FACT SHEET February 2012 AASB 1053 Applications of Tiers of Accounting Standards (This fact sheet is based on the standard as at 1 January 2011.) Important note: This standard is an Australian specific standard with no international equivalent. AASB application date AASB 1004 is applicable for annual reporting periods commencing on or after 1 July 2008. APPLICATION AASB 1053 is applicable for annual reporting periods commencing on or after 1 July 2013. Earlier application is permitted. If an entity applies this AASB earlier, it shall disclose that fact and apply the relevant it shall also adopt the relevant Standards that specify Tier 2 reporting requirements at the same time. OBJECTIVE The objective of this Standard is to set out the application of Tiers of Australian Accounting Standards to different categories of entities preparing general purpose financial statements. APPLICATION This Standard applies to: 1. each entity that is required to prepare financial reports in accordance with Part 2M.3 of the Corporations Act; 2. general purpose financial statements of each reporting entity; 3. financial statements that are, or are held out to be, general purpose financial statements; and 4. financial statements of General Government Sectors (GGSs) prepared in accordance with AASB 1049 Whole of Government and General Government Sector Financial Reporting. Prescribed accounting treatment The revised differential reporting framework to be applied by reporting entities preparing general purpose financial statements consists of two tiers of reporting requirements: Tier 1: Full IFRSs as adopted in Australia Tier 2: The Reduced Disclosure Requirements (RDR) The RDR (or Tier 2) requirements comprise application of the recognition and measurement requirements of full IFRSs as adopted in Australia, but with reduced disclosures.
The revised framework, indicating the application of the tiers to the various classes of entities within different sectors, is as follows: Sector For-profit Not-for-profit private For-profit and not-for-profit public Tier 1 Full IFRSs as adopted in Australia Tier 2 Reduced Disclosure Regime (entities may choose to apply Tier 1, that is, full IFRSs as adopted in Australia) Publicly accountable Non-publicly accountable All not-for-profit private sector entities have a choice of applying Tier 1 or Tier 2 requirements Federal, State and Territory Governments and Local Governments (including whole of government and general government sector) Entities other than Tier 1 entities noted above An entity is deemed to have public accountability if: a. Its debt or equity instruments are traded in a public market or it is in the process of issuing such instruments for trading in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets); or b. It holds assets in fiduciary capacity for a broad group of outsiders as one of its primary businesses. This is typically the case for banks, credit unions, insurance companies, securities brokers/dealers, mutual funds and investment banks The additional examples of entities having public accountability include: Disclosing entities, even if their debt or equity instruments are not traded in a public market or are not in the process of being issued for trading in a public market Cooperatives that issue debentures Registered managed investment schemes Superannuation plans registered with the Australian Prudential Regulation Authority (APRA) other than Small APRA Funds Authorised Deposit-Taking Institutions. Transition For details on transitioning to RDR please refer to the following flow diagrams below extracted directly out of AASB 1053. 2
Moving from SPFRs to GPFRs Moving between Tiers 3
Disclosures Refer Appendix 1 for a checklist to assist with AASB 1053 disclosure requirements. Important definitions Contributions Contributions by owners Non-reciprocal transfer Restructure of administrative arrangements non-reciprocal transfers to the entity. future economic benefits that have been contributed to the entity by parties external to the entity, other than those which result in liabilities of the entity, that give rise to a financial interest in the net assets of the entity which a) conveys entitlement both to distributions of future economic benefits by the entity during its life, such distributions being at the discretion of the ownership group or its representatives, and to distributions of any excess of assets over liabilities in the event of the entity being wound up, and/or b) can be sold, transferred or redeemed. A transfer in which the entity receives assets or services or has liabilities extinguished without directly giving approximately equal value in exchange to the other party or parties to the transfer. The reallocation or reorganisation of assets, liabilities, activities and responsibilities amongst the entities that the government controls that occurs as a consequence of a rearrangement in the way in which activities and responsibilities as prescribed under legislation or other authority are allocated between the government s controlled entities. The scope of the requirements relating to restructures of administrative arrangements is limited to the transfer of a business. The requirements do not apply to, for example, a transfer of an individual asset or a group of assets that is not a business. 4
Appendix 1 Disclosure checklist This checklist can be used to review your financial statements you should complete the column about whether the requirement is included and provide an explanation for No answers to ensure the completeness of disclosures. AASB 1 Aus1.6 AASB 1 RDR21.1 AASB 2. Aus1.6 AASB 2 RDR 46.1 AASB 2 RDR 46.2 AASB 2 RDR 50.1 Paragraphs 21-23, 24(b), 24(c) and 25-33; and In paragraph 24, the text To comply with paragraph 23 Do the financial statements for an entity where it is applying an entity s for the first time the Australian Accounting Standards Reduced Disclosure Requirements AASB 101 include at least two statements of financial position, two statements of comprehensive income, two separate income statements (if presented), two statements of cash flows and two statements of changes in equity and related notes, including comparative information? Paragraphs 45(c), 45(d), 46, 47(a), 47(b), 47(c)(ii), 47(c)(iii) and 48 52; and In paragraph 47, the text to give effect to the principle in paragraph 46,. For an entity that has equity-settled share-based payment arrangements, and is applying Australian Accounting Standards Reduced Disclosure Requirements, has information about how it measured the fair value of goods or services received or the fair value of the equity instruments granted been disclosed? If a valuation methodology was used, has the entity disclosed the method and its reason for choosing it? For an entity that has cash-settled share-based payment arrangements, and is applying Australian Accounting Standards Reduced Disclosure Requirements, has the entity disclosed information about how the liability was measured? For an entity applying Australian Accounting Standards Reduced Disclosure Requirements has the following information about the effect of share-based payment transactions on the entity s profit or loss for the period and on its financial position been disclosed: a. the total expense recognised in profit or loss for the period; and b. the total carrying amount at the end of the period of liabilities arising from share-based payment transactions? 5
AASB 3. Aus 1.7 AASB 3 RDR 65.1 AASB 3 RDR 67.1 AASB 5. Aus 1.9 AASB 7. Aus 2.9 Paragraphs 59-63, Aus63.6 Aus63.9, B64(d), B64(e), B64(h), B64(k), B64(l), B64(m), B64(n)(ii), B64(o)(ii), B64(q), B65, B66, B67(a) (c) and B67(e); in the heading before paragraph B64, the text (application of paragraphs 59 and 61) ; in paragraph B64, the text To meet the objective in paragraph 59, ; in paragraph B64(j), the sentence If a contingent liability liability cannot be measured reliably. ; and in paragraph B67, the text To meet the objective in paragraph 61,. For individually immaterial business combinations occurring during the reporting period that are material collectively, has an acquirer applying Australian Accounting Standards Reduced Disclosure Requirements disclosed in aggregate the information required by paragraphs B64(f), B64(g), B64(i), B64(n)(i), B64(o)(i) and B64(p) and the first sentence of paragraph B64(j)? The reconciliation specified in paragraph B67(d) for prior periods. paragraphs 33(b), 33(d), 41(d) and 42; and the second and third sentence in paragraph 35, including paragraphs 35(a) (c). paragraphs 6, 9 11, 12A(b), 12A(e), 15, 18, 19,20(c), 20(d), 25-27, 27A, 27B, 30(b) (e), 31 42,B1 B4 and B7 B28; in paragraph 8(a), the text showing separately AASB 139 ; in paragraph 8(e), the text showing separately AASB 139 ; in paragraph 20(a)(i), the text showing separately AASB 139 ; in paragraph 23(d), the text showing the income ; and the fourth sentence in paragraph 28, including paragraphs 28(a) and (b)? 6
AASB 7 RDR 18.1 AASB 7 RDR 27.1 AASB 101. AASB 102. AASB 107. AASB 108. Aus 2.9 AASB 108 RDR 28.1 For loans payable recognised at the end of the reporting period for which there is a breach of terms or default of principal, interest, sinking fund, or redemption terms that has not been remedied by the end of the reporting period, has the entity applying Australian Accounting Standards Reduced Disclosure Requirements disclosed the following? a. details of that breach or default; b. the carrying amount of the related loans payable at the end of the reporting period; and c. whether the breach or default was remedied, or the terms of the loans payable were renegotiated, before the financial statements were authorised for issue. Has then entity that is applying Australian Accounting Standards Reduced Disclosure Requirements disclosed, for all financial assets and financial liabilities that are measured at fair value, the basis for determining fair value, for example quoted market price in an active market or a valuation technique? When a valuation technique is used, has the entity disclosed the assumptions applied in determining fair value for each class of financial assets or financial liabilities. For example, if applicable, has the entity disclosed information about the assumptions relating to prepayment rates, rates of estimated credit losses, and interest rates or discount rates? paragraphs 10(f), 15, 16, Aus16.3, 39(c), 42(b), 61, 65, 80A, 90-92, 94, 104, 131 and 134 138; the second sentence in paragraph 39; and in paragraph 107, the text and the related amount of dividends per share. Paragraphs 36(c), 36(g) and Aus36.1(f). Paragraphs Aus20.1, Aus20.2, 40, 41, 46, 50(d) and 52. Paragraphs 28(b), 28(d), 28(e), 28(h), 30, 31 and 40. For an entity applying Australian Accounting Standards Reduced Disclosure Requirements, has it disclosed an explanation if it is impracticable to determine the amounts required to be disclosed by paragraph 28(f)(i) or 28(g)? 7
AASB 110 AASB 111 AASB 112 AASB 112 RDR 81.1 AASB 116 AASB 116 RDR 73.1 AASB 117 AASB 119 Aus 1.9 paragraphs 13, 19 and 20; and in paragraph 22(a), the text (AASB 3 in such cases). Paragraphs 40, 41 and 45 of this Standard. paragraphs 81(ab), 81(f), 81(i) (k), 82 and 87 87C; and the second sentence in paragraph 82A. Has an entity applying Australian Accounting Standards Reduced Disclosure Requirements disclosed the aggregate amount of current and deferred income tax relating to items recognised in other comprehensive income? Paragraphs 73(e)(viii), 74(b), 74(d), 77(e), Aus77.1 and 79. The reconciliation specified in paragraph 73(e) for prior periods. paragraphs 31(c), 31(d), 35(b) and 48; in paragraph 31(b), the text a reconciliation present value. and, in the second sentence, the text In addition, an entity shall disclose and and their present value, ; in paragraph 35(c), the text with separate amounts sublease payments ; and in paragraph 56(a), the words in the aggregate and. paragraphs 30(c)(ii), 34B, 47, 120, 120A(c),120A(d), 120A(e)(i) (iii), 120A(e) (vii),120a(e)(viii), 120A(l), 120A(n)(iii), 120A(o) (q),124(b) and 143; the third sentence in paragraph 23; in paragraph 120A(g), the text for each of in paragraph 58(b) ; in paragraph 120A(m), the text as well as paragraph 104A ; and the second sentence in paragraph 131. 8
AASB 119 RDR 120A.1 AASB 119 RDR 120A.2 AASB 121 Aus 2.8 AASB 123 Aus 1.6 AASB 124 Aus 1.11 AASB 127 Aus 1.6 AASB 127 Aus 10.1 Has an entity applying Australian Accounting Standards Reduced Disclosure Requirements disclosed a reconciliation of opening and closing balances of the defined benefit obligation showing separately benefits paid and all other changes? These disclosures may be made in total, separately for each plan, or in such groupings as are considered to be the most useful. The reconciliations specified in paragraphs 120A(e) and RDR120A.1 for prior periods. Paragraphs 55-57 of this Standard. Paragraph 26(b) of this Standard. paragraphs Aus13.1, 26, 27 and Aus29.1 Aus29.9.3; in paragraph 17, the text and for each of (e) share-based payment ; and in paragraph 22, the text (see paragraph 34B of AASB 119). paragraphs 41(b), 41(e), 41(f), 42, 43(b), 43(c) and Aus43.1; and in paragraph 43, the text (other than a parent covered by paragraph 42). Notwithstanding paragraph 10(d), has the entity that is applying Australian Accounting Standards Reduced Disclosure Requirements being a parent that meets the criteria in paragraphs 10(a), 10(b) and 10(c) not presented consolidated financial statements if its ultimate or any intermediate parent produces consolidated financial statements available for public use and: a. the parent and its ultimate or intermediate parent are: (i) (ii) both entities complying with Australian Accounting Standards Reduced Disclosure Requirements; or b. the parent is an entity complying with Australian Accounting Standards Reduced Disclosure Requirements and its ultimate or intermediate parent is a not-for-profit entity complying with Australian Accounting Standards? 9
AASB 127 RDR 43.1 AASB 128 Aus 1.9 AASB 128 Aus 13.1 AASB 131 AASB 131 Aus 2.1 AASB 134 Aus 1.10 Has a parent, venturer with an interest in a jointly controlled entity or an investor in an associate that prepares separate financial statements and is applying Australian Accounting Standards Reduced Disclosure Requirements, disclosed a description of the methods used to account for the investments in subsidiaries, jointly controlled entities and associates? Paragraphs 37(b) (i). Notwithstanding paragraph 13(c)(iv), has the entity that is applying Australian Accounting Standards Reduced Disclosure Requirements being an investor that meets the criteria in paragraphs 13(c)(i), 13(c)(ii) and 13(c)(iii) not applied the equity method in accounting for an interest in an associate if its ultimate or any intermediate parent produces consolidated financial statements available for public use and: a. the investor and its ultimate or intermediate parent are: (i). (ii) both entities complying with Australian Accounting Standards Reduced Disclosure Requirements; or b. the investor is an entity complying with Australian Accounting Standards Reduced Disclosure Requirements and its ultimate or intermediate parent is a not-for-profit entity complying with Australian Accounting Standards? Paragraph 56 of this Standard. Notwithstanding paragraph 2(c)(iv), has the entity that is applying Australian Accounting Standards Reduced Disclosure Requirements being a venturer that meets the criteria in paragraphs 2(c)(i), 2(c)(ii) and 2(c)(iii) not applied proportionate consolidation or the equity method in accounting for an interest in a jointly controlled entity if its ultimate or any intermediate parent produces consolidated financial statements available for public use and: a. the venturer and its ultimate or intermediate parent are: (i).. (ii) both entities complying with Australian Accounting Standards Reduced Disclosure Requirements; or b. the venturer is an entity complying with Australian Accounting Standards Reduced Disclosure Requirements and its ultimate or intermediate parent is a not-for-profit entity complying with Australian Accounting Standards? paragraphs 5(f), 16(g), 19 and 21; and in paragraph 16(i), the sentence In the case of required by AASB 3 Business Combinations? 10
AASB 134 RDR 19.1 AASB 136 AASB 137 AASB 138 AASB 138 RDR 118.1 AASB 140 Aus 1.6 AASB 140 RDR 76.1 AASB 141 AASB 141 RDR 50.1 Has an entity s interim financial report that is in compliance with this Standard as it applies to entities applying the Australian Accounting Standards Reduced Disclosure Requirements, disclosed that fact? An interim financial report shall not be described as complying with Australian Accounting Standards Reduced Disclosure Requirements unless it complies with all of the requirements of Australian Accounting Standards Reduced Disclosure Requirements. Paragraphs 129-137 of this Standard. paragraphs 84(b), 84(e) and 85(c); in paragraph 75, the text If an entity starts to of the financial statements. ; and in paragraph 85(b), the text Where necessary paragraph 48. Paragraphs 118(e)(vii), 120, 124(a)(iii), Aus124.1 and 128 of this Standard. Paragraph 118(e) for prior periods. paragraphs 75(b), 75(c), 75(f), 76(e), 77, 79(d)(vi), 79(d)(vii) and 79(e); in paragraph 75(d), the text including a statement market data ; in paragraph 76(a), the text disclosing separately an asset ; and in paragraph 79(d)(i), the text disclosing separately an asset. The reconciliation specified in paragraph 76 for prior periods. Paragraphs 40, 43 46, 48, 49, 51 53, 54(c), 55, 56 and 57(c) of this Standard. The reconciliation specified in paragraph 50 for prior periods. 11
AASB 1050.6A AASB 1054 5A AASB 1054 RDR 7.1 AASB 1052.10A 2 Aus13.5 4 Aus15.6 5 Aus13.5 15 Aus23.5 17 Aus17.5 127 Aus11.7 paragraphs 7(a)(ii), 7(b)(ii) and 8; and in paragraph 14, the words and by activity in the third sentence. Paragraphs 10-16 of this Standard. Han entity whose financial statements comply with Australian Accounting Standards Reduced Disclosure Requirements made an explicit and unreserved statement of such compliance in the notes? An entity shall not describe financial statements as complying with Australian Accounting Standards Reduced Disclosure Requirements unless they comply with all the requirements of Australian Accounting Standards Reduced Disclosure Requirements. Paragraphs 11 21 of this Standard. Paragraph 13 of this. Han entity whose financial statements comply with Australian Accounting Standards Reduced Disclosure Requirements excluded the text, but: elements in the arrangement in paragraph 15(b) of this? Paragraphs 11 and 13 of this. Paragraphs 20 and 21 of this. Paragraphs 16 and 17 of this. Paragraphs 10 and 11 of this. 12
129 Aus7.6 1052 Aus23A Paragraphs 6, 6A and 7 of this. paragraph 16; and the first and second sentence in paragraph 59. 13
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