
Our model half-year financial statements provide further guidance.
More information: The following general resources will be particularly helpful:
New publication on GPFS for ‘CBC reporting entities’
Action: Refer to our updated publication on general purpose financial statements under the Tax Administration Act 1953 when addressing financial reporting obligations arising under tax law.
As noted in our January newsletter, in late December 2020, the Australian Tax Office has published updated guidance on how ‘CBC reporting entities’ can meet their obligations for general purpose financial statements under the Tax Administration Act 1953. Additional guidance has also been provided on determining whether an entity is a CBC reporting entity and/or a significant global entity.
We have updated our comprehensive Clarity publication Understanding the GPFS requirements for CBC reporting entities. This publication:
More information: Clarity publication Understanding the GPFS requirements for CBC reporting entities.
Why now? Ensure you are aware of the latest developments and consider whether they may impact you.
A quick summary of recent developments:
Why now? Entities operating in regulated industries, such as electricity, gas, water and others should be aware of recent proposals to require the recognition of certain regulated assets and liabilities.
The proposals create a new accounting model that:
Comments on the proposals are due to the AASB on 10 May 2021 and to the IASB on 30 June 2021.
More information: IFRS in Focus IASB proposes new Standard on regulatory assets and regulatory liabilities.
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